Why is Telecom Fraud Becoming So Popular?

Why is Telecom Fraud Becoming So Popular?

Fraud is a constant problem facing every industry, whether it be internal or external. While credit card fraud is the most prevalent form of fraud targeting consumers, there’s another type that isn’t too far behind.

Telecom fraud is becoming more and more popular, and it targets more people every year. This type of fraud actually brings in double the revenue from fraud stemming from credit cards. 

Though, while banks and lenders are working hard to battle against credit card fraudsters, the telecom industry has been slow to react to threats both internal and external to their industry. 

The Telecom Umbrella

So why is the telecom industry having such a hard problem keeping up? Telecom has evolved and broadened its scope so much, the challenge to keep every facet of the industry protected has become quite difficult.

In the past thirty years the word telecom went from meaning landline phones and fax machines to any form of communication integrated into a complex web of communication such as smartphones, tablets, computers, bluetooth devices, mobile laptops, etc. 

Fraudsters have hit a windfall in opportunity to take advantage of weaknesses inherent in each technology. And with more technology  added, the harder it is for network inventory management systems to keep up. 

Opportunities for fraudsters aren’t slowing down anytime soon, either. With smart home mesh networks and integrated smart appliances like thermostats, automated door locks, smart refrigerators, etc., yet another avenue to fraud is presenting itself. 

Popular Telecom Fraud Methods
Many ways to defraud both subscribers and telecom companies present themselves to fraudsters; but there are three that are most common.

Subscription Fraud

Fraudsters take advantage of stolen or fabricated subscription data to get free telecom devices and services. Once they’ve established the service, they can branch out with this information by setting up fake identities to acquire credit cards and other lines of financing.

Call Transfer Fraud
One of the easiest types, fraudsters capitalize on call transfer fraud by penetrating PBXs (Private Branch Exchanges), using those exchanges to transfer calls to their own phones and then getting international long distance for free without being billed. The billing instead goes back to the telephone system that was initially hacked.

Internal Fraud

Fraud conducted by those on the inside of the telecom industry is increasingly popular due to the ease of access. This can include types of internal fraud such as false answer supervision (where incomplete calls are masked to look like complete calls and then billed), call forwarding fraud (fake forwarding to numbers that charge a fee), and traffic pumping (getting long distance carriers to mistakenly pay access fees to local carriers).

Nontraditional Telecom Fraud
This involves any form of fraud where smart device networks are penetrated and account information is extracted. The most popular way to attack these networks is through distributed denial of service (DDoS) attacks against the device networks.

Combating telecom fraud is much more complicated than it was thirty years ago, but if enough effort is put towards securing networks from threats, subscriber data can be adequately protected. 

This effort is not just on the telecom service providers shoulders, but also on smart appliance and mesh network engineers, smart device manufacturers, and subscribers themselves to ensure their networks are as secure as possible.

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