The cost of Telecommunications fraud [Archives:2007/1109/Business & Economy]
By: Iskandar Saeed
Telecommunications fraud is one of the largest causes of revenue loss for service providers in Yemen and abroad .With the advent of new services, such as 2.5G, 3G and VoIP, and as telecom fraud becomes increasingly sophisticated, this problem will become compounded. To combat this, service providers will need advanced systems that can detect all types of fraud. Such systems are not yet used. So, operators can't handle all known types of fraud such as subscription, internal and inter-carrier fraud. Failure to do so may result in substantial revenue loss and no operator can afford that today.
One example of how fraud techniques had grown is the number of new malicious programs that have been created. Statistics show that 212,101 new threats were reported during the first six months of 2007 worldwide, which is a 185% increase in the number of threats which had been reported in the last six months of 2006. The economy had rapidly become specialized and now every service was widely available for criminals who intend on carrying out attacks.
The U.S.-based Communications Fraud Control Association (CFCA) announced the results of a comprehensive survey that was conducted by them. It was estimated that the annual worldwide telecom fraud losses to be over $55 billion. That is a huge amount of money by any standard and this is more than sufficient in confirming that telecom fraud is a really lucrative criminal business.
An example of such fraud is a man who was charged with stealing more than 10 million minutes of VOIP (Voice over Internet Protocol) telephone service and then selling them to unsuspecting customers for as little as US$0.04 per minute.
The association of certified fraud examiners (ACFE) has conducted a study about 508 cases of fraud and found the following interesting facts:
1. Organizations on average lose 6 present of their bottom lines because of fraud.
2. Once fraud is committed, it is very unlikely that losses will be recovered.
3. Fraud losses from executives are six times higher than losses from managers and 14 times higher then losses caused by lower level employees.
For those reasons several operators have implemented different kinds of systems to detect fraud and help them significantly minimize types of fraud and avoid revenue leakage. However, their systems still need more developments to not only prevent fraud, stop revenue leakage, and detect the latest fraud techniques, but also to enable operators to combat fraud in real-time which means that when creating real-time (RT) system there is no place for error. The nature of the final system will be powerful, efficient, and highly reliable and allow authorized users to send commands to the network elements in response to suspected fraudulent activity in real time. Although all current systems greatly assist in the reduction of fraud, but no system can guarantee that all fraud will be covered. So, most of the operators noted that they can't stop all fraudulent techniques but they can detect some types of fraud in real time which can provide some level of security. Telecommunications companies can achieve this by creating their own plan to combat the expected fraud and understanding their organization's need to help them reach a satisfactory security level to combat the fraud and track down the perpetrators of such attacks.
Iskandar Saeed is the Fraud & Revenue Assurance Manager at Sabafon, Yemen.
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