As smartphone technology has advanced over time, the variety of telecoms fraud schemes targeting networks and customers has also expanded. In the early days, telecoms fraud involved threat actors exploiting payphones for free long-distance calls or trading stolen phone numbers. Today, fraudsters have refined their tactics, using methods like infiltrating phone systems or utilising counterfeit caller IDs to trick people into disclosing personal data, writes Kelvin Chaffer, the chief executive of Lifecycle Software.
In addition, new types of fraud, such as SIM exchange, SMS-based phishing attacks, SMS Toll Fraud and International Revenue Share Fraud, have become prevalent. Bots and botnets are also increasingly becoming pivotal tools in facilitating fraudulent activities. Cybercriminals can deploy bots for registering SIM cards, directing calls and messages, phishing, intercepting one-time passwords, and more. Adding to the complexity is the fact that bots possess the capability to imitate human behaviour, making it harder to detect anomalies.
Although numerous individuals can identify the indicators of a potential scam, the ever-changing strategies deployed by fraudsters have resulted in many people falling victim to these schemes. In fact, over 40 million people in the UK were targeted by scammers in the first quarter of 2023. As a result, telcos must consistently modify their security protocols to stay ahead in this ongoing battle against ever-changing fraud trends.
Types of fraud deployed by scammers
Telecom fraud cases are diverse and often infiltrate multiple aspects of a corporate infrastructure. There has been a particular concern around subscriber fraud as the gained products or services are frequently associated with organised criminal activities or terrorism. Scammers, utilising fraudulent details, can also sign contracts intending to resell devices, forcing telcos to write off bad debts.
However, telecom providers are not only vulnerable during new customer onboarding – fraudsters can exploit customer services, too. A common fraud involves creating premium phone lines dialled by unsuspicious businesses or individuals who usually only realise they’ve been scammed once they receive their bill. Such practices can cost the industry an estimated $4 to $6 billion annually. Additionally, scammers can send out blanket messages to acquire personal details from a few unsuspecting recipients.
Recently, fraudsters impersonating legitimate businesses have also targeted mobile phone users. For instance, customers may receive automation calls purporting to be from HMRC declaring there is an investigation being launched against them. Royal Mail is another example, where scammers send out mass messages claiming a missed delivery and requesting a £2 re-delivery fee. This scam not only nets the upfront payment but also acquires the victim’s card details for future fraudulent activities.
An escalating number of mobile phone users have also fallen prey to scams involving malicious code installation via fake technical support. Fraudsters convince victims to download software to fix alleged tech faults, granting scammers access to their devices and personal data. At the same time, robocalls, which use computerised auto-diallers to deliver pre-recorded messages, often coax victims into unknowingly calling back premium numbers.
Overall, the misuse of network services for fraudulent purposes is worrying for telcos as it can damage consumer confidence and long-term customer relationships.
Technology as a solution
Fraud detection should not be considered a one-time solution. Fraud patterns can vary significantly as customer behaviours and traffic volumes shift in the ever-evolving telecommunications landscape. Therefore, telecom companies can use artificial intelligence (AI) and machine learning (ML) to help combat fraud.
These technologies can help develop predictive models and simulations, enabling the assessment of a potential victim’s susceptibility to fraudulent attacks. Using real-time decision-making, AI-powered tools can monitor the behaviour of each network subscriber and instantly react to any fraudulent activities exhibited by a subscriber, allowing immediate suspension from the network to avoid revenue loss.
Similarly, by analysing customer behaviour, it can pre-emptively detect abnormal patterns that may suggest compromised device control. The customer can then be contacted to confirm the integrity of their account, thereby safeguarding both them and the network.
Whilst data monitoring can flag when something deviates from the norm, it doesn’t explain the ‘why’ behind it. Therefore, real-time analytics and AI are beneficial to addressing the core aspects of data trust, aiding in identifying and resolving anomalies invisible across the complete data lifecycle. Equipped with these tools, telcos can promptly identify and neutralise threats in their tracks, optimise workloads, boost efficiency, and ultimately save on infrastructure and operations costs – all while improving customer experience. Choosing a reliable strategic partner can help telcos implement the technology that can help them combat fraud.
Article by Kelvin Chaffer, the chief executive of Lifecycle Software.
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