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. 


August is known to be the busiest month out of the year for telecommunications fraud, as criminals take advantage of summer plans and holidays. This summer is likely to bring with it a host of new exploits and attacks – and you must assume that your company will be targeted. This summer telecom operators should spend their time bolstering their security efforts, through the adoption of increased technology and awareness training.

Roaming Fraud is on the Rise

Telecommunications fraud is not isolated to any particular network or country. Telecommunications services are now truly global, with new regions continuously opening up – and with them, new avenues for fraud. Telecom operators are already preparing for changes in EU data roaming rules and higher-risk roaming, additional telecommunications services, increased numbers of telecommunications devices, and seasonal increases of telecommunications fraud along with declining revenues due to the impact of other disruptive technologies such as OTT.

The Internet of Things has substantially changed the landscape for telecom service providers, with a multitude of devices now having the ability to initiate or facilitate fraudulent and malicious attacks. As network activity increases overall throughout the world, so too does the number of fraud attempts, and the number of telecommunications fraud vectors. Changes in roaming rules are already responsible for increased levels of fraud as consumers become less vigilant about managing their own charges and fraudsters exploit the new fraud opportunities these changes have provided them with.

But that’s not all – telecommunications fraud also tends to go up during the holidays and summer. With more people traveling and being active, there are more opportunities for fraudulent charges. This is especially true when customers are abroad or making plans to go abroad. Many known fraud attempts involve connections on an international level, and these can be some of the most costly to contend with.

With all that in mind, how can telecom operators combat the rise of telecommunications fraud? By creating a comprehensive telecom fraud management strategy. Telecom providers need to prepare now for the risks that are certain to come.

Taking Steps to Minimize Telecom Fraud

Telecommunications fraud is frustrating to the consumer and costly for the service provider. Telecom operators must take steps to minimise fraud if they want to protect their revenue and provide the best customer experience.

A solid telecom fraud management strategy consists of two parts:

An automated fraud solution: All operators must have a comprehensive fraud solution, which will automatically detect and mitigate the signs of fraud across their network. It is not always possible for a human agent to identify these signs, and consumers will often be unaware that fraud has occurred on their account until well after. Automated fraud solutions are able to do the work of many people, automatically scanning for and identifying potentially malicious actions. Even better, these fraud solutions are able to scale up easily, thereby allowing the telecom service provider to grow without an increase in security risk

Improved training and awareness: Telecom service employees must be trained to properly identify the signs of fraud and to escalate to a supervisor when needed. Though many fraud attempts will be detected by the automated fraud solution, there are types of fraud that can occur at the service, customer, and employee level. These types of fraud are often “social engineering” attempts, which employees must be able to recognize and respond to.

Some actionable steps telecom operators can take to avoid fraud this summer:

1. Reduce the lag between when calls are made and when these time stamps are logged, to combat International Revenue Share Fraud (IRSF) in particular – a type of fraud that involves generating traffic to expensive international revenue share numbers.

2. Broaden the scope of the fraud monitoring function. Fraudsters adapt their own modus operandi to counter common prevention and detection strategies that they know telecom operators will implement. A good example is country or range blocking. In February 2017, 42% of all International Premium Rate (IPR) test numbers advertised related to the top 10 fraud destinations. In July 2018, the top 10 destinations only account for 23% of the IPR test numbers advertised. There are now over 220 countries and territories being advertised as revenue share destinations, so monitoring only high-risk destinations is no longer effective.

3. Install an early detection service for Wangiri fraud (“one ring and cut”) – particularly fraud that diverts traffic illegally or “cons” users into returning missed calls to high termination rate destinations.

4. Implement and maintain a detection service for SIM Box Fraud, which is a type of fraud that involves using the internet to terminate calls on local SIM cards to sell international minutes.

5. Only resell minutes to reputable parties to combat “arbitrage,” the practice in exploiting settlement rates between countries for a profit.

6. Use monitoring equipment to detect more complex types of fraud such as OTT hijack attacks, or hacks into VoIP systems.

Though fraud attacks are going to be increasing through the summer, they aren’t going to go away once the holidays are done. Due to the IoT, new regulations, and the general increase in global traffic volumes, fraudulent attacks are going to be an ever-increasing threat. Businesses must take action now if they want to prepare themselves and prevent the possibility of a costly fraud attack.

If you want to learn more and minimize your fraud risk, reach out to XINTEC today.