Telecoms fraud: minimising the risk

11th June 2014  by Union Street

It’s no secret that telecoms fraud has become one of the most widespread and damaging problems facing the telecoms industry today.

Telecoms fraud comes in all shapes and sizes and impacts across the sector in a number of ways, ranging from attacks against interconnect traffic to direct attacks on PBX and even situations where multiple PBXs are hacked in order to create major challenges in both detection and investigation.

An increasing difficulty is the international nature of fraud which makes identifying and subsequently prosecuting frauds nigh on impossible for resellers and authorities alike.

Quantifying exactly how much of a financial impact fraud has on the industry is difficult due to the complexity that is associated in recording losses and the surrounding sensitivities that go with a company declaring they have been
a victim.

Despite these difficulties the Telecommunications UK Fraud Forum (TUFF) estimates that the telecoms industry suffered losses of around £953 million in 2011, a figure based on an average loss of 2.4 per cent against the total operator reported revenue of £39.7 billion.

One thing is certain and that is that most resellers will have encountered fraud at least once, and many companies will have come up against fraud on multiple occasions. New start-ups that haven’t taken the threat seriously are particularly vulnerable and easy targets for fraudsters, the percentage loss for such companies has been known to reach as high as 15 per cent!

The matter of how to deal with a customer that has been the victim of fraud can also be a thorny issue. In most contracts it will be the end user that is ultimately liable for the cost of fraud and there are many situations where resellers will follow the letter of the law, placing the responsibility for the overall fraud management onto the
customer.

This approach can save money in the short term but will inevitably damage the customer relationship, jeopardising the future of that relationship and possibly the reseller’s reputation in the long term.

Many resellers believe that it’s better to take a more diplomatic approach and by sharing the costs of fraud and providing advice on fraud management as part of the service, customer loyalty can often be maintained. Resellers taking this approach are often viewed as market leaders and the people to do business with.

Regardless of which approach a reseller takes when reacting to a fraud event, the effects will always be damaging to some extent. So what can resellers do to proactively prevent fraud?

Educating customers early should be a priority for all resellers. To overcome fraud customers need to know the risks and resellers should aim to engage with their customers in a way that doesn’t scare but educates on the risks and the best practices to deploy in order to reduce or avoid these risks.

For example if a business only trades locally or nationally why should they need international access on the lines?

Or if a small office is closed between Friday and Monday does it have to leave office equipment fully operational? This is particularly important during long holiday breaks such as Christmas and Easter and measures such as these can prevent fraud from ever occurring.

Raising awareness on the latest scams can also help to cut down on the occurrences of fraud.

One thing that Union Street has done to assist our reseller and carrier customers in this process is to join TUFF, which means we’re kept informed on the latest trends and developments in the area of fraud and fraud detection. We are then able to share this information with our customers who in turn pass this knowledge onto their customers.

By sharing information in this way we are able to raise awareness and keep customers up to date on the latest risks and how these can be proactively addressed.

In addition to proactively raising the awareness of fraud, technology is also playing a pivotal role in the early detection and mitigation of fraud when it occurs.

There are now a number of products and services on the market that can assist resellers to both detect and, where necessary, close down fraudulent activity in a much more timely manner than even just a few years ago.

Union Street’s LineGuard module of the aBILLity billing suite can for example use multiple algorithms to analyse CDRs and detect unusual calling patterns and charge rates in a customer’s account.

Once detected, LineGuard can automatically use aBILLity’s WLR3 interface to put a bar on further calling to the suspect numbers, ending the fraud event as quickly as possible and greatly reducing the cost of fraud.

Resellers should aim to select carriers, billing software providers, CPE manufacturers and other suppliers that provide the tools to detect and stop fraud early, and question their suppliers to be sure that they understand the various technical aspects of equipment and services that they are offering to their customers.

By putting as many technological hurdles in place as possible, resellers can dramatically reduce the potential for fraud.

In a wider sense, a solution to fraud can only come about through team work, with all the players in the industry being proactive in the space of fraud and fraud detection.

Inevitably fraud continues to evolve to reflect change. So as communication infrastructures improve to combat fraud, fraudsters will continually find ways around systems’ security. It is therefore essential for the industry to work together to develop telecom systems to be as robust against fraud as they can be, ensuring that any weaknesses are quickly identified and closed off.

There will always be people who look to exploit weaknesses in systems and equipment, and it’s likely that frauds will always pose challenges to the industry in one way or another, but by combining our experience and efforts we should be able to have a serious impact on their efforts.
To find out more about LineGuard, Union Street’s Telecoms Fraud Management system get in touch with one of our experts.

 

Authored by Gareth Pritchard, Marketing Manager for Union Street

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