Call Toll Fraud

46.3 Billion Reasons to Invest in Call Toll Fraud Prevention

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I remember the summer of 1972 as one hell of a hot summer. We were a bunch of kids on summer vacation without much to do. Our daily routine was mainly playing football in the deserted schoolyard and searching for other “exciting” activities the rest of the day.  One day we decided that it would be much “cooler” to stay indoors in the classrooms. So we broke the lock of one of the classroom and entered. I don’t remember exactly what we did in the classroom but what I do remember is that for some reason we decided to remove the blackboard (in those days it was really black and heavy) and take it with us through the window. But we had no clue of what to do with the loot! That took place more than 40 years ago and I still can feel the bitter taste of helplessness kids standing on the schoolyard with stolen blackboard

Call Toll FraudI have cool job in AudioCodes. Together with my colleagues, we are working on next generation products. A few months ago, I came up with a “revolutionary” idea as to how to prevent toll fraud using big data technologies.  I met with our security expert and presented my idea. He gave me an “offering my condolences” look saying – who cares about toll fraud? Who needs to fraud when calls are so cheap? And I felt again like I did 40 years ago, defeated, sweating, carrying a huge blackboard, and this time alone. But I didn’t give up, I decided to check the numbers.

The CFCA 2013 Global Fraud Loss Survey

The Communications Fraud Control Association (CFCA) published a fascinating report, “the 2013 Global Fraud Loss Survey”,  taken from fraud and security experts working within the industry who are directly involved in identifying and stopping communications fraud.  Responses were received from 93 Communications Service Providers (CSPs) located throughout the industry and around the globe. The CSPs included companies both small (<1K employees) and large (100K+), and covered wireless, wireline, broadband, and narrowband service providers. The CSPs reported providing service in multiple areas including: voice, data, financial services, and content distribution.

According to the survey, the estimated 2013 Global Fraud Loss was $46.3 Billion (USD) annually which is approximately 2.09% of total telecom revenues. Here are some interesting findings from the survey.

Top 5 Fraud Methods Reported

  • Subscription Fraud
  • PBX Hacking
  • Account Take Over / Identity Theft
  • VoIP Hacking
  • Dealer Fraud

 

Top 5 Fraud Types Reported

  • Roaming Fraud
  • Wholesale Fraud
  • Premium Rate Service
  • Cable or Satellite Signal Theft
  • Hardware Reselling

Top 10 Countries from which Fraudulent Calls Originate:

Ten countries account for 35% of the originating global fraudulent calls

Top 10 Countries from which Fraudulent Calls Originate

Top 10 Countries from which Fraudulent Calls Originate (CFCA)

 Top 10 Countries where fraud terminates:

I find this  graph to be amazing as many of these top ten are relatively esoteric countries (sorry for the non-politically correct language) and are the destination of more than 40% of the fraudulent calls!

Top 10 Countries where fraud terminates

Top 10 Countries where fraud terminates (CFCA)

 Estimated Fraud Losses by Service Type (in $USD Billions)

 

This pie chart shows that calls (PSTN & VoIP) comprise of more than 50% of the fraud service types

Estimated Fraud Losses by Service Type

Estimated Fraud Losses by Service Type (in $USD Billions) (CFCA)

 

According the survey, the companies that are subject to fraud don’t report this to law enforcement for the following reasons:

  • Debt recovery pursued through civil means
  • No faith in the judicial system to administer the right punishment to deter others
  • No perceived value to the business
  • Not referred due to lack of evidence
  • Perceived lack of interest by law enforcement to take the case
  • Perceived lack of understanding by law enforcement to pursue the case
  • Lack of resources

 

Conclusion

According to this survey, losses are huge and the fraud trend is definitely on the rise. From estimated total global revenues of $2.214 trillion (USD) in 2013, the estimated loss due to fraud is $46.3 Billion (USD), or 2.09%. The estimated total global revenue has been growing by 3.7% since 2011 where the Estimated Global Fraud Loss is growing by 15.4%!

So what do I hope are the main takeaways from this blog post?

Firstly, don’t write posts which can incriminate you or that you don’t want your kids to read. And, don’t break into school classrooms! And now seriously… Don’t give up on your ideas, even if the “experts” say they aren’t worth anything. Fraud detection applications are absolutely viable, According to the survey, toll fraud doesn’t occur often, but when it does hit, it can be financially painful.  And what’s amazing is that CSPs and other organizations prefer not to report to law enforcement since they don’t want to be tagged as low security firms. Additionally, they also lack the confidence that there is a real chance to expose the “faceless” net criminals.

Stay tuned for my next post on how to prevent toll fraud using big data tools.

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