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All posts by Vijay Amirthraj

SIM SWAP FRAUD: Stepping into the fraudster’s shoes!

“Lose a credit card and the loss may be in thousands… Lose a SIM Card, the loss is irreparable”

Last week, Twitter CEO Jack Dorsey became the latest high-profile account to be targeted by SIM swappers. Dorsey’s account sent several tweets, including some with racial slurs and others that defended Nazi Germany. Luckily for him, his account was secured soon after, and the consequences weren’t catastrophic. However, there have been many instances where SIM swappers have left victims in a really troubled state – especially the ones targeted for monetary gains.

SIM swap is a type of phishing fraud that poses a serious threat to customer along with the telecom and the banking environments. The SIM SWAP fraudster in here obtains an individual’s banking details through vishing/smishing/phishing techniques or by purchasing these from organized crime networks. They then use this information, including personal details sourced via social media, to pose as the victim to the mobile network operator and fool them into cancelling and reactivating the victim’s mobile number to a SIM in their possession. As a result, all calls and texts to the victim’s number are routed to the fraudster’s phone, including one-time passwords for banking transactions. After receiving a one-time pin or password from a bank, the fraudster can then potentially access the customer’s bank account and transfer funds. The SIM SWAP fraud impacts not just the victim, financially but also the telecom operator and the bank, equally. As non-adherence to consumer interests and protection, in many countries, both the entities (the telco and the bank) are legally liable to compensate the victim for his/her financial losses. When the loss is in millions, the impact is very grave!

Have you ever taken a moment to pause and think from a fraudster’s perspective to counter the fraud? Well most blogs that you will find on the internet on SIM SWAP will tell you ways (in bulletin points) as how to protect your assets from the SIM SWAP fraud. However, I am quite sure that there will only be a handful of blogs that will tell you how a SIM SWAP fraudster thinks in-order to be able to protect your customers from such attacks.

Without much ado, let me take you through the 4 vicious stages involved in the SIM SWAP fraud attack which will help you understand your SIM SWAP fraudster better and stay ahead of them on any given day!

Stage 1 – “Cherry picking and stalking”

Fraudsters are always on the loom to pick on their fraudsters and the social media, has, in a great way helped them in getting away with their desired schemes. A SIM SWAP fraudster may look for a high-profile customer or a prosperous and wealthy business personnel who generally solicits with prospective clients over social media. The SIM SWAP fraudster here could impersonate one such client, send out a connection request and start to closely monitor the victim’s activities. The SIM SWAP fraudster can even hijack an account of the victim’s affiliate to initiate conversations/get more information about the victim. In events where the victim does not have enough digital footprints, SIM SWAP fraudsters have even taken the road of dumpster diving and shoulder surfing!

Stage 2 – “Impersonating the victim”

At this stage, the fraudster has got all the information he/she needed to pass through the authentication protocols required to get hold of the victim’s assets. Once he/she has managed to convince the bank and Telecom Operator of his/her false identity, he/she goes on to take-over the customer’s personal assets such as his/her sim card or his bank account.

Stage 3 – “Swindling at once”

Having gained total control over the victim’s assets, the SIM SWAP fraudster now tries to extract monetary benefits from the victim’s assets at a single go. Here the victim is totally cut-off from his/her mobile network even without knowing it. By the time the victim gets to know that there are transactions carried out on his/her account without their knowledge, the damage is done!

Stage 4 – “Covering it up”

After having caused enough damage to the victim, the SIM SWAP fraudster lets go of the victim’s assets and goes on to hunt for another victim. The SIM SWAP fraudster makes sure that he/she makes enough improvisations to his/her fraudulent schemes so as not to appear like a serial offender, thereby leaving the law keeping forces with very little clue of the fraudster’s whereabouts!

SIM SWAP fraud, unlike many other telecom/bank frauds requires a joint effort from the customer, the bank and the telco. However, catching hold of the SIM SWAP fraudster doesn’t require the brains of Sherlock Holmes! Vigilance and a little proactiveness on how a fraudster might possibly behave can help catch them at a very early stage. To counter the ill-effects of the fraud, top Telecom Service providers like AT&T, T-Mobile, Verizon and other are harping on customer authentication through the 2-Factor method even during telephonic conversations.

However, I personally believe that not much is being done to study transactional pattern anomalies to identify potential fraudsters in the network and its high time bank authorities joined hands with telcos in countering the fraud. E.g. the telcos can notify the banks of change in a customer’s IMEI/MAC address/addition or modification of accounts/transactional abnormalities and then the banks can monitor the customer’s transactions for that week, in priority! Masking methods can be used during exchange of information to protect consumer interests. Telcos and banks can be more proactive by creating a database for reference where any changes made to the consumer’s profiles can be stored and looked up for instances of abnormal transactions. As preventative measures, customers can be advised by both the telcos and the banks to take enough care while sharing very personal and integral information such as card details, social security number etc. on social media or the public internet.  The SIM Swap fraud is known to cause serious collateral damage and reputational loss, however, a little care taken at the right point in time can work wonders!

To know more about how you can stay vigilant about SIM Swap fraud, view this video.

Account Takeover – Fraudster Intelligence

Account takeover fraud is one of the most common fraud types across the world. Fraudsters use the various methods to takeover an existing open account within the mobile operator or the banking instrument. The commonly used method of committing this type of fraud is vishing or smishing. As per CFCA fraud survey, account takeover accounted for an estimated fraud loss of 1.7 Billion US Dollars in the year 2017.

In all these scenarios, the primary goals of the fraudster are to gain access to the account and (by-) pass the validation steps. In many situations, such validation may only require low-level knowledge-based authentication, so basic information obtained by the fraudster is used to validate and by-pass controls in place and to takeover the targeted account.

I was investigating an Account takeover fraud case for one of the leading telecom operator in the APAC region wherein the fraudster used a different type of methods to commit this fraud. Many customers lost millions of dollars from their bank accounts without the knowledge after their account was taken over by the fraudster. On investigation, we identified that the fraudster’s primary motive was to takeover both mobile and banking account and then initiate multiple fraud transactions. He used Social Engineering, CLI spoofing, Spoofed website & Malware to commit the fraud.

The Fraudster sequentially executed his schemes. He targeted only the high-profile subscribers in a region. He acquired all the information of the subscribers using social engineering methodology and called up the subscribers pretending to be a Bank executive and Mobile operator security officer. He asked the subscribers to download a malware-infested application from a spoofed website, following which he gained remote access to their mobile phones.

The malware would read the SMS’s & call logs from the subscriber’s mobile and forward the details to fraudulent server. It also deleted the SMS & call logs from the mobile handset before the subscriber knew the same. The intention behind the reading of the SMS & Call log is to Bypass the second level authentication for completing the banking transactions. With this method in place, he was able the execute multiple transactions without the knowledge of the subscribers.

Impact to Telcos?

When subscribers approached law enforcement agency, the Law penalized both Telco and the bank and recovered from them, the amount lost by the subscriber. The Law took this action to protect the interest of the customers and secondly it was negligence from the service provider that led to the revenue losses of the subscribers.

Telecom & banking service need to protect the subscribers from such fraud attacks by providing awareness to subscribers. Fraud management systems need have intelligence built into them to detect the fraud attack and control damages at an early stage.

Dealing with Bypass Fraud : Think beyond the boundaries

Amid the fierce competition facing the telecom industry, sometimes we listen to stories how lack of forethought of one Telco brings on illegal traffic on the network, leading to aggressive open wars and blame games among the operators affected by the fraud. The Telecom Regulatory Authority could intervene in such scenarios and encourage a competitor to block suspicious outgoing traffic if it finds out that not enough care is being taken to avert the fraud.

Interconnect Bypass fraud is one such telecom scam costing the industry several billion dollars every year. It brings collateral damage to the networks involved, and the impact will be huge. The Telco could be imposed hefty penalty for its failure to detect and resolve the issue on time. Further, it could bring serious business implications for all participating telcos. In the process of rampant blocking of suspicious traffic, sometimes traffic of genuine customers could get blocked, leading to customer dissonance and dissatisfaction along with loss of other business opportunities.

Here’s an example of a West African Telco who suffered massively due to Bypass fraud.

Why did this happen?

The West African telecom operator had been massively impacted by off-net Bypass fraud where the network of the operator was being misused to land fraudulent calls on the competitor’s network. Over time, the problem became so grave that the Regulatory Authority of the country had to step in and take charge of things. This eventually ended with the competitors blocking both fraudulent and genuine traffic from the Telco affected by the interconnection fraud.

Investigations conducted confirmed that the huge differences between the International termination rates and local termination rates made the environment suitable for fraudsters to run their schemes. There aren’t enough KYC controls in the country to facilitate certain onboarding checks which distinguish a genuine customer from a fraudulent one.

Impact on business

There were multiple warnings and memos issued to the operator from the Regulator, indicating that the operator would have to face penalties if amendments are not made in time.

Customers flooded the operator with complaints saying that their off-net calls were being barred without prior notice and for no fault of theirs and threatened that they would eventually churn out of the network if their services weren’t restored.

The atmosphere grew so tense that instead of cooperating, the operators became more aggressive and indulged in a rat-race in trying to prove a point to the Regulator as to how better and efficient they were from the rivals in terms of detecting Bypass fraud cases.

The solution

With the understanding that Bypass scams are rampant, Telcos need to direct their efforts towards building knowledge-sharing forums where they can share insights on fraudster behavior and geographical locations from where most of the fraudulent calls are generated and what kind of products tend to get misused by these fraudsters to nip things in the bud.

Telcos should understand that indulging in rat race or blaming each other will not help solve issues arising from such frauds; rather they should adopt a proactive approach to identify and prevent such scenarios in future. Instead of the Regulatory authority dictating terms to the operators, the operators must drive the authority to create nationalized framework for user identity governance.

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