Telecoms fraud is increasing at an alarming rate in Asia Pacific and is one of the biggest sources of revenue erosion for every telecoms operator. Unfortunately there are no detailed statistic available to fully understand the extent of telecoms fraud in the region: many operators hesitate to come out into the open about the full extent of their losses from telecoms fraud as they are concerned about loss of customer confidence and impact on brand reputation.
One particular type of fraud, International Revenue Share Fraud (IRSF), is the most prevalent telecom fraud type in the Asia Pacific region. Total measured losses from IRSF alone at a global level stand at $ 6.1 billion in 2017, according to the Communications Fraud Control Association (CFCA).
But why are operators, with all the resources at their disposal, unable to prevent telecoms fraud?
Jurisdiction limitations
Telecom fraud is now a multinational business - two-thirds of all fraud losses are tied to international traffic. For example: A fraudster buys SIM cards in country A, travels to country B and makes thousands of calls to premium rate numbers in Country C. Through many ingenious schemes such as this one, fraud is detected but fraudsters are not: they move from country to country, operator to operator.
Operating hours
Most operators and victims work 9 to 5, but fraudsters work 24x7. PABX fraud, another prevalent type of fraud, is usually committed during weekends or public holidays. Fraudsters hack into the PABX systems of the enterprise and make thousands of international calls. The company and operator only become aware of the fraud when billing time comes around: it’s too late by then.
Delayed intelligence
While operators have great visibility over their own networks they have severely limited visibility of global fraud trends, often learning about a fraud only after it hits them. Roaming has become a preferred vehicle to carry out international telecom fraud simply because it introduces delays in fraud detection which may last anywhere between hours and days, until reconciliation takes place. Some investigations and prosecutions take up to a year to complete, according to the CFCA 2017 Global Fraud Loss Survey.
However, the cost of fraud is huge. Apart from the direct revenue losses arising from fraud operators suffer from a number of significant indirect costs including customer dissatisfaction and churn, increased customer service costs and a tremendous reputational impact when they have been hit by fraud.
Strength in numbers the key weapon in fight against telecom fraud
The historical ‘write it off’ approach is no longer a viable option for operators and the industry needs to go on the offensive in fighting fraud. While the criminals behind fraud are shadowy and difficult to track down, the telecoms community has strength in numbers.
If the telecoms industry wants to succeed in its battle against fraud, operators need to co-operate. Operators and service providers need to work together to develop dynamic, real-time anti-fraud tools, so they can detect telecom fraud as it happens and take real-time preventive action. Fraud creates very specific, abnormal traffic patterns as it moves across networks.
SMS fraud can be reduced or eliminated by using a reputable and secure SMS hub that can close any ‘open doors’ and route traffic through official routes. Through deep dive analysis into network traffic it is possible to detect fraudulent traffic, which can be rerouted through legitimate routes or even blocked if necessary.
To protect operator networks from signaling fraud, a firewall approach at the signaling level is advisable to detect fraudulent traffic patterns or anomalous messages. This is particularly effective in dealing with roaming-specific fraud types.
To prevent voice fraud, operators may use and benefit from the experience of other fellow operators. By adopting a co-operative approach and getting a ‘crowdsourced’ view of cross-network traffic patterns, operators can observe and detect fraud as it happens and block it before it enters their networks. This will ensure they are not hit by fraud schemes and fraudulent numbers still active globally.
With bottom lines under tremendous pressure it is now time for telecoms executives to invest and collaborate in fraud protection solutions that will safeguard their networks from attacks effectively and proactively.
Malcolm Chan is managing director for Asia-Pacific at BICS