Global Telecom Fraud Trends 2024
Overview of the Fraud Landscape and Global Trends
Fraud has always been a cat-and-mouse game that organizations, governments, and individuals play with fraudsters. As we stand on the cusp of 2024, the fraud landscape is once again changing, morphing into new forms as it leverages new technologies and vulnerabilities. The following blog post delves into the latest global fraud trends, providing an overview of regional trends as well as specific threats.
The Growing Complexity of Fraud
The proliferation of digital transactions and mobile communications has also led fraudsters to adopt increasingly complex methods of getting around security measures. The use of artificial intelligence and machine learning by fraudsters to commit their crimes has also become more widespread, which makes it harder for traditional security measures to keep up. Additionally, the world is more interconnected than ever before, which means that fraudulent activities in one part of the world can quickly spread to another. This means that there is a greater need for international cooperation as well as increasingly sophisticated technological means of effectively combating fraud.
Regional Insights
It is critical to understand the different regional patterns of the types and methods of fraud in order to devise targeted means of combating these threats. Different regions have different challenges based on their technological infrastructure, regulatory environment, and socioeconomic conditions. In the following blog, we explore the specific fraud trends in the Asia-Pacific (APAC) region, Africa, the Middle East and North Africa (MENA), Europe, and North America.
Fraud Trends for Asia-Pacific (APAC) in 2024
Bypass Fraud
Bypass fraud continues to be a major issue in the APAC region, where fraudsters exploit vulnerabilities in the telecommunications infrastructure. Bypass fraud involves the fraudulent use of telecommunication services by bypassing the legitimate network routes, avoiding international call tariffs, and causing major revenue losses for telecom operators. Criminals use methods such as SIM box fraud, with which they reroute international calls as domestic calls through SIM boxes, thus bypassing international calling rates.
SMS Fraud
SMS fraud is also a common threat in the APAC region. Criminals commonly use methods such as SMS spoofing, with which they hide their identity by changing the information on text messages regarding the sender. Another common method is smishing (SMS phishing), with which fraudulent messages dupe the receiving end into disclosing sensitive information or downloading malicious software.
Scams Texts and Calls
Scam calls often involve vishing (voice phishing), where callers pose as representatives from legitimate organizations, such as banks or government agencies, to extract sensitive information or money from victims. Shockingly, scams account for 54% of all digital banking fraud in the APAC region Scam texts, on the other hand, include smishing (SMS phishing) and other deceptive messages that trick recipients into revealing personal information, clicking on malicious links, or making payments. These scams have increased with the growth of digital communication, affecting both individuals and businesses.
Flash Call Related Fraud
Flash call fraud exploits the phone number verification process by spoofing caller IDs or using similar number ranges to bypass authentication. Fraudsters initiate brief calls that appear legitimate to manipulate the verification system. This undermines security, causes financial losses, and affects customer trust.
PBX Hacking
PBX (Private Branch Exchange) hacking is another prevalent threat in the APAC region. Fraudsters gain unauthorized access to an organization’s PBX system to make long-distance or international calls, often resulting in significant financial losses. These attacks typically occur during off-peak hours, making detection and prevention more challenging for the affected organizations.
Wangiri
Wangiri fraud, also known as “one-ring and cut,” involves fraudsters calling a number and hanging up after one ring, prompting the recipient to call back. These return calls are routed to premium-rate numbers, leading to hefty charges for the unsuspecting caller. This type of fraud continues to cause substantial financial losses across the APAC region.
International Revenue Share Fraud (IRSF)
IRSF is a sophisticated fraud technique where fraudsters exploit international premium rate numbers to generate illicit revenue. They artificially inflate traffic to these numbers, often using compromised PBX systems, resulting in substantial financial losses for telecom operators and businesses in the APAC region.
Subscription Fraud
Subscription fraud involves fraudsters obtaining telecom services or products through fraudulent means, such as using fake identities or stolen personal information. This leads to significant financial losses for service providers as the fraudsters default on payments after obtaining the services or devices.
Fraud Trends for Africa in 2024
In Africa, SIM box fraud is a common threat, especially dealing a blow to the telecommunications industry. This type of fraud entails the illegal routing of international calls through local SIM cards. Through the use of SIM boxes that contain the SIM cards of different carriers to route calls, the perpetrators bypass international call rates, and this leads to huge losses in terms of revenue for the telecom companies. This not only has an impact on the financial health of these organizations but the quality of service for bonafide users.
With the arrival of mobile money services across Africa, mobile money fraud has also been rampant. Mobile money ecosystem, which is relatively new and rapidly growing, is used by fraudsters to commit fraud. This may be in the form of phishing attacks, where users are deceived into revealing their personal identification numbers (PINs) or account details, and fraudulent transactions, where unauthorized transfers are made from the victims’ accounts. The absence of well-developed regulatory frameworks in certain regions further aggravates the issue by making it difficult to address adequately.
SMS fraud in Africa is a widespread issue, with fraudsters using techniques such as SMS spoofing and smishing to deceive users into revealing personal information or downloading malicious software. The lack of robust regulatory frameworks in some regions exacerbates the problem, making it difficult to effectively address and mitigate these fraudulent activities.
PBX Hacking
PBX hacking remains a significant threat in Africa, where fraudsters exploit vulnerabilities in corporate PBX systems to make unauthorized calls, often to international or premium-rate numbers. This results in substantial financial losses for businesses and telecom operators.
Wangiri
In this type of fraud, victims receive missed calls from international numbers and are tricked into calling back. These calls are directed to premium-rate numbers, leading to exorbitant charges for the unsuspecting callers. This type of fraud continues to cause considerable financial harm to individuals and businesses alike.
SIM Swap Fraud
SIM swap fraud is a growing concern, particularly affecting mobile banking and mobile money services. In this type of fraud, fraudsters manipulate telecom operators to transfer a victim’s phone number to a new SIM card under the fraudster’s control. This is often achieved through social engineering techniques, where the fraudster convinces customer service representatives to activate a new SIM card by posing as the legitimate account holder.
Once the fraudster has control of the victim’s phone number, they can intercept calls and SMS messages, including those containing one-time passwords (OTPs) used for two-factor authentication (2FA). This allows them to gain access to the victim’s bank accounts, mobile money accounts, email, and other sensitive online services.
Fraud Trends for Middle East and North Africa (MENA) in 2024
SMS Fraud
Similar to the APAC region, SMS fraud is a major concern in the MENA region. Fraudsters use means such as SMS spoofing and smishing to deceive users into revealing sensitive information as well as downloading malicious software. These are capable of leading to large financial losses for both individuals and businesses. The high penetration of mobile phones in the region makes SMS fraud a particularly effective means that can be used by fraudsters.
Handset Fraud
Handset fraud is also a major concern in this region. This may be in the form of theft or fraudulently obtaining mobile devices, where fraudsters resort to means such as identity theft or subscription fraud to obtain the devices. In the case of identity theft, stolen personal details are used by the fraudster to obtain new handsets in the name of the victim. Sometimes a handset is obtained on a contract and the fraudster absconds without paying the bills. Not only do this lead to financial losses for the telecom operators, but they also present security concerns to the individuals whose names have been used.
International Revenue Share Fraud (IRSF)
In this type of fraud, fraudsters exploit international premium rate numbers to generate illicit revenue. By artificially inflating call traffic to these numbers, fraudsters cause significant financial losses for telecom operators and businesses, who are left to bear the cost of the fraudulent activity.
Caller Line Identification (CLI) Spoofing
CLI spoofing in the MENA region involves fraudsters manipulating the caller ID to appear as though the call is coming from a trusted source. This technique is often used in conjunction with scam calls, increasing the likelihood of deceiving victims into providing sensitive information or making financial transactions.
Flash Call Related Fraud
In flash call fraud, fraudsters exploit the flash call authentication process to gain unauthorized access to user accounts or services, bypassing standard security measures and potentially compromising sensitive information.
Wangiri
Wangiri fraud continues to be a problem in the MENA region, with fraudsters using the one-ring technique to prompt victims to call back premium-rate numbers.
Fraud Trends for Europe in 2024
Scam Calls
In Europe, scam calls have been increasing in sophistication as well as volume. Fraudsters use means such as vishing (voice phishing), where they contact victims pretending to be representatives of legitimate organizations, such as banks or government agencies, for the purpose of getting sensitive information. Another common modus operandi is the use of robocalls, where automated calls are made to a large number of consumers, presumably with malicious intent.
The fraud of handsets and devices is also a serious problem in Europe. Fraudsters engage in activities such as theft, selling stolen devices, and fraudulent contracts. For example, criminals may obtain a handset by taking a contract by using a fake or stolen identity and then sell the handset on the black market. This is a cause not only of loss of money to telecom operators, but it also wreaks havoc with the supply chain as well as genuine customers.
A-Number Manipulation
In this type of fraud, fraudsters alter the originating number of a call to deceive the recipient or the telecommunications network. This manipulation can serve various fraudulent purposes, such as evading call charges, bypassing international tariffs, or facilitating scam calls. By presenting a false number, fraudsters make it appear as though the call is coming from a trusted source, thereby increasing the likelihood of successfully deceiving the recipient. This technique leads to significant financial losses for telecom operators and compromises the security of individuals and organizations.
Wholesale Fraud
Wholesale fraud in Europe involves fraudsters exploiting vulnerabilities in the wholesale telecom market. This can include activities such as arbitrage fraud, where fraudsters take advantage of price differences between telecom carriers to generate illicit profits, often leading to substantial financial losses for the affected carriers and disrupting the telecom market.
Fraud Trends for North America in 2024
Robocalls
Robocalls have become a major irritant, as well as a huge burden, in North America, with billions of robocalls being made each year in the region. The typical calls are made with malicious intent, such as phishing scams, fraudulent debt collection, or other forms of financial malice. Despite the efforts that regulators have made to restrict robocalls, they continue to be a widespread problem, which is due mostly to the ease with which fraudsters are in a position to take advantage of technology to place calls in very large volumes.
Robotexts
Robotexts, or unsolicited text messages that are sent in very large volumes by automated systems, are another major problem in North America. These messages often originate from phishing URLs or as scam messages that are designed to trick the recipient into parting with personal information or making payments. The growing use of mobile phones for a wide range of different transactions makes robotexts a particularly effective tool for fraudsters.
Scam Calls
Scam calls in North America involve fraudsters utilizing a wide range of different techniques to deceive victims. This might involve vishing, where the caller pretends to be a representative of a legitimate source, or spoofing, where the caller ID is manipulated to make it appear as though the call is coming from a trusted source. These calls often aim to trick the victim into giving up personal information or financial details.
CLI Spoofing
Caller Line Identification (CLI) spoofing is also a significant concern in North America. Fraudsters engage in this form of spoofing to manipulate the caller ID to make it appear as though the call is coming from a legitimate source. This is often used in combination with scam calls as a technique to increase the chances of successfully deceiving the victim. The fact that CLI spoofing is able to be implemented with relative ease, and the high volume of telecommunication traffic in the region, makes it an issue of extremely high prevalence.
Subscription Fraud
Subscription fraud involves using fake identities or stolen information to obtain telecom services or products, resulting in significant financial losses for providers. This type of fraud is particularly prevalent in the sale of mobile phones and smart devices, which now form a significant revenue stream for telcos.
Fraudsters use various methods, including identity theft, creating fake identities, account takeovers, and payment fraud with stolen or counterfeit credit cards. They also exploit loopholes in business processes to facilitate their schemes. Organized fraud rings significantly contribute to these crimes, causing billions in losses and damaging customer trust. To combat this, telcos need robust systems and processes to prevent fraud without disrupting service for genuine customers.
Account Takeover
Account takeover fraud is a growing concern in North America, where fraudsters gain unauthorized access to user accounts by stealing login credentials through phishing, social engineering, or other means. Once they have control of the account, they can make unauthorized transactions, change account settings, or use the account for further fraudulent activities, causing substantial financial and reputational damage to both individuals and organizations.
Conclusion
Looking into the year 2024, a clear picture emerges that the face of fraud is becoming increasingly complex and sophisticated. Each region reveals unique challenges, and these are a product of the technological, regulatory, and socioeconomic developments of that region. In order to be able to effectively combat these, a multi-faceted approach is required that involves technological innovation, robust regulatory frameworks, and international cooperation.
Regulatory and Partnership Efforts
Effective regulatory schemes are also necessary to combat the changing nature of fraud. Governments and regulators will need to work with one another to adopt and enforce regulations designed to protect consumers and companies from fraud. International cooperation will also be necessary, as fraud has a tendency to be committed across borders and will require a concerted response to the problem in order to effectively combat it.
The Need for Advanced Solutions and Vigilance in Fraud Prevention
In the detection and prevention of fraud, advanced technologies such as artificial intelligence and machine learning play a crucial role. These technologies can process large sets of data to identify patterns and anomalies that might indicate fraudulent behavior. Additionally, advanced authentication methods, including biometrics, serve as critical security layers to minimize fraud risk.
Generative AI is emerging as a powerful tool in fraud management. By leveraging advanced algorithms and deep learning techniques, Generative AI can simulate potential fraud scenarios, identify patterns, and predict future fraud attempts with high accuracy. This proactive approach allows organizations to strengthen their defenses by anticipating fraudulent activities before they occur. Additionally, Generative AI can help in creating synthetic data for training other AI models, ensuring they can detect even the most sophisticated types of fraud without compromising sensitive information.
However, the battle against fraud requires more than just technological solutions; it demands the vigilance of all parties involved. Companies must implement robust security measures and educate customers about existing threats. Individuals need to stay informed about the latest fraud trends and exercise caution when sharing personal information or making transactions. Recognizing regional differences in fraud trends and applying holistic strategies to combat them is essential. By remaining vigilant and leveraging advanced solutions, we can collectively protect ourselves and our communities from the persistent threat of fraud in 2024 and beyond.
For advanced solutions in detecting and preventing fraud, consider exploring Subex’s innovative offerings in Fraud Management. Their cutting-edge technologies and extensive expertise can equip your organization to effectively counteract fraud and stay ahead of emerging threats.
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