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Tag Archives: Fraud Management

IRSF Fraud: there’s more to this than meets the eye!

How big is the impact of the IRSF Fraud and how are the attacks launched?

International Revenue Share Fraud (IRSF) is one of those fraud types that has been alive for two decades now, all because of the fraud being intricate in its pattern while the approach to it being still very reactive. Here, the motive of the fraudster is to abuse a telecom operator’s network infrastructure to artificially inflate traffic onto high-risk international destinations with the intention of non-payment. This fraud is common to multiple geographies and has estimated for a fraud loss of USD 6.1 Billion (The highest fraud loss contributor) as per the Communications Fraud Control Association (CFCA) Global Fraud Loss Survey, 2017.

Lack of adequate steps taken to protect the network has caused this fraud to grow by leaps and bounds. In this fraud, the attacker usually tries to exploit the vulnerabilities of the Telecom Service Provider’s assets and attacks by either calling to unallocated number ranges or land calls onto international premium rated services or illegitimately route calls to short stopped mobiles. PBX hacking and abuse of promotional services are often the commonly used methods for executing the fraudulent practices. The fraud is also quite common with many fixed line providers.

In my experience of working with multiple operators, globally, I feel that the most common challenge faced by operators is in understanding the fraud pattern and method used by the attacker. The impact to operator becomes brutal when fraudsters use unknown patterns of execution and sophisticated techniques to attack the network. IRSF attack from roaming network, call conferencing, call forwarding, calling cards, negative margin abuse for products and services are among the more popular methods for fraudster in launching attacks.

Also, the lack of regulatory precedence in governing the way of carrying out business with international carriers is quite laxative now, setting the perfect breeding ground for fraudsters to flourish.

Why has this fraud grown in leaps and bounds and how do I ensure control Proactiveness?

Now here is the bummer – the traditional and reactive fraud countering mechanisms as of date do not have a full-proof solution, and one of the biggest reasons is that there are not enough fraud controlling strategies, mechanisms, and systems in place. IRSF, unlike other fraud types, requires a continual and proactive measure for control. More than just the “run-of-the-mill” detection techniques, the fraud type requires a well-planned control and mitigation steering strategy and here are six simple strategies, to begin with:

  • Fraudulent practices have become cleverer over time.

If we brag of the fact that the fraud detection technologies have become quite sophisticated over time, we must not forget that the fraud practices too have gained an equal amount of intelligence. Fraudsters these days are quick to realize technology loopholes and system fault lines. It does not take much for fraudsters today to detect the fraud finding patterns and control logic of Telecom Service providers and identified the loophole in the system. Study of method and pattern become a critical process.

  • Demoralize your IRSF attacker.

Letting your attacker attack you to dig his own grave sounds like an oxymoron? Actually not! It is, in fact, possible to have a honey -trap system in place where you lure the attacker to launch his/her attacks onto it without a fruitful outcome. The more the attacker’s attempts fail, the less hopeful he/she gets to strive any further.

  • Think of the customer and protect their interests

IRSF not just drains away revenue resources but also can cause customer dissatisfaction, causing them to churn out of the network eventually. Hence it is crucial that we don’t ignore whenever a customer complains of frequent cross-connections or call diversions for international calls.

  • Have an “Anytime-Anywhere” vigilance strategy with automation to your advantage

There is no denial to the fact that detection processes for IRFS are very complicated and resource intensive. However, having the right strategies, the right processes with the right amount of automation applied to them can help the business in a significant way. I personally recommend a 24 x 7 detection strategy to be put in place to counter the IRSF attacks. From the cases that I have dealt with, it’s my observation that the IFRS attacks happen round the clock, including the wee hours of the morning or off-business hours. Having a rotational manpower strategy can really work wonders at times. However, there could also be instances where having a 24*7 approach may not be possible owing to the lack of capital or high cost of human resources. In such instances, the automation of detection processes will be of value.

  • Never ignore Negative Margins

Negative margins can occur at any level. It could emerge while planning the pricing strategies of the products, services, use of calling cards in international destinations or Interconnect agreements. Feeble margins on profits can often open a Pandora’s box for fraudsters. Just the basic knowledge on negative margins is enough for fraudsters to break open mayhem. Trend reports on traffic patterns with priorities given to partnerships with frugal margins can save the day!

  • Pursue Strategic Knowledge Partnerships to establish Fraudster Intelligence

Sharing knowledge and having a supportive ecosystem for interaction with carrier partners and vendors in the value chain can be a practical step closer to proactiveness. Also, MoU’s established with knowledge bodies and CoEs like GSMA, CFCA, and others can help the TSP gain information such on PRS test numbers and services, high-risk range numbers, unallocated number series which can be used as vital sources of references to counter this fraud.

When I say, a reactive approach for IRSF fraud, I mean that much of the effort and systems built towards countering the fraud is in silos and so are the human efforts that go into it. By a proactive system, I would mean a system that is quite unified in its approach and can perform end to end operations associated with the fraud type. One of the many ways of building a more unified system is to go the AI (Artificial Intelligence) way. A well thought out AI technology strategy can really help detect the fraud at a very early stage and help you choose the right controls for specific problems in question. It aims to reduce the time taken by the laborious human efforts that goes into the detection stage while helping analysts and investigators concentrate on the need of the hour. Much as the famous English saying goes “Every Cloud has a silver lining,” the impact of the IRSF can considerably be reduced by just broadening the organizational perspectives towards the fraud.

Vijay Amirthraj

Vijay is a Principal Consultant in Subex’s Managed Services vertical, focusing on Fraud Management. He has over 12+ years of experience in Telecom fraud, & Revenue Assurance management professional with  progressive experience in process management and managing risks in telecom business.

8 Simple Strategies for Telcos to counter Wangiri Fraud

Wangiri is not new rather; it is one of the most commonly occurring telecom fraud. In a recent case, a fraudster gave a missed call to several users of different countries. When the users viewed the missed call on their mobiles, they thought that it was a genuine missed call and called the number back. That is where they got tricked! The fraudulent numbers were unusually long and originated from an array of exotic countries. These were premium rated numbers so when the users called back, the fraudster’s intention to extract maximum payment out of them was successful.

In such scenarios, it is not just the subscribers but their operators as well who bear the losses. There is both a direct and an indirect loss for the operator. As per the latest CFCA 2017 global fraud loss survey, Telcos have lost close of 1 Billion USD to Wangiri Fraud alone, which is quite a lot!

In my point of view, Wangiri cannot be eliminated entirely for two main reasons- there is no proper regulation on the carrier business, and there is lack of visibility on the end carrier who is terminating the call. The end carrier who terminates a fraudulent missed call is not aware of the fraudster details and whether the country from which call has originated is a high-risk destination or not.

So, let’s look at how can telcos protect revenue and provide great customer experience?

  • Subscriber Awareness

A pro-active approach to minimize Wangiri fraud would be, making the consumers aware of the fraud scheme. If a number appears to be suspicious, a quick search of the number in several free apps available online, would tell the customer if the number is a part of any ongoing scams or not. Several Fraud Management tools are readily available in the market to detect and prevent Wangiri.

  • Customer Experience Management

As the customer is the king of any business, and hence Telcos need to manage the customer complaints effectively, which will, in turn, reduce customer churns. All employees in the customer care department should be well informed about the Wangiri fraud and how the customer care executives should manage the complaints related to this fraud.

  • IVR (Interactive Voice Response) Facility

IVR Facility is a pro-active approach that can be adopted by the operators. Whenever a subscriber calls back to a high-risk destination upon receiving a missed call, the operator should have an IVR voice informing him about his called destination. This IVR voice message would make the subscriber cautious to drop the call.

  • Removal of International Services as the default service for a Subscriber

In India, Telecom Regulatory Authority of India (TRAI) has announced a new mechanism to effectively protect the common interest of mobile subscribers. TRAI has said that international service calling facility should not be activated on prepaid SIM cards without the explicit approval of the consumer. This measure is yet to be adopted by several other regulatory bodies globally.

  • Technology

To protect customers from phone scams, T- mobile has introduced a new network technology. They have rolled out a scam ID by which customers are automatically alerted when an incoming call is likely a scam.

Several other vendors are also coming out with similar technological solutions.

  • Routing Management of carrier:

When a fraudster carries out the Wangiri fraud and gives missed calls to multiple subscribers, high amount of increased traffic can be observed on the carrier who routes these calls. If an operator monitors this activity, there will be a repetitive trend of increased traffic observed on the same carrier to route these calls. In such cases, an operator must take necessary precautions to route all the traffic through an alternative carrier. Routing the calls through a different carrier will help in breaking the chain between the fraudster and the linked carrier.

  • Control designing through FMS tool:

Control designing through an FMS tool is required as it helps in early detection of Wangiri activity. An FMS tool assists in the discovery of Wangiri cases by monitoring the number of calls made by the fraudster. Artificial Intelligence & Machine Learning can play a significant role in detecting the Wangiri fraud.

  • Negative Margin Prevention

In case of a negative margin occurrence, the number needs to be blocked by the operator immediately as it leads to direct impact in the revenue.

I would conclude by saying the famous quote by Bill Gates, “Treatment without prevention is simply unsustainable”- though Wangiri fraud can never end completely, right preventive measures can minimize it significantly.

Neha is a Consultant (FM) in Subex’ s Managed Services vertical, focusing on telecommunications sector. She has over 4 years of experience in consulting and IT industry with key focus on Fraud Management, Risk Advisory -Telecom, Software Development & IT transformation. She has previously worked with EY & QuEST Global Pvt. Ltd

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.

Vijay Amirthraj

Vijay is a Principal Consultant in Subex’s Managed Services vertical, focusing on Fraud Management. He has over 12+ years of experience in Telecom fraud, & Revenue Assurance management professional with  progressive experience in process management and managing risks in telecom business.

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.

Vijay Amirthraj

Vijay is a Principal Consultant in Subex’s Managed Services vertical, focusing on Fraud Management. He has over 12+ years of experience in Telecom fraud, & Revenue Assurance management professional with  progressive experience in process management and managing risks in telecom business.

Why Artificial Intelligence Powered Fraud Management

Artificial Intelligence (AI) is not new and it has been around for decades. However, with the advent of big data and distributed computing that is available today, it is possible to realize the true potential of AI. From what started as an interesting story line in SCI-FI movies to programs like Alpha-Go which has been beating humans, AI has been evolving. AI also has branched out into multiple sub categories such as Machine Learning, Deep Learning, Re-enforcement learning etc.
FM-1

FM-2
An effective Fraud Management (FM) strategy includes 3 important pillars: Detect, Investigate & Protect. We believe AI can positively influence all the 3 pillars of fraud management, from reducing false positives to helping in mining root cause analysis to creating enhanced customer experience in protection.

In this post I would like to look at the starting pillar of the Fraud Management strategy – “Detection” and look at AI’s influence in this very important step. A traditional approach to Fraud detection has been through Rule Engines which could be:

  • If-Else Conditions
  • Thresholds
  • Expressions
  • Evaluating Data Patterns
These are widely known as deterministic solutions where an event triggers an action. The biggest pros and cons with this approach is that human intervention is needed to feed the logic.

For eg: for a threshold based detection humans have to feed the rule engine that count of records above a certain threshold is suspicious.

Following diagrams shows how this looks like

rule-engine

After looking at the diagram above an important question arises, should this threshold value be a straight line or can it bend based on how data behaves. Now there are ways for rule engine to behave like mentioned in the diagram,

variable-threshold

for eg, instead of having a single rule lets have multiple rules

  • Per Customer Category
  • Per Destination
  • Per Age of Customers

And multiply that with other dimensions in data which are

  • Phone Number
  • Caller Number
  • Called Number
  • Country Code

And multiple that with other set of measures per dimensions

  • Count
  • Duration
  • Value

And throw an additional billion volumes at the datasets

Quickly FM teams ends up with something like this
AI Blog1
But what they wanted or dreamt was this
AI Blog2

Now I am not saying FM teams are not skilled enough to fly, but a fraud team in a modern Digital Service provider should be more focused on other important factors.

machine-learning
So, let’s look at how a very evolved class of Artificial Intelligence known as Machine Learning looks at this problem statement. Rather than humans feeding domain information or thresholds, Machine Learning Algorithms mine data from historic fraudulent behaviors and create models. These models are then used to evaluate real production datasets to score whether they certain activity is fraud or not. An advantage is that these models are very good at looking the datasets from multiple dimensions and measures at the same time and concluding whether event is fraud or not.

This approach thereby helps in achieving multiple KPI’s of fraud management teams there by increasing efficiency.

  • Higher Accuracy – Because AI can learn and adapt to Business scenarios faster, AI can significantly increase True Positive ratio
  • Reduced time to detect – How fast a fraud event can be detected
  • Self-Learning – How over a period changing business scenarios and seasonality in data can be adopted to Fraud detection
  • Fraud Intelligence– How customer or any other entity behaviors can be learnt and categorized for better fraud detection
  • Proactiveness – Ability to mine for unknown patterns not seen in the data earlier
FM-4

Application of Artificial Intelligence has its own significant challenges and requires a new frame of thought, however looking at the Data Tsunami that has hit the fraud management teams, it looks an AI pro approach would only help Fraud Management teams to scale further.

Nithin Gangadharan

Nithin has more than 10 Years of experience in Fraud Management. He started his career as an Implementation Consultant with Subex Ltd and has been part of many Fraud Management implementations across APAC & Middle East. He has also been a Subject Matter expert & Business Solution Consultant earlier. Nithin is currently working as Product Line Manager for Fraud Management and machine learning developments at Subex.

Why SIM Box Fraud is Rampant in Africa?

The second fastest-growing continent after China, Africa owes much of its recent economic growth to the use of telecommunications services. However, over the past few years, telcos in Africa have been hit by several telecom frauds. SIM box fraud, also known as the interconnect bypass fraud, is one of the major frauds affecting the dynamic telecom market in Africa. The impact is huge in terms of the loss in revenues to telcos and taxes to the government. It is estimated that Africa loses up to 150 million US dollars every year to interconnection frauds. Reports suggest that two years back SIM box fraud had brought in losses of 12 to 15 million minutes’ worth of revenue to Kenyan government and operators, and about US$5.8 million to Ghana government.

Why SIM Box Frauds Target Africa?

  • As per the industry reports, mobile subscriber growth in Africa is largely driven by the lower call prices and availability of cheaper handsets. The competition arising from over-the-top (OTT) providers has put an additional pricing pressure on telcos, forcing them to design new bundled offerings encompassing data, voice and SMS. Such bundles bring much lower per-minute revenue for the operators as compared to traditional services. Fraudsters operating the SIM boxes are taking advantage of this scenario to bypass the formal call termination systems that fetch higher tariffs to telcos.  The calls routed through the IP networks are terminated using local SIM gateways, thus compromising the formal interconnection networks and bringing heavy losses to the telcos who have invested in building the networks. Traditionally, African countries are known to have higher interconnection tariffs compared to other regions, which further explains why such frauds are prevailing in Africa.

 

  • If I were to look at data from google trends, one can also make out that Ghana in Africa seems quite buzzy about “Simbox Fraud” as a term to be searched on Google (till Nov, 2017)

 

simbox-fraud1

 

 

  • Technological advancements have also contributed for the rise in interconnection frauds. The growing sophistication around SIM box technologies has made fraud detection difficult using traditional methodologies. SIM boxes are programmed to mimic the activities of a normal call user. The equipment can have SIM cards of different operators installed, so a single SIM box can operate with several GSM gateways located in different parts of the world. The availability of SIM cards at cheaper prices and the lack of law enforcement over the sale of prepaid SIM cards have also favored the growth of SIM box fraud, further.

 

  • Globally, the difference in approaches adopted by different countries to deal with the fraud makes it difficult for operators to develop a unified strategy to fight these frauds. IP interconnection services are treated as legal in a few countries whereas they are banned in other countries due to the regulatory issues associated with such activities. For example, the Ghanaian government has declared SIM boxes illegal and made several arrests in this regard. However, SIM boxes are now available in several open markets including popular e-commerce platforms for around $1000 per unit. To make the matter worse, OTT providers like Viber are now explicitly selling their call termination capabilities to lure roaming customers to such bypass activities. Another such OTT development I recently noticed is Skype offering Free calls to mobiles and landlines in the United States and Canada from India These evolving trends convey the scale at which the SIM fraud is growing, calling for immediate action from telcos to safeguard their revenue streams.

Unified approach for addressing Sim-box fraud:

To conclude, the recent developments around SIM box fraud have further aggravated the challenges faced by African telcos. With no scope for regulatory remediation, the only way forward for them is to prevent these attacks using advanced technologies. Traditional approaches like Call Detail Record (CDR) analysis are becoming ineffective in dealing with modern SIM box strategies due to the latency and false positives associated with those methods. As the market evolves, operators are looking toward a unified approach that can help them address the crisis in a much proactive manner. The developments around machine learning and test call group (TCG) analysis have favored the growth of an integrated solution that can help telcos combat the fraud in a cost-effective manner. The approach builds the capabilities of the traditional models but integrates the advancements in artificial intelligence and self-learning rules.

Watch this space for more updates on SIM box fraud management with cognitive analytics capabilities.

Neeraj leads digital marketing for Subex with focus on Website, Search, social media, mailer automation and MIS. In addition to this role, he also looks after product marketing for Revenue Assurance & fraud Management solutions for the company. He comes with over 8 years of experience spanning across sales, product and digital marketing.

Why Telcos could never overcome Simbox Fraud since a decade Now

Simbox, Bypass Fraud/ Or Interconnect bypass Fraud has been one of the fastest growing Fraud Types In recent few years.  As per 2017 Global Fraud Loss Survey by CFCA, Global Fraud Loss Estimate stands at $29.2 Billion (USD) annually which is 1.27% of global telecom revenues.

global bypass

Source CFCA Survey Results

Simbox Fraud / Bypass Fraud has been a significant fraud issue for more than a decade now. CFCA survey results across 2009 till 2017 clearly shows an increase of more than 100%  in Bypass fraud since 2013. In this blog, we shall discuss about factors that has contributed to this continuous increase in Bypass Fraud and reasons, operators have not been able to effectively mitigate Bypass Fraud.

Factors for continuous Increase in Bypass / Simbox Fraud:

  • Reduced barrier for entry

Buying and operating SIMBoxs has never been easier with online stores, e-commerce websites,courses, forums and instant support availability.  This has led to an increased spread of VOIP based startups and subsequent increase in bypass fraud. VOIP based calling apps have also made customer acquisition easy by making them  easily available on  AppStore for Android & IOS users. For instance, a recent news from India covered the similar trend wherein those who wanted to make international calls from Gulf countries has to download an app called ‘dial to India’ Once this app is downloaded, they get a password for monthly subscriptions. The person sitting abroad will just dial the number in India, the call will bypass the VSNL gate and will directly route through the SIM box and will get connected from there. Read More

Few more such examples as below:

Illegal phone exchanges thriving on SIM boxes

VOIP exchanges used by ISI busted in Andhra Pradesh, India

  • Competitive Landscape

Reduced margins on international traffic has resulted in wholesale traffic being mixed with internal traffic. Wholesale providers have also been increasingly offering non-CLI based options which could potentially end up in Grey routes. This fierce competition had led to increase in bypass traffic particularly in countries with higher landing costs.

Reasons Operators have not been able to effectively mitigate Bypass Fraud:

  • Advancement in Sim-server Technology

Simbox have evolved from being a simple single box setup to a complex modular architecture. This architecture allows fraudsters to maintain all the simcards in a single place and using Antenna modules and multiplexers, fraudsters are able to distribute their operations in the market. In fact, Latest Simservers also comes with inbuilt anti-fraud detection solutions allowing fraudsters to  distribute his operations in multiple locations. This makes fraud detection very complex as fraud management teams have to device multiple strategies to beat fraudsters at their game.

  • Regulatory Changes

Regulatory changes in certain markets have fueled increase in traffic for Bypass. Recent changes of regulations in European Union has also resulted in traffic with E.U been heavily being differentiated in price from traffic outside E.U thereby causing significant increase in Bypass traffic.

  • Raising Concerns in Simcard Sales

Increased pressure to maintain sales and activation of new connections have resulted in dealers colluding with Bypass fraudsters. Bypass operations requires lot of sims to be activated in bulk and lack of effective subscriber acquisition controls have led to fraudsters taking advantage of it.

Fraud Management teams further have an uphill task in the Bypass fraud space as new technologies such as virtual sim’s would only increase the impacts on bypass of international traffic. It is hence important that they adopt a comprehensive fraud detection methodology to fight simbox frauds.

Nithin Gangadharan

Nithin has more than 10 Years of experience in Fraud Management. He started his career as an Implementation Consultant with Subex Ltd and has been part of many Fraud Management implementations across APAC & Middle East. He has also been a Subject Matter expert & Business Solution Consultant earlier. Nithin is currently working as Product Line Manager for Fraud Management and machine learning developments at Subex.

Device Journey Management: the next frontier for Device Assurance

In recent years operators have scaled their thinking into hundreds of millions – but not in terms of data volumes, but instead in the numbers of devices now utilizing their networks.  Smart handsets have led the charge of devices, followed (and soon to be surpassed) by IoT devices, and an army of small cells that will serve to densify the upcoming 5G network rollouts around the world.

Why are these devices capturing more and more operator attention?  With over 1.5 billion smart phones shipped from manufacturers in 2017, the amount of investment by telecom operators just in this device category alone amounts to approximately 20% of their overall operational budget.  However, each year tens of millions of dollars of this opex are being written off as losses by operators due to issues with logistics (forward and reverse), fraud, and process misalignments; device journey oversight doesn’t exist as a discipline today.

Subex has invested almost two years researching this domain, including talking with operators of all sizes around the world.  What we have found is an expanding set of exploitable gaps that current systems and practices are incapable of closing.  Points of risk exist across internal processes, channel partners, distribution and supply chain, and various other areas leading to (and sometimes even originating from) the end consumers.  These risk points accumulate losses for operators that range between $500K USD to over $10M USD per month, per operator, depending on size of the operator.

The device growth area today is not only in smart handsets, but also in a wide array of small cells, sensors, and various other categories.  With already significant gaps existing in oversight, this new breed of devices puts an even greater risk on operating budgets.  Under current estimates, deployed IoT devices alone in the next 5 years will exceed 200 billion units, dwarfing the handset counts worldwide.  Can losses be sustained, or even ignored, at these levels?

Subex will be speaking about a comprehensive strategy and methodology for Device Journey Management during a presentation at the CFCA Winter Conference in Las Vegas on February 6th, 2018.  We will also be at the Mobile World Congress in Barcelona later in February where we look forward to speaking with operators encountering the same problems.

Vice President – Product Management – John Brooks serves as the Vice President of Product Management in Subex. He has over 26 years of experience in Telecommunications, spanning Fixed, Mobile, Data, and Video technologies. Within the industry Mr. Brooks was a board member for the GBA, founded the TM Forum Fraud team (authoring the first International Fraud Operations and Fraud Classifications guides), and now leads the TM Forum Network Asset Management team, focusing on transformative best practices for SDN/NFV operations. Over the years Mr. Brooks has served as an Advisory Board member for a prominent technical university, and has spoken at over 50 industry events and authored numerous papers on topics spanning IoT, Digital Disruption, Big Data, and Enterprise Risk Management. With Subex (formerly Connexn/Azure) since 1999, he has directed over 40 successful Cost, Revenue, and Business Optimization engagements at over 24 top-tier carriers globally, including AT&T, America Movil, BT, Vodafone, and Verizon.

Digital Advertisement Frauds: A Telco Story (Part 2/3)

This is the 2nd part of the 3 part blog series and covers how the digital advertisement ecosystem works along with understanding how big is the problem of fraud in that ecosystem.

This 3 part blog series puts a light on relevance of Digital Advertisements in telecom space along with providing a high level understanding of it’s ecosystem and fraud risks it injects. Idea is to give readers a basic knowledge of the digital advertisement space and the inherent risks.

The 1st part of this blog series was published on Jan 21, 2016 and you can read the same here.


Part 2 – Digital Advertisement Ecosystem & the problem of fraud

Advertisement Ecosystem is divided into 9 major components, as shown in the image below:

1. Advertiser:

Advertisers are ‘Brands’. Brands which are the source of promotions for a specific product, service etc. This is the entry point of money into the ecosystem – A demand feeder.

2. Ad Agency:

Ad Agencies are the entities who plans marketing & ad campaigns on behalf of the advertiser. They are, generally, also the ad creators, or outsource the creative bit to a media agency.

Ad Agency designs the ad strategy and works with publishers, ad networks and other industry participants making the demand meet the rest of the ecosystem.

3. DSP:

Demand side platform. These are the demand side aggregation platform solution providers. They may be part of an Ad Exchange or maybe separate entities. They allow buyers of digital advertising inventory to manage multiple ad exchange and data exchange accounts through single interface.

4. Ad Exchange:

Like the stock exchanges we all are aware of, Ad Exchanges act as a advertisement digital marketplace that enables advertisers and publishers to buy and sell advertising space, often through real-time auctions/bidding.

These are the points where the demand side generally meets the supply side.

5. SSP:

Similar to DSP, the Supply Side Platform are the aggregation platform solution providers at the supply side who enable publishers to manage their advertising impression inventory and maximize revenue from digital media.

6. Ad Network:

The Googles and InMobis of the world, Ad Networks connects advertisers to web sites that want to host advertisements. The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand.

The Ad Networks are commonly known to manage most of the data exchange in the ecosystem, while earning most of the revenues.

7. Publisher:

The ad space owner. This is an entity which owns the medium (website, app, content service etc.) to deliver ads to intended end consumers/ad viewers. Commonly known as the consumer touch point.

More touch points, better touch points, better the ranking of the publisher.

8. Consumer:

The ad consumers. Customers. Us. The target entity for the whole Ad Ecosystem.

9. Data Aggregators:

The data crunchers of the ecosystem, Data Aggregators serve as the independent measurement entities for the other players in the ecosystem. Aggregators collect and compile data from individual sites to derive big picture and sell to others.

 

The Payout Models

There are 3 main payout models in the advertisement ecosystem:

1. Pay Per Click:

Pay per click, also called cost per click (CPC), is a payout model in which advertisers or ad network pays the publisher when the ad is clicked by the consumer. It is defined simply as the amount spent to get an advertisement clicked.

2. Pay Per Impression:

Pay per impression (CPI), or “pay per thousand impressions” (CPM), refers to the payout model where advertisers or ad networks pays a publisher each time an ad is displayed on its inventory. CPI is the cost or expense incurred for each potential consumer who views the advertisement, while CPM refers to the cost or expense incurred for every thousand potential consumers who view the advertisement(s).

3. Pay By Lead:

Cost per Lead (CPL), also known as cost per conversion, is a payout model where the advertiser pays for each specified action which the advertiser can consider as a business ‘lead’ with verified interest – for example, a form submit (e.g., contact request, newsletter sign up, registration etc.), feedback, double opt-in, sale etc.

The influencer of each payout model, which governs the actual payout while governing the quality rating of a publisher, is CTR (Click Through Rate).

Click through rate is defined as the rate of consumer taking the intended action – click, form fill, registration etc. over the advertisements being displayed to him.

In simple terms, higher the CTR of a publisher, higher is its quality rating. This when mixed with volume of ad traffic, directly influences the revenue for a publisher.

CTR also helps gauge the quality of ads itself – in terms of its creativity, contextuality & relevancy.

 

Role of a Telco

While traditionally Telcos have been playing a role of an advertiser, they have been slowing growing as publishers too, utilizing their web portal space for the purpose.

But, as I wrote in the first part of this blog series, Telcos are now riding on a significant ‘ad capable’ inventory being generated by their next generation product & services, specially content related.

This significant inventory at their disposal has a capability of turning Telcos into a small or mid sized Ad Network, while setting up advertisements as one of the key revenue source or service adoption enabler over the coming years.

Fraud Risk Levels in Advertisement Ecosystem

Before we move to the 3rd part in this blog series, let’s look at the existing fraud levels in the Advertisement Ecosystem.

Let me tell you, if you are all concerned about the 1-3% fraud loss levels against traditional telecom services, the fraud levels in the advertisement domain is going to give you sleepless nights.

To give you an example, one study by MediaPost reveals that, if a company has an online display ad budget of $100,000, then only $8,000 of that ad spend has the “chance” to put advertisements in front of human eyeballs.

That means, if you are paying $0.10 per impression, then the $10,000 that you will pay for 100,000 impressions will result in “chance” of only 8,000 human views—meaning that the effective Cost per Impression will actually be $1.25.

Pushes an organization’s ad investments of the track completely, isn’t it ?

Below are some industry statistics around existing levels of advertisement frauds published by the likes of SunTrust Robinson Humphreys, Ad-fraud prevention firm Pixalate & Forensiq:

Now, if a Telco’s Fraud Management team were to analyse frauds in the digital advertising domain, it will need to focus on 3 different areas:

  • Safeguarding your organization’s marketing investments & sales targets: It is more relevant when you see the Telco you are working for, as an advertiser or a brand.
  • Protecting the revenues from AD business & also safeguarding your publisher rating: This is relevant when a Telco acts as a Publisher or an Ad Network
  • Lastly, your own subscriber’s satisfaction & security levels: Now, this one is a bit confusing. But, to understand how advertisement frauds affect Telco’s end subscribers directly, let’s watch a short video courtesy Forensiq:

 

As shown in this interesting video by Forensiq, advertisement frauds not only impacts a Telco’s investments and expected revenues, but also influences customer satisfaction directly.

Recently Three, a leading telecom operator from the UK & Italy, decided to install network level ad-block solution with the below mentioned intent:

“Irrelevant and excessive mobile ads annoy customers and affect their overall network experience. We don’t believe customers should have to pay for data usage driven by mobile ads. The industry has to work together to give customers mobile ads they want and benefit from.”

If Three are successful, I can only imagine similar actions becoming widespread over the coming years or the sane players of the advertisement ecosystem gearing up to counter the problem of fraud like never before.

Clearly, there are two sides of the coin – while advertisements open up new exciting revenue avenues for Telcos, the fraud problem in the ecosystem is so widespread that it has potential to disrupt the whole revenue model built upon it.

In the next part of the blog, we will cover the most interesting bit and understand the presence of digital advertisement fraud risks in the ecosystem along with looking at a few case studies. You will not have to wait far too long, that I promise!

Abhijeet Singh

Abhijeet is currently working as Principal Consultant with Subex.

He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.

Out of professional life, he is a blogger, tech enthusiast and a traveler.

Digital Advertisement Frauds: A Telco Story (Part 1/3)

Look around you and you see posters, hoardings & stand-ins. Look at whatever screen you carry or face and you will see videos, popups & banners. These are “Advertisements” and they are everywhere!

I will not be going overboard when I say advertisements are the fulcrum of relationship between every business and its consumers. Organizations put significant investments into their marketing functions which in turn enables advertisements.

While earlier advertisements were statics in nature – channel run time, physical hoardings etc., they were easy to track to ensure the investments are protected. But, with the advertisements becoming digital, increasingly dynamic & internet driven – There has been an increasing need for measuring & protecting the advertiser’s or brand’s money and even the publisher’s real estate which is used for ad delivery & consumption.

Like it or not – In Telecom space, Digital Advertisements are coming to steal sleep off every fraud manager’s eyes.

From the risk perspective, the domain is complex and different from the traditional Telecom frauds, but the most important point is that advertisements from the internet space bring fraud exposure levels which are much higher than what Telco’s are used to. And containing that, will be a real challenge!

This 3 part blog will put a light on relevance of Digital Advertisements in telecom space along with providing a high level understanding of it’s ecosystem and fraud risks it injects. Idea is to give readers a basic knowledge of the digital advertisement space and the inherent risks.

This is the 1st part of the 3 part blog and covers why telecom industry is looking at Digital Advertisements as their next enabler. 


Part 1 : Digital Advertisement and Telcos: A match made in heaven

When we think about internet or technology, there are 4 names which cross mind – Google, Apple, Facebook & Amazon.

What the 2 of these 4 giants, Google & Facebook, have taught us that AD revenues are a big deal when it comes to the digital world. With Apple & Amazon also planning to jump the advertisement bandwagon, the belief only gets stronger.

No surprise that Google & Facebook earn 90% of their revenues from advertisements. Also, most of the Apps, specially communication apps also have advertisements at the centre of their revenue model.

Considering this, it was just a matter of time our own Telecom industry shifts its focus on exploring the digital advertisements as one of their primary source of revenue.

The likes of Verizons, Axiatas & Singtels have already invested big in the area of advertisements.

Also, some other leading operators like Vodafone, Telefonica, Etisalat and France Telecom have also openly agreed for a bright future of advertisements in telecom industry.

Digital advertisements: Attracting attention within Telcos

If you look at telecom industry as an advertiser, you will find telcos spending 10-15% of their total yearly revenues as marketing budget, out of which 46% is only on digital advertising like website banner ads, video ads etc.

That is quite higher than any other comparable industry sector.

And if we believe certain studies conducted by industry experts like Adobe, spend on advertisements is only set to grow:

It only shows that telco industry agrees that this spending will only increase with mobile advertisements leading the pack.

What will drive this spending on Advertisements further ?

Now lets look at what are the factors which are going to drive the investments in the area of advertisements further.

If you look at the areas marked in yellow in the chart below, you will find that digital Advertisements are among the fastest growing revenue streams for Telecom Industry.

And, if you look at the elements which are marked with red circles, you will see a list of services on which telcos are currently betting big on.

These services, which include M2M, Gaming, Music, Video etc., interestingly are set to become the “enabler platforms” to drive advertising revenues further.

And not only that, these services also ensure that Telcos have sufficient advertisement inventory for them to upgrade from just an advertiser to become a big ticket publisher or a small AD Network.

This is the reason why you will find that these services have “Ad Delivery” inbuilt as a core functionality within their framework.

Digital Advertisements are key to make upcoming & exiting product & services more affordable to a Telco’s subscriber base and in turn boost adoption

Apart from this, we all are aware that content services are set to become a big ticket to monetize the large investments Telcos have been making towards infrastructure & quality of data services.

There are researches from the likes of eMarketer which indicate that content is set to make up 66% of the total traffic in Telco data pipes by the year 2017.

Driving on content services, advertisements are set to attract 100 billion dollars in next 1 year and an increase of 233% increase mobile ad spending in next couple of years.

Now, there is little doubt that advertisements are set to become one of the major source of revenues for Telcos or power that next big idea which will be a star of their upcoming annual report!


In the next part of the blog, we will understand how the digital advertisement ecosystem works along with understanding how big is the problem of fraud in that ecosystem. You will not have to wait far too long, that I promise! 

Abhijeet Singh

Abhijeet is currently working as Principal Consultant with Subex.

He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.

Out of professional life, he is a blogger, tech enthusiast and a traveler.

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