Telecommunications Fraud 2023: Top 10 Telecom Frauds and How to Prevent Them

Telecommunications, or telecom, is a critical component of our modern lives. It’s a global, interconnected system that facilitates not only communication but also social interaction, business transactions, and more. But with increasing sophistication comes increasing risk – the risk of telecommunications fraud. In this blog post, we delve into the top 10 telecom frauds, provide an in-depth analysis of the list of telecom frauds and telecom fraud prevention, and explore how countries like China and the UK are tackling fraud in the telecom industry.

Telecom Frauds Overview

Before we dive into the top 10 telecom frauds, let’s first understand what telecom fraud entails. Telecom fraud can vary widely, from complex network infiltrations to straightforward scams. Two prevalent forms of fraud currently plaguing the industry are:

IRSF Fraud in Telecom

International Revenue Share Fraud (IRSF) is a pervasive type of fraud in the telecom sector that causes significant financial losses across the globe. This deceptive act involves fraudsters, often part of complex networks, making extensive long-distance calls to high-tariff countries.

The basis of this fraud is the complex international rates set by telecom operators. For some countries, these rates can be exceedingly high due to various factors such as lack of infrastructure or political instability. The fraudsters target these specific countries and establish arrangements with local operators to share the revenue generated from these high-tariff calls.

This fraud works in a quite strategic manner. Fraudsters generate traffic, typically by hijacking or spoofing phone lines, then make numerous calls to high-cost numbers that they control. By doing so, they inflate the phone bill of the unsuspecting telecom operator or individual whose line they’ve hijacked.

Consequently, the telecom operator is liable to pay for the fraudulent calls based on international telecom regulations. The revenue share, obtained from these calls, is then divided between the fraudsters and the local operators who are part of the scheme. Unfortunately, the unsuspecting telecom operator, who has no clue about this arrangement, suffers significant financial losses.

Bypass Fraud Telecom

Bypass fraud, also known as interconnect bypass fraud, is another rampant issue in the telecommunications sector. In essence, this type of fraud occurs when international calls are rerouted via illegal or unlicensed channels, skillfully bypassing the official network gateways that levy call termination charges.

Telecom operators usually have official agreements to handle calls originating from foreign networks. These agreements include termination fees, which are charges imposed for handling and terminating calls on their network. Fraudsters, however, find innovative ways to sidestep these charges.

In bypass fraud, the trick is to make international calls appear as local calls, thereby evading the termination fees associated with international calls. Fraudsters employ illegal SIM boxes, devices filled with several prepaid SIM cards, to convert international calls into local calls. This unlawful practice effectively bypasses the official network pathways and dodges the termination fees.

As a result, telecom operators suffer from revenue loss due to the unpaid termination fees. Moreover, it leads to inaccurate traffic measurements and network performance data, which can seriously impair a telecom operator’s ability to plan and manage their network effectively.

Top 10 Telecom Frauds

Now, let’s enumerate and look into the top 10 telecom frauds in 2023, which include IRSF and Bypass fraud discussed above:

  1. International Revenue Share Fraud (IRSF)
  2. Bypass (Interconnect Bypass) Fraud
  3. Subscription (Identity) Fraud: This happens when fraudsters use false identity information to gain telecom services.
  4. Premium Rate Service (PRS) Fraud: Scammers trick victims into calling premium-rate numbers, which incur high charges.
  5. Traffic Pumping Fraud: Also known as access stimulation, fraudsters increase traffic to high-cost numbers to receive a portion of the termination fee.
  6. Refiling Fraud: This involves changing the characteristics of a call to lower charges or disguise its origin.
  7. False Answer Supervision Fraud: The fraudster causes calls to be charged as answered, even if they weren’t.
  8. Stolen Equipment Fraud: Telecom equipment is stolen and used to generate illegal revenue.
  9. Phishing: Scammers trick victims into revealing personal or financial information via calls or text messages.
  10. Wangiri Fraud: This fraud involves missed calls from international numbers, enticing the victim to call back and incur high charges.

Spotlight on Fraud in Different Countries

To fully grasp the global impact of telecom fraud, let’s look at specific cases from China and the UK:

China Telecom Fraud

In China, telecom fraud is widespread. Fraudsters often impersonate authority figures or relatives, leading victims to disclose personal information or make financial transactions. Chinese authorities are taking proactive measures, such as regulatory reforms and public awareness campaigns, to combat this escalating problem.

British Telecom Scams

In the UK, a typical scam involves fraudsters posing as British Telecom (BT) employees. They often claim to have detected issues with the victim’s internet connection or threaten to cut off services unless a payment is made. British Telecom has issued warnings and guidance to its customers to help them recognize and avoid these scams.

Preventing Telecom Fraud

Prevention is our most potent weapon against telecom fraud. Here are some vital strategies for telecom fraud prevention:

  • Secure Network Infrastructure: Telecom providers should ensure their networks are secure and frequently updated to prevent fraudsters from exploiting vulnerabilities.
  • Fraud Management Systems: Using advanced fraud management systems can detect unusual activity in real-time and halt fraudulent transactions.
  • Educate Customers: Regularly informing customers about common scams and how to avoid them can help shield them from fraud.
  • Collaboration: By collaborating, telecom providers can share information about new fraud techniques and work together to devise preventive measures.

Wrapping Up

The world of telecom is in constant flux, and with these changes come new types of fraud. By understanding these various types of fraud and implementing effective prevention strategies, we can work together to create a safer telecom environment for everyone. Stay vigilant, stay educated.

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