Protect your customers from the cost of telecoms voice fraud


CSP customers are losing US$48bn per annum due to fraud over the network. If telcos want to keep their subscribers, they’re going to have to do a better job of protecting them from telecoms voice fraud.

How do you prevent telecoms voice fraud?

Depending on your perspective, telecom voice fraud is either an extremely profitable or extremely costly business.  If you’re reading this blog, it’s almost certainly the latter! And that’s just the start of the bad news; worse, in the telecom industry fraud is booming.

And why not?  Compared to other methods of financial crime, telco fraud is reasonably low risk. Getting in and getting out (of the network, with the money) is a generally clean-cut process. Plus, many telcos are struggling to keep up their defences with only inadequate prevention measures in place. In the long run, this exacerbates the problem.

Worst of all, the end-users of network services; the subscribers operators rely on to achieve commercial success, are suffering.  A recent survey commissioned by the European Union found that 56% of all consumers were victims of one sort of fraud or another. Of those, 15% were defrauded via their mobile phones, another 14% via their landlines. While these figures are scary, there’s more to come.

Fraud hits customers directly – in their pockets

That’s because, according to the Revenue Assurance and Fraud Management Survey 2020, the cost of fraud to telecoms customers/subscribers is equivalent of 2.80% of CSP total revenue – a whopping $48 bn. That hits your customers where it hurts most – their own pockets.

For providers of communications services, those should be sobering statistics. Because money that disappears from the pockets of their customers, even if fraudsters are the direct culprits for that being the case, is the CSPs problem when the fraud occurs over their network.

The reality is that operators have a duty to protect their customers, particularly the elderly and vulnerable, and to help ensure that they not affected by criminal activity. This is a key point. And it follows that if telcos fail to protect their customers, sooner or later they’ll lose them to a competitor that takes fraud prevention more seriously.

And that’s something leading operators are now starting to do.

Things are bad, and getting worse

Just how bad are things for the communications industry? A report published by Europol’s European Cybercrime Centre, suggested that global telco fraud cost some US$32.7 billion (€29 billion) annually in 2019 and those figures are trending in the wrong direction. Ouch!

Along with inadequate protections and security measures, that’s in large part because fraudster’s tactics are evolving at rapid pace, more or less in lockstep with the equally rapid evolution of network technology which has driven corresponding increases in telecommunications traffic. Here, opportunity appears to be the mother of inventiveness. For instance, notable increases in fraud attacks on increased international voice traffic flows during the COVID-19 pandemic bear this out.

Telco fraud: More flavours than an ice-cream parlour

And the many flavours of telecoms fraud are evolving too. While some ploys target and defraud the network operator directly, many of the higher-profile (and thus higher-publicity) scams are directed at the end-customer.

It’d take an encyclopaedia rather than a blog to list all the varieties, but most telecom frauds can be fitted into one of three categories.  First, Traffic Pumping Schemes which seek to stimulate traffic to a high-cost destination that shares revenue with the fraudster. Second,

schemes to defraud telecom service providers by deploying complex methods to exploit SIP trunking, regulatory loopholes, and more. And third, on-telephone schemes, commonly known simply as “phone fraud” covering all types of general frauds that are executed over a telephone. It’s in the latter category that the telco’s customers, in particular, are targeted.

Failing to act on fraud isn’t an option

With criminality rife, network operators and telecommunications service providers can’t afford to sit on their hands. They must protect both their own interests and, perhaps even more urgently, those of their customers – not least because, if fraudsters can easily make money from their crimes, they’re not going to stop committing them. In fact, telco customer losses will likely expand as fraudsters become increasingly sophisticated, unless operators take aggressive steps to counter their activities fall.

Fortunately, telcos can do just that. The power to act lies in identifying and deploying the right anti-fraud technology from the right partner. One example of a platform that’s proven to make a significant difference in this area comes from Utel, which in live deployment at Tier-1 operator sites is already reducing fraudulent activity (in some cases eliminating it altogether) – protecting customers and reducing losses for both the operator and its subscribers. It’s an important message: building trust in your network and services and acting as an agent that protects.

Telcos must ramp up their fraud detection and response efforts to better protect the users of their services – and tell customers how they are taking steps to reduce risk. If you’d like to discuss the challenges and requirements of an effective strategy with the experts at Utel who are responsible for developing and delivering a platform that’s already delivering results, please get in touch.