May 28

What makes Rachel from Cardholder Services tick?

Editor’s note: This is the second of four parts about the annoying “Rachel” from Cardholder Services telemarketing calls.  To read part one, click here.

Phone ReceiverPreviously, I wrote about the parties that seem as being behind those annoying calls from “Rachel” at Cardholder Services. This time, I want to consider the technology behind “Rachel”, and the way that the program works, and what it is going to take to stop her once and for all.

Since my background is telecommunications, breaking down how I suspect the system works will help to understand the means of stopping it.

How to produce 2.4 Million phone calls a day…

In a typical 12 hour window, there is no way, without thousands of people, to complete calls in the millions (as reports have indicated the volume “Rachel” achieves).  They have to rely on a system called a “predictive dialer” that takes a list of telephone numbers, places the call, and if a live person answers (it has the knowledge to know human versus machine, working and non-working numbers) play a recorded message.

You’ve probably experienced one before, either from your airline calling you with flight status updates, or a reminder for an appointment or even a survey (not to mention the political campaign calls).  This same system, if serving as a “cold call” system, has to cross reference the numbers in the “Do Not Call” lists, and not dial them.

This is where “Rachel” starts to break the law. The predictive dialer does not have the do not call lists loaded. Also the dialer could have been designed/developed before the passing of the do not call laws. Since predictive dialers typically cost in the range of $100,000 and up, the cost of upgrading it, particularly if it is older, might be prohibitive, particularly if the players are in it to make money.  A system sized to handle their suspected volume could easily be north of $500,000!

It’s not just dial tone anymore…

Using the aforementioned 2.4 million calls a day estimate, and basing it on a 12 hour day, would produce 200,000 calls an hour.  If each call typically lasts 15 seconds, it would need 926 phone lines to process that volume – and obviously that number would go up the more “live” responses they have.

Doing some math based on commercial phone service rates, a block of traditional phone lines of that size could easily run $20,000 a month, and that’s before the long distance charges!  Add to that the hardware to support that many phone lines, and you could easily see a one-time outlay of more than $250,000 just to get the predictive dialer going.

But, there’s a cheaper way, and I suspect this is part of how they’re doing it.  They are likely employing “Voice over Internet” (VoIP) services, much like Vonage or Skype uses, but on a larger scale.

A similarly sized Internet circuit that can process that volume of calls would only cost $3,000 to $4,000 a month.  Add to that the about $25,000 hardware costs, and getting off the ground is much more reasonable.

The use of VoIP also enables them to set up all those phantom numbers in various cities around the United States, thereby camouflaging their real office.  If the predictive dialer were “co-located” in an Internet Provider facility,  a real office may not even exist, and the only recurring costs is for the equipment space and bandwidth.

Taking abuse, one call at a time…

Boiler room operations, much like I suspect they are using to handle the calls from people who really choose to talk to a live agent, are in cities all across the United States.

Reports are that much of their hiring these days is by way of Craigslist.  The agents are usually paid a very low per-hour wage, but have the potential to earn a commission off of each completed sale.

HeadsetSince the turnover is high in these kinds of operations, and the pay so low, it is no doubt that many of the people being hired have criminal pasts, and are not subject to pre-employment background checks. This is despite the fact they are handling bank account, social security and other numbers.

This leaves the door open for identity theft to happen, and these people (if the company is not already doing it) can destroy your credit quicker than they can fix it.

Given a boiler room of 25 people is probably all it takes to handle the “live” calls, 5 days a week, 12 hours a day, the costs are likely $75,000 a month to staff the boiler room.

The bottom dollar…

If this organization is operating the way I think it is, they are probably incurring $85,000 to $100,000 per month in costs.  That means they would have to close about 4-5 deals a day at $1,000 a deal to break even. Double that deal closure rate and you can see the profits can really add up quick.

Again, these costs come from my experience, combined with the information I have been able to gather involving these operations.

Next time: What can we, as consumers, can do to (legally) fight back…

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  • I had the chance ask some contact sources close to, and knowledgeable about “cardholder services” some questions. I appreciate their response, and wishes to remain anonymous. The question was asked about the link between the predictive dialer, press “3” [or whatever # the robo gives] then connects to the chs/call centers, operating within the U.S. The answers are basically “from the horses mouth”, so to speak!

    “Here is the problem with the robo dialer, Most of them are not in the U.S. The government can go after these companies but cannot stop them because of where they operate“.
    “Most all [cardholder services] operations are in the US. Usually the only thing outside the US is the server or the “dialer”. Because the calls are being made from outside the U.S. there isn’t a whole lot the FTC can do.”

    Also, from another source:
    I asked;
    “Your obviously familiar with the “biz”, and aren’t happy with FTC. Why not show them how it should br done? And these “companies” Help us understand how it works, take it apart piece by piece as to find a weakness to make laws that will stop it for good!”

    “You are right I am VERY familiar with the industry. We were a service provider that offered a web driven solution for all who wanted to do any form of message delivery. We had 300+ customers , among them some did not follow the rules, despite contracts they signed with us saying they would. The FTC raided our company and put us out of biz in 2010, and left most of the customers alone, such as companies using the Rachel prompt. It will make you very happy to know, they punished us for everything our customers allegedly did and left us with less that you would be allowed to keep in Chapter 7. So your government has done a great job on us, not so great on actually stopping those who actually did the telemarketing.”

    “The pay off is that the many small call centers that use the Rachel prompt, sell the “leads” to a larger corporation that pays them for every lead, and stays off the radar of the FTC, because they obviously claim not to do any of this. I would not be surprised if it was fortune 500 companies buying the leads generated with Rachel.”

  • Petereseo

    Yes, A great technology which people can use by predictive dialer , they can save precious time, multiple call can be done, etc. So many business organization is using this system.

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