by Colin Berkshire

I have long condemned credit card companies because they profit on credit card fraud. They collect 3% fees from retailers on all fraudulent transactions, and then when the charges are disputed they again collect $10 to $25 in service fees per disputed amount. The retail store pays these fees, not the credit card company. The fees are actually a profit center for the credit card companies. Worse, when there is fraud the retailer must eat the transaction, the credit card company doesn’t reimburse the retailer.

So the credit card companies have a hundred-million dollar source of revenue (fees from fraud) that costs them nothing. They have every incentive to encourage fraud. They don’t care what it costs merchants.

The carriers have a similar scam going on. It is the spammers…

Every time a robo call spammer calls a number they pay a very small access fee. It is a fraction of a cent per call. It is carefully set so that it is not so much that the spammers cannot make a profit. But it is enough that it is 100% profit for the exchange carriers. Of the billions and billions of robo spam calls placed, the carriers make a small profit off each and every one of those calls. Then, they wash their hands and profess that it isn’t their problem and that there is nothing that they can do.

The carriers have a strong disincentive to stopping these spammers. Stopping them will cost tens or hundreds of millions of dollars of pure-profit revenue. So the carriers small while shrugging their shoulders.

Here is how to stop this heinous problem: Charge the caller 1-cent per call completed. Put that money into the Universal Service Fund and eliminate the monthly charges now slapped on each phone line. The math works out on this…

A 1-cent per call charge works out to $100 per 10,000 calls, and that is enough that most spammer scammers would no longer be profitable (assuming one call in 10,000 results in a $100 scam.)

A 1-cent per call charge would be enough to fully fund the universal service fund. So the tax could be dropped from all phone lines. (I propose that the tax be reduced each quarter by the amount of money collected in the previous quarter from the 1-cent per call fees.)

The spammer scammers are doing it for the profit. All of the profit can be taken out of their business easily, and in a way that benefits the public by reducing Universal Service Fund taxes.

We should do it, but we can’t look to the carriers to lobby for it because (lets be honest here) they are profiting from scammer spammers. The carriers in on this racket are no better than the credit card companies who encourage and profit from credit card fraud.