Telecom Fraud Management: Lessons from 2022 & trends to watch out for in 2023
New trends in the telecom industry are causing a stir. For example, the worldwide economic value of 5G will reach US $13.2 trillion by 2035 thanks to improvements in mobile broadband, widespread machine-type communication, and ultra-reliable low latency networks.
A new immersive other digital universe called the metaverse is starting to take shape. It combines augmented, virtual, and mixed realities with the actual world. It may present telecoms with new chances to work with hyper-scalers for seamless service delivery. Developers are eager to exploit 5G’s low latency capabilities to allow edge computing, which could open up a variety of new business opportunities for telcos in the areas of driverless vehicles, virtual reality games, proactive asset maintenance, and smart grids.
The introduction of new technologies also expands the area of work for CSPs to include anything from assessing new partners, services, and products to keeping an eye on network security and eliminating emerging cyber risks.
Telcos are battling a growing fraud landscape in addition to trying to meet customer demand for digital products and services. Some of the scams that have increased during the past year include the following:
- Account Takeover
- Increase in cross-industry targeted social engineering schemes (Wangiri Fraud, SMS Phishing/Pharming, Social Engineering, Robocalls & Scam calls)
- An increase in identity fraud in the financial services sector utilizing credentials acquired from data breaches
- SIM-Swap frauds
- Subscription frauds
The aforementioned fraud methods contributed to massive fraud losses under IRSF Fraud, Device/Handset Fraud, Wangiri, Bypass fraud, PBX hacking, etc.
Fraud trends to watch out for in 2023
2022 was quite a tempestuous year for the fraud management space globally. Some fraud trends to look out for in 2023 are:
Newer social engineering techniques: Fraudulent assaults that compromise victims’ personal or professional security will increase in the next year. Deepfake and phishing will be used in these sophisticated assaults. Deepfake attacks, which use AI to create fake films and pictures that are difficult to distinguish from real ones, will proliferate and compromise an individual’s or an organization’s security. Also, with recession lurking around the corner, the trajectory of such fraud will go up, and the act of fraud prevention is the immediate need of the hour.
The deployment of 5G technology will probably lead to an increase in the number of Internet of Things (IoT) devices connected to networks, opening up new chances for hackers to conduct more extensive and sophisticated assaults. Attackers will find it simpler to target particular types of traffic, such as IoT devices, thanks to network slicing, which enables the separation and control of various types of data on the same network. Additionally, consumers are more likely to experience security problems, including denial of service assaults, botnet attacks, and man-in-the-middle attacks, due to the unique design of 5G networks.
Rise of Synthetic ID: Synthetic identity fraud is the creation of an identity using both real and false information. The new identity that is created, also known as a synthetic identity, contains enough verifiable information to appear legitimate and may be used to open accounts, make fraudulent transactions, and con telecoms. The internet’s development has made it easier for large-scale synthetic identity fraud and blurred the distinction between traditional crime and cybercrime. By 2023, synthetic identity fraud is expected to reach $2.42 billion, and by 2024, $5 billion.
Scam Calls: The number of scam calls is increasing daily as threat actors get more inventive in attracting their victims. Some people play on fear while others make false promises, while some appear amiable while threatening victims with grave repercussions. Scam calls are frequently a part of a broader plan. Scammers attempt to get sensitive personal data from their prey in order to carry out more telecom scams. Such fraud may cause customers to experience everything from identity theft to financial losses, while it can also harm telecoms’ reputations and cause revenue losses.
Robocalls: Although there are regulations in place to curb the menace of illegal robocalls, there seems to be no end to it in the near future. Scammers are quick to adapt to obstacles and are constantly seeking clever ways to bypass security protocols, thus continuing to affect telcos and their customers’ experience.
Device Fraud: Device sales are undeniably a revenue opportunity but come with significant risks. In recent years, we have seen a steep increase in the number of device fraud cases, with organized fraud- rings playing a significant role in these crimes, and this trend will continue to grow due to factors such as the advent of 5G, a shift in consumer behavior towards online channels, etc.
Flash Calls: Flash calls are quickly gaining popularity since they are thought to be more affordable than SMS but also quick and secure and contribute to a better customer experience overall. Juniper reports that Flash Call volume will increase by 25 times from 2022 to 2026. Although this is lucrative, fraudsters can exploit these gaps in the channels.
It is paramount for telcos to have a holistic fraud management strategy. One of the critical arsenals is to incorporate ML and AI algorithms in their fraud management systems that monitor networks for suspicious behavior. It has also never been more critical to proactively combat fraudulent behaviors using automated procedures that cancel, halt transactions, or suspend a subscription in real time. On the other hand, it is also vital for telcos to educate their customers on the new fraud tactics used by fraudsters in order to protect them from falling prey to fraud. Through advanced Fraud management systems that are readily deployable, 2023 could provide a more promising light on fraud identification and mitigation.
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