Dealing with Bypass Fraud: Think beyond the boundaries

Amid the fierce competition that the telecom industry is facing, sometimes we listen to stories of how lack of forethought of one Telco brings on illegal traffic on the network. This has serious implications such as revenue loss and unwarranted accusations among the operators affected by 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, along with a massive impact on their profitability. Telcos could be imposed a hefty penalty for their 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 Telco who suffered massively due to Bypass fraud.

Why did this happen?

The Telco 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 system. 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 and local termination rates made the environment suitable for fraudsters to run their schemes. Moreover, it was also identified that there were not enough KYC controls in the country to facilitate certain onboarding checks which distinguish a genuine customer from a fraudulent one.

The Repercussions

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. They also 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 frauds are rampant, Telcos need to direct their efforts towards incorporating advanced technologies such as AI/ML in their fraud management systems. This would help Telcos with early detection of fraud, as quickly as within 10 minutes of usage. Also, this would enable telcos to identify the various hidden complex patterns that otherwise might go undetected using traditional rule-based methods. These technologies can also help in monitoring the changing behavior without manual intervention.

Furthermore, telcos need to build cognizance in terms of fraudulent behavior and the locations from where they are generated. Telcos need to understand what kind of products tend to get misused by these fraudsters. This would help telcos to nip things in the bud thus saving millions and keeping their brand image intact.

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