In 2017 alone, the CFCA estimated that US$29 billion was lost due to telecom fraud. Telecom fraud is four times larger than credit card fraud, yet it’s less often discussed in the media. Telecom companies need to protect themselves through the use of reliable telecom fraud management solutions, if they want to avoid costly surprises for their customers. Most telecom companies will see some level of fraudulent traffic – whether they are able to identify this traffic will depend on the tools at hand.
The True Cost of Telecom Fraud
Telecom fraud occurs when malicious attackers take advantage of the telecommunications system to complete calls or transactions that benefit them financially. Methods of telecom fraud vary considerably across the world, though scams are most often perpetrated by highly organised criminals, operating either alone or in gangs.
For instance, a malicious attacker may entice customers to return a “missed call”, without the customer realizing that the number is a toll or premium number that will charge a significant amount of money to their bill or prepaid account. This is called a “Wangiri” fraud, a Japanese term that literally means one (ring) and cut.
In a security attack known as “phishing”, a fraudster will get access to a customer’s personal details to make purchases using their account, and subscribing to services without the customer’s knowledge. As individuals spend more time on their phones, using voice and data services, they become more vulnerable to these types of threats.
At a corporate level, malicious attackers may hack VoIP PBX systems to make long- distance calls, again to premium-rate numbers. The attackers could also take advantage of quirks in a telecommunications system to make it seem as though calls did not go through (by recording a false disconnection notice), while still charging for completed calls. Calls can be routed and transferred incorrectly, all of which lead to artificially inflated charges.
When telecom fraud does occur, someone has to pay – and often, that someone is the telecom company itself. Telecom companies can also lose money through wholesale interconnect charges, customer refunds, investigations, and additional customer support hours. Telecom companies may also eventually lose the faith of their customers, leading to fewer new customers and fewer customers retained.
Luckily, there are answers. Companies can reduce the cost of telecom fraud – and thereby improve their profitability – by avoiding telecom fraud altogether. This can be done with the help of an advanced telecom fraud management solution.
Mitigating Your Threats With a Telecom Fraud Solution
Using a telecom fraud management solution, your telecom business can prevent a significant fraud from taking place altogether — therefore potentially saving millions. A telecom fraud solution is able to automatically detect suspicious activity, making it easier for the organization to mitigate it before the damage is done. Some newer solutions are able to learn from past behaviours, identifying even threats that haven’t been seen before.
Many telecommunications businesses now use self-learning algorithms to identify the patterns on a customer’s profile. This is similar to fraud detection used for credit cards. With these patterns, the company can identify activity that seems strange for a customer, blocking suspicious payments and costly subscription fees. The smarter these algorithms are, the less likely they are to produce disruptive false positives.
Improving Profitability With a Telecom Fraud Solution
As discussed, telecom fraud itself is expensive, and a telecom fraud solution can help you mitigate threats. In so doing, telecom fraud solutions improve profitability in three major ways:
1. Mitigating direct costs:
There are direct costs of telecom fraud. Telecom companies will often need to audit and review their systems, and update their software, hardware, and business processes. Companies may also find themselves needing to reimburse customers for fraudulent charges, or absorbing costs that were fraudulently relayed across their system. All of this is going to lead to additional expenses.
2. Customer retention and brand reputation:
If a telecom company experiences enough fraud, it will get low marks from its customers and may not be able to retain customers. Customers will not trust a company that often falls prey to fraud, and they will not want to continue using a company on which they have experienced fraudulent transactions or charges.
3. Reduced labour and troubleshooting costs:
Telecom fraud management solutions are able to automatically enforce many security protocols, thereby reducing the amount of time that administrative personnel and IT teams need to spend tracking down and mitigating threats. Telecom companies may be able to reduce their internal IT staff by using automated fraud detection solutions for mundane and routine tasks.
Whether your telecom company is large or small, it’s probably already the target for malicious attackers. The time to begin protecting yourself and your business is now.