Collective immunity: A vaccine for all telecom fraud
Today about 42% people worldwide have received an anti-COVID vaccine. If we add 20% more we will achieve collective immunity, says Vasily Birulin, managing director at AB Handshake.
It would be great if the same could be done to protect against voice traffic fraud. Actually, it could be. Fraud schemes hit telecom operators and other businesses every day causing billions of dollars in financial losses each year. This overwhelming threat has led operators and national regulators to try to establish new protocols to detect and prevent telecom fraud. While they are successful in some cases, there’s too much money to be made and the fraudsters always find a way to evolve, slip through the cracks of the fragmented telecom industry and escape with profits.
The key word here is ‘fragmented’. This is a key issue in the fight against telecom fraud.
Many moving parts
There are many opportunities for telecom fraudsters. The fragmented nature of the telecom industry is the main reason there have always been opportunities for fraudsters to abuse telecom services.
Different regions of the world have different regulations; however, more importantly, telecom services are usually delivered by more than one network operator. A single voice call can originate on a specific cellular network and terminate on another fixed-line network, which involves a separate provider.
The shortcomings in traditional fraud management systems lie in two key areas:
- Operators only being able to monitor activity on their networks, but not their partners’ networks, and
- A lack of communication between operators.
Lack of communication between operators
It’s also important to note that fraud isn’t only a matter of financial losses. Increasingly, the costs of telecom fraud also cause reputational damage to operators and the brands they serve. This has led to mistrust among operators.
In response, individual operators have established and implemented various fraud management systems that are incompatible with those of other operators. This only compounds the problem. Without such compatibility between fraud management systems, operators have no way to interlink fraud-related information between one another.
‘Collective immunity’ – The answer to stopping telecom fraud
Up to 90% of operators are hit by fraudsters on daily basis
In the case of telecommunications fraud, the scammers attack, take their profits and leave before they can be stopped. Many telecom network operators know this story all too well. These days, telecommunications fraud threatens operators with financial and reputational losses and with today’s technology, they are discovering their losses when it’s too late.
This has been the case for decades as telecommunications companies, including wholesalers, have joined the fight against fraud and developed telecom fraud protection services. They’ve done a good job of blocking some attacks, but many attackers out there still succeed. And each year, the financial losses from these successful attacks amount to billions of dollars.
Traditional telecom fraud technology – protection, not prevention
Telecom service providers and government institutions have been in the fight against telecom fraud for decades, offering solutions for operators that stop most, but not all, fraud attacks.
Recent legislation includes the TRACED anti-robocall act in the US. However, since there are such large profits in fraud, most scammers have ignored it. They push ahead.
Another recent milestone was on June 30th, 2021 the deadline for operators to integrate the new STIR/SHAKEN protocol or an alternative fraud mitigation program into their existing systems.
However, many operators implementing the STIR/SHAKEN protocol have faced problems with integration expenses and compatibility (it only works with TDM networks).
Community-based approach to fighting telecommunications fraud
Traditional fraud-fighting systems use reactive techniques with each of their operators that collect their own data and analyse calls on their networks. This means that they can gain insight only on the calls taking place on their networks and nothing else. Because fraud schemes can easily route a single call through many networks, there is a lot of data these systems don’t detect.
The new idea is that via collaboration, multiple operators can exchange data about calls to prevent any fraudulent call from starting. Such collaboration can facilitate a fraud management community that can proactively co-operate to monitor and validate calls over multiple operators, much like the SWIFT system does for banks sending and receiving payments around the world.
Taking a cue from banking to stop telecom fraud
There is a lot of overlap between an international phone call and an international bank transfer.
- Both involve an A party that initiates the transaction and a B party receiving it.
- Both involve two companies, in different countries, abiding by common protocols with no control over each other.
- Both involve an active A party and a passive B party, but the B party can reject the transaction.
- Both involve forms of messaging: signalling is a fundamental component of telecom operations. Banks and financial service providers also use communication methods the work at the speed of light.
The author is Vasily Birulin, managing director at AB Handshake