Millions of Americans fear answering their phone due to a plague of billions of robocalls. These calls have made a mockery of the national Do Not Call Registry and touch on several public policy questions.
We had seemingly ended the problem of unwanted telemarketing calls. Congress authorized the Do Not Call Registry in 2003 after more than a decade of calls disrupting the peace and quiet of our homes. Fines of $11,000 per violation largely put telemarketing companies, with hundreds of thousands of employees, out of business.
Why have unwanted calls returned? VOIP technology (voice over internet protocol) allowed anyone with a computer and an internet connection to make thousands of calls. A handful of responses can make thousands of calls worthwhile when the cost is almost zero. Furthermore, technology makes robocallers mobile and elusive.
By contrast, telemarketing firms employed hundreds of people at call centers. The authorities could find and fine telemarketers. Firms had to comply with the Do Not Call registry, even if forced out of business.
Technology further frustrates the control of robocalls. Spoofing makes a call appear to be from a different number. Spoofing a local number increases the chance of someone answering, defeats caller ID, and makes identifying the calls’ source difficult.
By contrast, technology allowed the elimination of spam email. It’s easy to forget that fifteen years ago spam threatened the viability of email. Email providers connected accounts to IP addresses and eventually identified and blocked spammers. Google estimates that spam is less than 0.1 percent of Gmail users’ emails.
The Federal Trade Commission (FTC) banned almost all robocalls in 2009 (political campaigns and schools were excepted). Yet the volume of calls and complaints from the public rise every year. And the “quality” of the solicitations is lower: legitimate businesses employed telemarketers, while most robocalls seem to be scams.
Telephone companies and entrepreneurs are deploying apps and services to block robocalls. The robocallers then respond, producing a technological arms race. The technology of this arms race, however, is beyond me.
I’d rather consider some issues robocalls raise. The root of the problem is some people’s willingness to swindle others. Although we all know there are some bad people in the world, free market economists typically emphasize the costs and consequences of government regulations over the cheats and frauds who create the public’s demand for regulation. People can disagree whether a level of fraud warrants regulation, but free marketers should not dismiss the fear of swindlers.
Robocalls also highlight the enormous inefficiency of theft. Thieves typically get 25 cents on the dollar (or less) when selling stolen goods. Getting $1,000 via theft requires stealing goods worth $4,000 or more. In addition, thieves invest time and effort planning and carrying out crimes, while we invest millions in locks, safes, burglar alarms, and police departments to protect our property. America would be much richer if we did not have to protect against thieves or robocallers.
Finally, having the government declare something illegal does not necessarily solve a problem. Our politicians like to pass a law or regulation and announce, “problem solved.” Identifying and punishing robocallers is difficult; the FTC had only brought 33 cases in nearly ten years. And less than ten percent of the over $300 million in fines and relief for consumers levied against robocallers had been collected. Government has no pixie dust which magically solves hard problems.
The difficulty of enforcing a law or regulation does not necessarily imply we should not act. The Federal Communications Commission, for instance, recently approved letting phone companies block unwanted calls by default, and perhaps this will prove effective. We should weigh the costs of laws and regulations against a realistic projection of benefits and laws failing to solve problems as promised should be revised or repealed.
Still, a law that accomplishes little can have value. Cursing robocalls accomplishes little yet can be cathartic. A law that costs little might provide us satisfaction until technology solves the problem.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
