Planet Money - Spam call bounty hunter

Episode Date: December 14, 2022

Telemarketing calls are not only annoying; in some cases, they are illegal. Congress even gives you the right to sue scofflaw telemarketers for $500 a call. Today, the story of one man who collected a surprising amount of money bringing telemarketers to justice. Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoneyLearn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money, from NPR. Just a quick warning, this episode contains a phrase that might not be suitable for kids. Nathan Barton is the kind of guy who likes to solve problems by tinkering around. I'm an engineer by training, and with engineering, you just start building things, measuring things, paying attention to the outcome, and then take that and do better next time. Nathan used to design microchips for Texas Instruments. But he brings that same engineering vibe to his new life as a stay-at-home dad outside Portland, Oregon. If he gets stuck on a problem, he'll just keep working on it and working on it in his mind, breaking it down until he can figure out how all the pieces fit together. I'm kind of obsessive compulsive, so I don't let go of things very easily. A couple years ago, Nathan turned his laser focus to a problem that

a lot of us have sadly become intimately familiar with, telemarketing phone calls. His kids had just become tweenagers, so Nathan had gotten them their first cell phones. But whenever he'd actually try to call them to make plans or ask what they want for dinner or whatever, they wouldn't pick up the phone. I want to get on them. Well, that's not the deal. And then they say,

well, I can't leave the phone on because it rings a lot. Nathan had gotten these kinds of calls before, but it felt different now that his kids were getting them too. They were going after his family. And where before he might have applied his dogged engineering mind to designing a better microchip, all of a sudden he had a new mission. I felt like it was kind of my job then to make the phone stop ringing. So Nathan made the first obvious move. He put his kids' numbers on the government's do-not-call list, the one that tells telemarketers, do not call these people.

But the calls kept coming. The system was not working the way it was supposed to. But Nathan happened to know that the system offered regular citizens a more powerful tool, an obscure federal law. He'd used it once before to get this guy to stop sending him junk faxes back when people stole fax machines. But this law was mostly aimed at unwanted phone calls. It says you can sue a telemarketer for $500 every time they call you illegally. And Nathan and his kids, they're getting like 10, 15 calls a day.

So Nathan thinks, OK, well, I kind of have some time on my hands these days. I'm going to figure out how to file a lawsuit, and I'm going to fix this problem by taking these telemarketers to court. Hello and welcome to Planet Money. I'm Jeff Guo. And I'm Alexey Horowitz-Ghazi. When we talk about regulation, we are usually talking about something the government does. The SEC makes sure the financial industry follows the rules. The EPA watches out for polluters. But there are some laws where the government wants everybody to pitch in, where most of the enforcement comes from regular people like you or me or Nathan. See something, sue something. Today on the show,

an experiment in crowdsourcing justice. What happens when the government hands over the business of enforcing regulations to Nathan? And what happens to Nathan when the telemarketers strike back. To understand the legal system that Nathan was diving into, you first have to understand this one central question at the heart of every law. That question, who is going to enforce this law? Like, let's say Congress passes a law that says, as of today, it is illegal for other people's dogs to poop on your lawn. Just saying it's illegal will not be enough. The law also needs to say who is actually going to be responsible for bringing those poopy dogs to justice.

Congress could create a federal agency like a National doggy doo-doo task force. I would be honored to serve. I know you would. And you could file a complaint to this task force if you find dog poop on your lawn and they might send an investigator to sniff out the wrongdoer and take them to court or like issue them a fine. But hiring all those investigators would be super expensive. And maybe it's not worth it to spend millions of government dollars fighting this minor nuisance. So instead, Congress could say, OK, you know what? We're going to let everybody enforce the law themselves. If you can find the person who let their dog poop on your lawn, you can take them to court. You can collect the fine from them yourself.

This is called a private right of action. Private rights of action are a self-enforcement mechanism. It brings that many more cops to the beat. Margo Saunders is an attorney at the National Consumer Law Center. She says private rights of action are at the center of a lot of consumer protection laws, including the one that Nathan, the engineering dad in Portland, was using, the Telephone Consumer Protection Act, the TCPA. The problem facing Congress back in 1991 when the TCPA was passed was a little like our dog poop example. Telemarketers like lawn pooping dogs were annoying. It was definitely a problem. But there were so many of them. And the harm was so spread out that it seemed absurd to hire a whole army of telemarketing enforcers to track them all down. So instead, Congress decided to go the private right of action route, to turn all of us into an army of telemarketing enforcers.

When Congress was passing this law in 91, what did they envision was going to happen? Well, I think they envisioned that the individuals who received unwanted calls would be able to go into magistrates courts, small claims courts, and teach the callers a lesson and they would stop making the illegal calls. Congress said if you receive an illegal telemarketing call, you can just take that telemarketer to court and have them pay you $500, meaning it could cost these companies at least that much for every unwanted call. So the $500 is meant to be a penalty. It is meant to incentivize callers to comply with the law. And if this sounds like privateers on the high seas

or, you know, rewards posters in the Wild West, that is not a coincidence. These systems of private enforcement go back centuries. In medieval times, if somebody was poaching the Duke's foxes, the Duke would just post a bounty and whoever caught the bad guy got the reward. Hear ye, hear ye. And that, that was just how law enforcement worked.

So when Congress came up with the plan for the TCPA, they were drawing on a time-honored tradition. They were just deputizing the whole country into this law enforcement scheme. And Congress really did seem to think it would be easy for people to enforce this law themselves. That people could just walk down to their local small claims court, file a lawsuit, and get their money. But Marger says in practice, that's not what happened at all. For most people, these lawsuits are a lot harder to pull off than Congress imagined. I would not recommend people filing their own cases. They're welcome to do it. They have that right. But it's hard to bring these cases. They're welcome to do it. They have that right.

But it's hard to bring these cases. They're complex. Back in 2020, when Nathan, the dad from Portland, was first looking into the TCPA to get telemarketers to stop calling his kids, he did not have Margo advising him. Instead, he went to YouTube. You know, if you make one phone call illegally,

500 bucks. They have to pay you 500 bucks. That can triple up to $1,500 real money. See, this is just math. This is how numbers work. Small claims court, you do not need an attorney. Good luck. Go get them.

I know you hate them. I know you do well. Nathan finds this whole community of people explaining not just the TCPA, but also how to get telemarketers to maybe stop calling you altogether. They say the industry keeps lists of people who like to sue them. So I thought I'll file a lawsuit or two, and then that'll be that, and the calls will stop. You wanted to get on the real blacklist. I wanted to get on the real blacklist.

But before Nathan goes on his quest to silence the telemarketers, he lays out some ground rules for himself. One, he's only going to do this in his spare time. Two, if he makes any money, it's going to go toward family stuff. And three, am I able to use the word a-hole on the podcast? Oh, yeah. Okay. So I have a no a-hole rule. Even if they're in the wrong, I'm not going to sue a real charity. I'm not going to sue a hospital. I'm only going to sue people who are a-holes. Nathan thinks, okay, I'm going to find those a-holes, file a few lawsuits, show them I'm a real threat, and then they'll put me on that secret blacklist. So starting in the summer of 2020, when Nathan notices one of his family's phones ringing

with some number he doesn't recognize, he answers it and he gets to work. Sometimes the people on the other line are straight up scammers. They're people trying to steal his bank info or something. Those calls are illegal too, but Nathan's not looking to take on an entire international crime ring.

That's like way too much work. Nathan's going after actual telemarketers, the ones trying to sell him something, the ones with real business addresses in the U.S. But the telemarketers who are making illegal calls, they aren't making it easy for Nathan to track them down. They won't even tell him what company they're with. Or at least not at first. The process could start with a robocall that's like,

press 1 if you're interested in saving money on car insurance. Your robo-insurance man is uncanny. Well, of course, if you say no, they're just going to hang up on you. You don't have a name. You don't know who did it, right? But if Nathan does press 1, if he pretends to be interested in buying car insurance, they might transfer him to a real person, a live agent who would screen him again,

testing him to see if he's a real customer. For Nathan, this starts to feel like a game. It's like he's turning the tables on the telemarketers. Now he is the one trying to keep them on the line, trying to sweet-talk them, trying to get to the next level. Sometimes you'll go through an agent or two, and then they'll transfer you to a name that you know. So then you're like, oh, big company X is the one who's actually behind this. Sometimes the only way to gain their trust is to give out personal information. Nathan's told

people his real name, his address, his social security number. He even bought and returned an entire vacation package just to get that company's information. Over time, Nathan gets better and better at the game, at convincing mysterious telemarketers to divulge who they work for. If they've come to have reason to think, hey, this guy might be a paying customer, to think, hey, this guy might be a paying customer. Then you can maybe drop a little like, well, can I see a website? And when they crack, that does feel good. But just having the name of a company wasn't enough. Nathan still had to figure out how to file a lawsuit. I went down to the local court clerk, and I just asked for paperwork. How do I start a lawsuit? And they had these forms that you could just literally fill out or handwrite. Nathan could have hired a lawyer to do

all of this, but when he crunched the numbers, he realized that just a few hours of a lawyer's time might cost more than one of these cases would be worth. So he decided to do it all himself. these cases would be worth. So he decided to do it all himself. Like, I have a law degree and I would never do a lawsuit by myself. I don't know what to tell you. Maybe I shouldn't either. Like, I've literally done everything wrong before I figured out doing it right. Once again, Nathan goes to the internet. Well, I Google summons, didn't really see anything. I asked the court clerk, okay, what's a summons? It just has your name.

It has the name of the court. What, what, what, what, what, right? So I'm like, oh, okay. So I just went home and made one. Nathan says he found out a few months later that his summons letters were kind of janky. Like there's actually an official form letter he was supposed to use. I don't know what opposing attorneys thought when they saw something that I just typed up. The lawsuits that Nathan was filing and sending off, they were pretty simple. You know, under the Telephone Consumer Protection

Act, this company called me illegally five times. So they owe me five times $500. As soon as he sends out a few of these summons, he starts getting some very different calls on his phone from lawyers wanting to settle out of court. The lawyer said, if you sign this NDA and go away, we'll cut you a check for a few thousand dollars, which was enough money that Nathan would say, sure, hand it over and I won't tell a couple of nosy journalists any legally sensitive specifics. They weren't amounts that you'd run around the neighborhood and be like, wow, look what I did, right? Now, later I have settled maybe for some larger amounts, but the first amounts were not particularly noteworthy, in my opinion. But still, like, it's money. It's like, it's a win. That's got to feel satisfying.

Yeah. I mean, it feels satisfying in that you think you're making your life better, right? You think that, okay, I settled. I'm on my way to getting less calls. This is what I wanted to do. And yeah, you know, the next vacation is going to be a little sweeter. So Nathan's plan seemed to be working. He was making some money, and more importantly, he was sending a message to these companies. Put me and my kids on the real do-not-call list or suffer the legal consequences.

But the calls kept coming. Like, Nathan even got a call while we were talking to him. Recorded line. Right away, Nathan starts doing what he always does, trying to ferret information out of this guy. I'm with Ryan, real estate, R-I-A-N. Oh, uh, uh, out of Portland, right? Uh, yes, sir, that's where it originated out of, yeah.

Um, corporate office in Dallas, Texas now. Nathan says, please do not call me again, and he hangs up. It sounded like you recognized that name, because I thought you had a lawsuit against some Ryan group. There's a piece of paper that says I cannot answer that question. Interesting. But on a completely unrelated topic, some companies don't learn from history. That is true. Now, the question you should be asking is, have I ever sued a company three times?

Have you ever sued a company three times? Yeah. They called, got sued, called, got sued, and then I notified them on the third one and they paid out without it being filed. Nathan says maybe one out of a hundred calls he's able to trace back to an actual company that he can sue. He gets into a groove. He's spending about 10 hours a week investigating telemarketers, filing lawsuits, negotiating with lawyers, and collecting checks. Nathan wouldn't tell us how much money he's made from all these lawsuits. He says a lot of that information is tied up in the

NDAs. But let's just do some back of the envelope math here. He's fired off more than like two dozen lawsuits. And if each lawsuit is worth a few thousand bucks and a couple of them are worth a lot more, he could be pulling in six figures. Six figures. And that's not that unusual. We talked to another guy who said he's made $120,000 off of suing telemarketers.

It paid for his MBA. And get this, he even used the leftover money to buy a bar. It's called the wrong number bar, you know, because all those telemarketers, they called the wrong number. Womp womp. Over time, though, Nathan realizes that not all of these telemarketers are easy pickings. Some of them, instead of offering him settlement checks, they fight back. And we're not talking small claims court anymore or even state court. They take him to federal court. These are the big leagues, legally speaking. Well, not technically. Anyway,

the telemarketers say, when you pressed one for more information when we first reached out to you, that was consent. Or they would say, we only have your number because you entered it in on some form on the internet asking us to call you. And now you're suing us after basically begging us to call you? That is fraud. That's basically what a telemarketer argued in one of Nathan's cases from last year, that Nathan baited their calls. They were also like, your honor, this guy's not a real victim. He's a grifter.

Look at all these other lawsuits he's filed against honest, hardworking phone sales professionals. And this telemarketer convinced the judge that Nathan's case was so frivolous that Nathan should have to pay their legal fees. How much money did they ask for? Well, they asked for like $160,000. What? That's what everybody's reaction was. We reached out to the telemarketers on the other side of the case through their lawyers.

They declined to comment. After the break, what does this ruling mean for Nathan's bottom line? And for the system of crowdsourced justice that depends on people like Nathan to enforce the law. surprising number of you. My favorite part of the tax code. Had thoughts. My least favorite part of the tax code. My two favorite parts of the tax code. Section 529. 415. 7502. 1.162-22. A bunch of tax loopholes we could not fit into our regular episode of the show. That's in our most recent bonus episode for Planet Money Plus listeners. If that's not you, it could be. Check out the link in our episode notes. If you, like Nathan, start getting into suing telemarketing companies using the TCPA, it's probably only a matter of time before you will encounter this guy.

My name is Eric Trautman. I'm the czar of the TCPA. That is not an official title, but Eric is a big deal in the telemarketing world. He's one of the go-to defense lawyers for companies that have been hit with a TCPA lawsuit. To Eric, this law is all kinds of broken. For one, Eric says the people suing telemarketers, they're not all upstanding, honest citizens. all upstanding, honest citizens. You know, there's instances where someone might go off and buy 80 cell phones just so that they can collect wrong number calls. And there's a ton of that.

And there's instances of people filling out forms online and then pretending that, hey, it wasn't me, it was somebody else. Maybe 80 is a bit of an exaggeration, but Eric did defend a case where a woman kept like 30 cell phones in a shoebox just to file TCPA lawsuits. She even described that as her business. Eric argues people making a living bringing these lawsuits was never the point of the TCPA. And some judges agree. They're starting to punish people who they think are abusing the law. The courts don't like to think that somebody is inviting calls and then

turning around and suing for them. And some defendants are pushing very, very hard to make sure that the people who are inventing these lawsuits are going to pay for it. But Eric says in the grand scheme of things, individuals like Nathan are small fry. The real problem is the way the TCPA allows these giant class actions where someone brings a lawsuit not only on behalf of one client, but on behalf of all the people that a company has ever illegally dialed. Think about that. $500 a call multiplied by millions of calls. I'm talking, right, eight-figure settlement. Tens of millions of dollars. That is how insane these statutes are. Back in the 2010s, there was a huge wave of class action lawsuits

against big household name companies, and Eric represented a lot of them. What were some of the companies that got tangled up in these settlements? Every single bank and finance company you can think of. The largest on record until just last year was Capital One. They had a $75 million settlement. It seems like those big lawsuits made a difference. They kind of freaked everybody out. And so in the past few years, companies, at least the big legitimate ones, have become a lot more careful about following the law. So isn't that a positive thing?

Well, I mean, look, the way I look at it, that's like saying, you know, if you want someone to behave, you just put a gun to their head and say behave, right? Well, yeah, but there's other ways to do it. Eric says, come on, this can't be what Congress really intended. All these plaintiffs, attorneys ginning up massive lawsuits in the name of people who maybe didn't even care about these telemarketing calls in the first place. And we're going to take you for $10 billion and we're going to put you out of business unless you pay me $20 million, right? It's absolute extortion at the highest level. And so, you know, does it create incentives to comply? Yes, it does. No, no question. Yes, it does. But you could create that same incentive without this really heavy-handed remedy that just, it threatens to put American businesses out of business over what? Over nothing, you know, comparatively over nothing. And Eric says these big lawsuits could actually have made the spam call problem

even worse than before. They may have discouraged big public-facing companies from using illegal telemarketing, but a lot of smaller telemarketing outfits are still willing to bend the law. And these bad actors have gotten way more sophisticated at hiding their identities and tricking people into giving their consent to get even more phone calls. And lately, they've added one more move. Going after the people who sue them. Taking them to court for fraud. As I often say, it's not for someone who's green of horn.

You can't just walk into this environment and expect to survive. You'll get eaten alive on both sides. The TCPA has turned telemarketing enforcement into a kind of market. Like, instead of having a central government agency deciding this is how much law enforcement we're going to have, the amount of enforcement goes up or down depending on the incentives. How easy is it to hunt down a company making illegal calls? How much does it cost to bring them to justice? Can you find efficiencies of scale by bringing lawsuits on behalf of millions of people all at once?

And of course, as with any enforcement regime, the lawbreakers are also weighing their costs and benefits. Telemarketing is a multi-billion dollar business. How much can a telemarketer make on each call? How much financial risk is worth taking on to sell some vacation packages over the phone? And so when you're thinking about the world that we are living in, where your phone rings five times a day with calls from potential spam, that is the equilibrium that this market has found. The result of all these different incentives playing off of each other.

And if you look at it that way, the reason for this ongoing spampocalypse, maybe it's just a problem with the incentives. Right now, it doesn't make financial sense for most people to spend the time and money to file these lawsuits. As for the people who are filing these lawsuits on their own, like Nathan, there are things besides the money motivating them. There's a sense of indignation of not wanting these companies to get away with it. And a sense of duty that by filing these lawsuits, the rest of us might eventually get fewer unwanted calls. A lot of things as a good citizen you do, not because you're going to get money back in your pocket, but because that's what a good citizen does. In the end, Nathan did not have to pay the $160,000 to those telemarketers. He finally hired a lawyer, the judge knocked it down to $40,000,

and now Nathan is appealing everything. He thinks there's nothing wrong with using the TCPA to file a lot of lawsuits against telemarketers if telemarketers refuse to stop calling him. Nathan says the calls have slowed down a bit. He's getting about half as many as before. And he's still holding on to this dream that he started out with. I see a future where I can have a nap with my phone on and the phone doesn't ring. And that I can call my kids and the phone rings and they answer it. After all, Nathan says, that's what the law was supposed to do in the first place.

Are you using an obscure law to take on a shadowy industry? Tell us about it. You can email us at planetmoney at npr.org or find us on all things social at Planet Money. One more thing. You may have heard Planet Money started a record label to put out a song. That song is called Inflation. It's sung by Ernest Jackson and Sugar Daddy and the Gumbo Roo. Stream it and download it wherever you listen to music.

This episode was produced by Willa Rubin with help from Nikki Ouellette. It was edited by Keith Romer, fact-checked by Sarah Juarez, and engineered by Gilly Moon with help from Robert Rodriguez. Special thanks to Chris Frischella and Anthony Peronic, and to Omar Khoury, the guy who bought a bar with the proceeds from his telemarketing lawsuits. Omar says he's been in touch with Eric Troutman, the defense attorney, and he might even name a drink after Eric. It'll be called The Czar. I'm Alexi Horowitz-Ghazi.

And I'm Jeff Glow. This is NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.