How KYC can Help with Robocaller Crack Down

Telemarketing has long been a vital tool for businesses to engage with potential customers. However, it has also been a significant avenue for fraudulent activity. Scammers often impersonate legitimate businesses or government entities to deceive consumers. This can result in financial loss, identity theft, and a lack of consumer trust in the telecom industry.

In response to these issues, Know Your Customer (KYC) practices have become more relevant in the telemarketing world. By verifying the identity of telemarketers and their legitimacy, telecom companies can mitigate the risk of fraudulent calls. KYC processes can help providers ensure that their customers are who they say they are, preventing fraudsters from using fake identities to commit illicit activities.

The FCC and KYC

The Federal Communications Commission (FCC) plays a pivotal role in shaping the regulatory landscape for the telecom industry. As part of its broader efforts to address telemarketing fraud, robocalls, and identity theft, the FCC has enacted several regulations that require telecom companies to implement KYC-related practices.

These initiatives include the TRACED Act (Telephone Robocall Abuse Criminal Enforcement and Deterrence Act), which mandates telecom companies to adopt the STIR/SHAKEN (Secure Telephone Identity Revisited and Signature-based Handling of Asserted Information Using Tokens) protocols.

STIR/SHAKEN is a framework designed to authenticate caller ID information and prevent call spoofing. Though it is not strictly a KYC regulation, it incorporates elements that are consistent with the goals of KYC in the telecom industry—mainly verifying the legitimacy of phone calls and protecting consumers from fraudulent activity.

The key KYC related principles to gain from the TRACED Act and STIR/SHAKEN are:

1. Caller Verification: The law requires the implementation of caller ID verification methods to ensure calls are from legitimate sources. This includes measures to authenticate the caller’s identity, preventing fraudulent or spoofed calls, a process that mirrors KYC practices by ensuring that telecom service providers know their customers and what calls they are originating.
2. Call Authentication Record Keeping: Providers are required to keep accurate records of call authentication data. This aligns with KYC principles by ensuring that the entity originating the call can be identified, and that any fraudulent or suspicious activity can be tracked and blocked.
3. Provider Accountability: Telecom providers must take responsibility for ensuring that the calls they carry are properly authenticated and traceable. Recently, the FCC has begun taking a harsher stance against telecom providers by holding them accountable for illegal activity across their networks, such as implementing fines or network shutdowns in the event of non-compliance.

The Future of KYC in the Telecom Industry

As the telecom industry continues to evolve and the regulatory environment tightens, the role of KYC will only become more critical. Telecom providers will need to stay ahead of emerging threats, adapt to new technologies, and comply with evolving regulations.

Evidence of this is found in the FCC’s approval of the Notice of Proposed Rule Making (NPRM) for Strengthening Call Blocking Rules at their open meeting February 27th. The NPRM seeks to extend the FCC’s authority over telecom providers, requiring them to more actively block fraudulent or unwanted robocalls from reaching consumers. At the heart of the NPRM is a proposal that would give telecom companies more flexibility to proactively block calls that are likely to be fraudulent or “spammy,” even before they are received by consumers.

This proposal is part of the FCC’s ongoing efforts to crack down on illegal robocalls and spoofing, which have been a persistent problem for consumers and a major source of frustration. As the regulatory landscape progresses, the telecom industry will need to continue innovating and adapting its KYC processes to ensure that both consumers and businesses are safeguarded from the growing threat of fraud in the digital age.

If you have any questions on implementing KYC guidelines or how these principles can apply to your business, please contact us as connect@compliancepoint.com.