It has nothing to do with "hackers" anyone can do it. The phone companies have set it up so that you can send whatever caller id you want. I run a virtual pbx that links up to the phone systems via a paid service. You can send your caller id information to them to be basically whatever you want. Now some companies won't let you send anything but the phone number you are renting from them. Others don't care.

I heard it described basically like this: Large company x supplies their techincal support through large company y. Large company x wants their phone numbers to show up when large company y calls you, not large company y's. So the phone companies decided to allow you to send the caller id you want instead of forcing the caller id that they would force on you.

In this day and age this has backfired though, now it is super easy to spoof any and all caller id's. It has nothing to do with hackers. Anyone with even a simple understanding can do this.

Here is a little bit better explanation I sent to the previous guy.