Be Aware Of Telecom Fraud!

September 8, 2023

In the past few years, telecom fraud has become a significant threat jeopardizing operators’ revenues and leading to considerable financial losses. MNOs are quite challenged by this critical situation and are constantly striving to mitigate the risk of fraud. In the following blog, we’re going to identify major fraud types and understand their impact on MNOs.

Types of fraud

The main issue behind telecom fraud is that businesses are more likely to remain unaware of the breach until they receive their inflated monthly bill. Here are the main types of fraud that MNOs should be aware of:

  • International Revenue Share Fraud (IRSF):International Revenue Sharing Fraud (IRSF) is a deceptive scheme where malicious individuals exploit international calling routes for financial gain. These fraudsters employ premium rate numbers or expensive destinations to initiate unauthorized calls, imposing significant charges on unsuspecting businesses that fall victim to their tactics.
  • SIM Box fraud:SIM box fraud involves criminals taking advantage of local on-net calling rates by acquiring SIM cards in one country and utilizing them in SIM boxes to terminate international calls to subscribers on the network. By doing so, scammers only pay the subscription fee and the local rate, often supplemented with free minutes provided with the SIM card, enabling them to generate substantial profits.
  • Grey routes:SMS grey routing is when an SMS is sent through a legal channel initially, but at some point, travels through illegal channels before reaching its destination. Grey routes take advantage of the fact that international text messages can be routed to their destination using multiple pathways, each with its own cost calculation.
  • Phishing/smishing:Phishing occurs when fraudulent individuals pretending to be so-called companies or services send text messages, tricking recipients into clicking on links or divulging personal information.
  • SIM swapping:SIM swapping, also known as SIM jacking, involves fraudsters seizing control of an individual’s SMS messages and phone calls by transferring their phone number to another number under the fraudster’s control. As more companies, including banks, rely on one-time passwords (OTP) and two-factor authentication (2FA) delivered via text messages or phone calls, fraudsters are attempting to gain control over people’s phone numbers to intercept these security measures.
  • Callback Fraud:It takes advantage of weaknesses in Voice over IP (VoIP) systems, where attackers exploit vulnerabilities to initiate calls to a company’s phone system. They intentionally hang up after a single ring, prompting a missed call notification for the business. Unaware of the scam, when the business returns the call, they unintentionally connect to a premium rate number, leading to exorbitant charges.

The Impact of Fraud on Operators

SMS fraud can have several negative impacts on mobile operators. First and foremost, telecom fraud can result in significant financial losses; fraudulent activities such as premium rate SMS scams, SMS phishing, or unauthorized text messaging can lead to increased costs for the operator, including reimbursement of affected customers and potential legal liabilities. Not to mention that fraud is more likely to damage the reputation of mobile operators. More precisely, if customers fall victim to fraudulent activities facilitated through their network, it can erode trust and confidence in the operator’s services. This may lead to customer churn and a negative perception of the operator’s security measures. Hence, customer dissatisfaction.

Furthermore, SMS fraud campaigns often involve sending a massive volume of messages, causing network congestion, which can degrade the quality of service for legitimate users, leading to delays, failed message deliveries, or disruptions in service. Network congestion can also impact the operator’s infrastructure and require additional resources to mitigate the effects. Last but not least, Mobile operators are typically subject to various regulations related to consumer protection and telecommunications. SMS fraud incidents may lead to regulatory scrutiny, fines, or penalties if the operator is found to have inadequate security measures or fails to take appropriate action to prevent or mitigate fraud.

How to fight fraud?

To address this threat, mobile operators ought to be proactive and implement drastic measures such as SMS filtering, and fraud detection systems. Not to mention that they should educate customers about potential scams and collaborate with industry partners and authorities. On the other hand, to shield operator networks from fraud infiltrating at the signaling level, adopting a firewall approach is highly recommended. This proactive strategy enables the detection of anomalous messages or fraudulent traffic patterns, providing an additional layer of protection.