AI-Powered Roaming Fraud Detection: A Game-Changer for Telcos

In a world where mobile communication underpins both personal and business activities, the demand for reliable telecom infrastructure is more important than ever. With globalization driving international travel and cross-border communication, roaming services have become indispensable for telecom operators. However, this essential service brings with it the challenge of roaming fraud. As telecom networks evolve, so do the tactics of fraudsters who seek to exploit their weaknesses. The consequences of roaming fraud can be severe, leading to significant financial losses and damaging the reputation of telecom operators.

Multiple Avenues for Fraudsters to Exploit Roaming Services

Roaming fraud occurs when a subscriber moves from their home public mobile network to a visited public mobile network and uses services with no intention of paying for them. Fraudsters take advantage of delays and inefficiencies in data roaming exchanges to generate high-cost international calls through premium-rate numbers, leaving operators and unsuspecting subscribers to bear the financial burden. Since analyzing this data is often time-consuming, fraudsters exploit the delay to maximize their profits. To effectively combat and stop roaming fraud, rapid detection and swift action are imperative. Consequently, the telecom industry is increasingly adopting AI-powered solutions for more sophisticated fraud detection and prevention.

Multiple Avenues for Fraudsters to Exploit Roaming Services

Roaming fraud is a complex and evolving challenge for telecom operators. Fraudsters employ various methods to exploit vulnerabilities in roaming services, often leading to significant financial losses for Communication Service Providers (CSPs). These fraudulent activities typically begin with the illicit acquisition of SIM cards, which can occur through several avenues such as SIM theft, SIM cloning, or subscription fraud. Once fraudsters obtain SIMs, they leverage these to gain international roaming status, enabling them to initiate fraudulent activities across borders.

Here’s a closer look at how these fraud schemes typically unfold:

1. Fraudulent Acquisition of SIM Cards

Fraudsters often start by acquiring SIM cards from a CSP’s home network through illicit means. This can include stealing SIM cards directly, cloning them, or using fraudulent identities to obtain them via subscription fraud. Once in possession of these SIMs, fraudsters can connect to the network, gain international roaming status, and start executing their schemes.

• SIM Theft and Cloning: Fraudsters may steal SIM cards or use sophisticated techniques to clone them. Cloning involves duplicating the SIM card’s unique identifiers, allowing the fraudster to use the card as if they were the legitimate owner. This provides them access to the network without the account holder’s knowledge.
• Subscription Fraud: Another common method involves subscription fraud, where fraudsters use fake identities or stolen personal information to obtain new SIM cards. These SIM cards are then used for fraudulent activities, including roaming fraud.

2. Exploiting Time Delays in Roaming Scenarios

One of the key tactics used by fraudsters is exploiting the inherent time delays in roaming scenarios. When a SIM card is used for roaming, there can be delays in the exchange of billing and usage information between the visited public mobile network (VPMN) and the home network. Fraudsters take advantage of this lag time to rack up charges on international calls or data usage before the CSP can detect the anomaly.

• Time Delay Exploitation: During these delays, large volumes of traffic can be generated without immediate detection. By the time the home network recognizes the fraudulent activity, significant financial damage may have already occurred. This makes it difficult for operators to act quickly and mitigate the losses.

3. Manipulating Visited Networks to Stay Under the Radar

Fraudsters often move between different visited networks to avoid detection. By hopping between networks, they can stay below the thresholds that are typically set in roaming agreements between operators. This tactic allows them to continue their fraudulent activities without triggering alarms in the system.

• Network Hopping: By frequently switching between networks, fraudsters make it challenging for CSPs to track their activities. This constant movement keeps their usage patterns dispersed, making it harder to spot anomalies or patterns indicative of fraud.

4. Generating High Volumes of Traffic to Premium Rate and High-Cost Destinations

Once fraudsters have gained international roaming status, they often generate large amounts of traffic, particularly to high-tariff international numbers or remote countries. These destinations typically involve premium-rate services (PRS) or other high-cost international lines, where the charges are significantly higher.

• Inflated Traffic to High-Tariff Destinations: The goal of the fraudsters is to generate substantial revenue by artificially inflating call volumes or data usage to these destinations. They might also target remote or underserved regions where the cost of communication is higher. This inflated traffic leads to excessive billing, which is often left unpaid, leaving the CSPs to absorb the losses.

Voice Fraud Projected to Account for 54% of Roaming Fraud Losses by 2028

Roaming fraud has long been a lucrative avenue for fraudsters, particularly through high-margin schemes like bypass and Wangiri attacks. According to a report by Kaleido, voice fraud is projected to account for 54% of all roaming fraud losses by 2028, even as mobile networks transition to packet-switched technologies such as VoLTE and VoNR, which typically have lower termination rates for such services.

The report also highlights that SIM box fraud and International Revenue Share Fraud (IRSF) remain persistent threats in the roaming industry. IRSF manipulates international routing and billing systems to generate large volumes of calls or messages to premium-rate numbers controlled by fraudsters. The expansion of Roam Like At Home bundles, beyond just Europe, has further incentivized fraud across both voice and SMS channels, making these types of fraud even more prevalent.

The Financial and Operational Impact of Roaming Fraud

Roaming fraud presents a substantial financial burden for telecom operators, with industry estimates indicating billions of dollars in losses annually due to various forms of fraud, including roaming fraud. These losses extend beyond immediate revenue shortfalls, deeply impacting an operator’s overall profitability, market position, and capacity to invest in new technologies and services.

The operational repercussions of roaming fraud are equally significant. Fraudulent activities can overwhelm network resources, degrade service quality, and lead to customer dissatisfaction. Additionally, operators face increased costs associated with fraud detection and mitigation, as well as complex legal and regulatory challenges when pursuing fraudsters across different jurisdictions.

A key factor in mitigating these losses is the speed of detection and action. Fraudsters often exploit delays in data roaming exchanges to generate high-cost international revenue share calls through premium-rate numbers, leaving operators and subscribers to bear the financial burden. Given the time-consuming nature of analyzing roaming data, fraudsters are able to maximize their profits before being detected. Therefore, real-time detection and swift response are critical to effectively combating roaming fraud and minimizing its impact on operators and their customers.

The Role of AI in Roaming Fraud Detection

Traditional methods of fraud detection, which rely on predefined rules and post-event analysis, are increasingly inadequate in the face of sophisticated fraud techniques. These methods are often reactive, identifying fraud only after it has occurred, leading to significant financial losses before corrective action can be taken.

AI-powered fraud detection systems represent a paradigm shift in combating roaming fraud. These systems leverage advanced machine learning algorithms, real-time data processing, and behavioral analytics to detect and prevent fraud in its early stages. Here’s how AI is revolutionizing roaming fraud detection:

1. Real-Time Data Analysis

AI systems can analyze vast amounts of data in real-time, processing information from multiple sources such as call records, billing data, and network logs. This enables telecom operators to identify suspicious patterns of behavior as they occur, rather than before they escalate

2. Behavioral Profiling

AI-powered systems can create detailed behavioral profiles of subscribers, learning their typical usage patterns over time. Any deviation from these patterns can trigger an alert, allowing operators to investigate further. This is particularly useful in identifying out-roamer fraud, where a subscriber might be using data services outside the region covered by their roaming package.

3. Advanced Pattern Recognition

Fraudsters often try to cover their tracks by mimicking legitimate usage patterns. However, AI systems are capable of recognizing subtle patterns that may go unnoticed by traditional rule-based systems. Machine learning algorithms can identify complex fraud schemes by analyzing multiple variables simultaneously, such as call duration, frequency, location, and time of day.

4. Predictive Analytics

One of the most powerful features of AI is its ability to predict potential fraud based on historical data. By analyzing past instances of fraud, AI systems can identify the conditions that led to those incidents and proactively monitor for similar conditions in the future. This predictive capability is crucial for staying ahead of fraudsters who are constantly evolving their techniques.

5. Automated Response

AI-powered fraud detection systems can be configured to automatically take action when fraud is detected. This might include blocking a suspicious transaction, suspending a user’s account, or alerting the network’s security team. Automation significantly reduces the response time, minimizing the financial impact of fraud.

Case Study: Batelco Stops Roaming Fraud in Its Tracks with Subex’s Fraud Management System

Batelco (Bahrain Telecommunication Company) is the leading provider of telecom services and digital solutions in the Kingdom of Bahrain. With a strong focus on digital growth, customer centricity, and environmental sustainability, Batelco has achieved significant milestones, including 100% coverage across Bahrain’s population, the acquisition of an open banking license, and the launch of Bahrain’s first financial app, Beyon Money. However, like many telecom operators, Batelco faced a growing threat from roaming fraud, which threatened to undermine its financial performance and customer trust.

Business Context

Batelco offers a variety of international roaming packages tailored to specific countries and regions. These packages are designed to limit usage to the visited public mobile networks (VPMNs) within the defined regions. However, Batelco’s roaming team noticed anomalies in some of its out-roamer packages, where subscribers were exploiting loopholes to continue using data roaming services outside the package-defined international borders. This unauthorized usage resulted in substantial revenue losses for Batelco, as fraudulent subscribers were not being charged for these prepaid roaming data services. To prevent further losses and protect its revenue streams, Batelco needed a robust solution that could monitor roaming user behavior in real-time, detect suspicious activity, and mitigate risks proactively.

Subex’s Solution

Batelco chose Subex as its fraud management partner due to Subex’s proven expertise in telecom fraud management and its best-in-class AI-powered fraud management solutions. Subex’s AI-first fraud management platform features a hybrid architecture that combines rules-based detection with behavioral profiling, advanced statistical algorithms, and flexible matching techniques to identify and mitigate fraud.

Key highlights of the engagement between Batelco and Subex include:

1. Defining Rules to Detect Patterns: Subex worked with Batelco to define threshold and statistical rules on multiple record types, considering complex conditions to detect anomalous usage patterns. This allowed Batelco to identify and flag suspicious roaming activity quickly. Additionally, Subex enabled users to create rule templates, allowing for the monitoring of specific entities based on identifiers and varying thresholds. These rules could be further customized with filtering conditions to include or exclude certain data services, providing Batelco with a flexible and targeted approach to fraud detection.

2. Configuring Controls for Timely Alerts: To ensure that fraud could be detected in real-time, Subex helped Batelco’s fraud team configure several controls to detect out-of-network roaming as it occurred. New rules were established to trigger alerts when data usage occurred outside the regions covered by the roaming packages. These alerts were crucial in preventing unauthorized usage from escalating into significant revenue losses. Subex also provided advisory guidance to Batelco’s network teams, helping them institute primary controls, such as usage restrictions at the network level. Subex’s system was programmed with secondary controls, creating a multi-tiered defense against roaming fraud.

Benefits

By implementing Subex’s AI-powered Fraud Management System, Batelco was able to achieve several key benefits:

1. Enhanced Fraud Detection: Batelco could configure intelligent rules across its existing and upcoming roaming packages, supported by multi-tiered controls, ensuring comprehensive coverage against various fraud scenarios.

2. Revenue Protection: The solution enabled Batelco to plug daily revenue losses of nearly USD 70,000, providing immediate financial relief and long-term protection against roaming fraud.

3. Improved Customer Experience: With real-time fraud detection and prevention, Batelco was able to enhance the customer experience by ensuring that legitimate subscribers could use roaming services without disruption while minimizing the impact of fraudulent activity.

4. Reduced Fraud Run-Time: The AI-powered system drastically reduced the time it took to identify and respond to fraudulent activity, ensuring that threats were addressed before they could cause significant damage.

5. Increased Accuracy: Subex’s advanced algorithms and customizable rules improved the accuracy of identifying roaming fraud, reducing the occurrence of false positives and ensuring that only genuine threats were flagged for investigation.

Conclusion: Is Your Business Prepared to Combat Roaming Fraud?

As the telecom landscape evolves, so do the tactics of fraudsters looking to exploit vulnerabilities in roaming services. The projected rise in roaming fraud losses underscores the urgency for telecom operators to take proactive steps in safeguarding their networks. The financial and operational impacts are too significant to ignore—ranging from billions in lost revenue to strained resources, degraded service quality, and eroded customer trust.

The key to staying ahead lies in adopting advanced, AI-powered fraud detection systems that can monitor and respond to threats in real-time. The case of Batelco, which successfully mitigated roaming fraud with Subex’s Fraud Management System, serves as a powerful example of how investing in the right technology can make a significant difference.

Now is the time to ask: Is your business equipped to handle the growing threat of roaming fraud? Are you leveraging the latest technologies to detect and prevent fraud before it impacts your bottom line? In an industry where every second counts, taking swift and decisive action could be the difference between staying competitive and suffering substantial losses.

Don’t Let Roaming Fraud Impact Your Business: Act Now!

Book a Free Demo