How small VOIP operators in the US are being used to perpetrate robocall scams related to social security, COVID-19, and more
Wall Street Journal : Tweets: @hoofnagle , @bysarahkrouse , and @ryanjtracy Tweets: Chris Hoofnagle / @hoofnagle : WSJ: “When you receive a robocall, chances are someone like Nick Palumbo collects roughly $0.0024 a minute. Those fractions of a cent can add up to millions of dollars...” https://www.wsj.com/...? Sarah Krouse / @bysarahkrouse : Small carriers are a key link in the U.S. telecom system. They can also open the door to scams. Now, federal authorities are taking aim at some of them https://www.wsj.com/... w/ @ryanjtracy Ryan Tracy / @ryanjtracy : Why can't we stop robocalls? Here's a big reason: neighborhood carriers that route them to your phone. https://www.wsj.com/... w/ @bysarahkrouse
Context & Ripple Effects
The Wall Street Journal's reporting follows the money rather than the calls: operators like Nick Palumbo collect roughly $0.0024 a minute for carrying robocall traffic, so small VOIP providers profit from volume even when the content — social security and COVID-19 scams — is fraudulent. Federal authorities are now probing some of these carriers directly.
This widens an enforcement arc that started with the callers themselves: the FTC shut down four robocalling companies responsible for billions of calls in 2019, and Congress followed with the TRACED Act's $10K-per-call fines and STIR/SHAKEN mandate. The new front is the intermediary layer that made those earlier targets possible.
First-order effects
- Small VOIP operators named in or adjacent to federal probes now face legal exposure and the threat of being cut off by upstream carriers, threatening the per-minute revenue model the WSJ documented.
Second-order effects
- Larger carriers, already obligated under the TRACED Act to deploy STIR/SHAKEN, are pushed to police their smallest downstream customers more aggressively — raising onboarding and compliance costs for legitimate small VOIP businesses.
- Scam operations respond by migrating across the same weakly-governed channels seen elsewhere in the corpus, from fraudulent overseas call centers running tech-support scams to cheap SMS-redirect services like Sakari — enforcement against one chokepoint displaces activity to the next cheapest one.
Third-order effects
- If regulators keep following the money up the stack, liability for phone fraud settles on carrier infrastructure itself rather than individual scammers — the same accountability gap exposed by US carriers' slow adoption of real-time SIM-swap data sharing with banks.
- Per-minute interconnect economics become the structural vulnerability: any network tier paid purely for volume has an incentive to look away, inviting rules that condition payment on verified caller identity.
The trend: US telecom fraud enforcement is migrating from the scammers who place calls to the small carriers who profit from carrying them, with identity-verification mandates like STIR/SHAKEN turning compliance into a competitive filter.