Cooperation – A paradigm shift for telecom fraud management systems

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telecom fraud management system
When solving problems, cooperation is usually more effective than competition. In terms of telecommunications fraud, this adage couldn't hold more truth.

This is due to the inherent nature of the current telecommunications landscape. Isolation between operators, a lack of transparency and ultimately, competition, has enabled fraudsters to thrive and remain steps ahead of any contemporary telecom fraud management system. By shifting from a mindset of competition to one of cooperation, together operators around the world can rid themselves of telecom fraud, for good.

What is Telecommunications Fraud?

Telecommunications Fraud, also known as telco fraud or telecom fraud, is any scheme designed to abuse telecom services to take advantage of operators and their end-users. Telecommunications fraudsters use illegal, deceptive tactics to steal money from operators and undermine service quality.

Cost of Telecom Fraud

Traditional telecom fraud management systems fail to stop 100% of all telecom fraud attacks, leaving the fraudsters a stake in your success. This threat is growing as traffic volumes rise. It's nature of our industry.

In 2021, a single fraud scheme, "Wangiri", was responsible for $2.23 bln in revenue losses to telcos globally. Another one, "Interconnect Bypass", stole $3.11 bln that same year and International Revenue Share Fraud (IRSF) accounted for $6.69 bln.

Total global revenue loss to telecom fraud rose from $28.3 bln to $38.89 bln from 2019 to 2021 – a 28% increase in two years.

The crippling financial impact, in addition to the loss of brand loyalty and customer churn, has persisted at a growing rate for years.

Once we understand the mechanisms behind the fraud schemes and the nature of the call transit path, it's clear to see that telecom fraud will never be stopped while operators are working in isolation from one another (which is the modus operandi of today's telecom fraud management systems).
Cooperation between international operators is necessary for eliminating voice traffic fraud around the globe, once and for all.
While this may sound too good to be true, it's just a matter of technology and education.

Full Scope of Telecom Fraud

The effects of telco fraud don't only amount to staggering financial loss.

These schemes do indeed cause financial loss that can be easily measured in dollars and, as we can see, the numbers are astounding. Of no less relevance are the unresolvable customer disputes, ineffective traceback requests from regulators, distrust between operators and a list of other issues.

Fraud schemes like Wangiri, Call Stretching, Short Stopping, CLI Spoofing and others don't only steal major revenues from telcos. They also create network overloads, billing system and call duration discrepancies that practically cannot be resolved and much more, all of which lead to crippling customer churn.

These issues make up the other side of fraud loss, which by the way, ultimately compound the financial losses in the end as well.

There are three key aspects of this issue:

  • The fraud schemes
  • The call chain
  • The traditional telecom fraud management system

By understanding the mechanisms by which each one operates, we can see why cooperation is simply unavoidable if we're serious about eliminating telecom fraud.

Consider Interconnect Bypass

As a call travels from origin to destination, it transfers from carrier to carrier. Each entity in the call chain charges the preceding carrier for receiving traffic and carrying it onto their network. In other words, each carrier charges and is charged for receiving and passing on a call, respectively.

In the case of Interconnect Bypass Fraud, corrupt carriers along the call chain manipulate voice traffic in a number of ways at these interconnect points to illegitimately inflate their profit margins. While it's one of the most common forms of telco fraud, this doesn't mean it's easy for a telecom fraud management system to detect.

Issue #1 – Revenue Loss for Terminating Operators

A corrupt carrier may reroute incoming high-rate traffic via a SIM box (SIM Box Fraud), pass traffic on to another dishonest operator (Refiling Fraud), reroute it to an OTT app (OTT Bypass Fraud) or choose another means of manipulating the traffic to appear (and be charged as) low-rate traffic (i.e. disguising it as on-network traffic).

Regardless of the means, the fraudulent carrier collects a fee for the high-rate incoming traffic (usually international) while paying a low-rate fee to the next carrier in the chain – thus, inflating their profit margin and undermining the revenue of succeeding carriers.

At no point in this sequence of events are the preceding or succeeding carriers (that aren't in on the scheme themselves) aware that the fraud has occurred. As a result, the terminating operator loses revenue by charging for low-rate traffic that began as high-rate, quality traffic.

Issue #2 – Loss of Call Quality & Revenue Drop for Originating Operators

Quality is the other side of this issue. While the terminating side faces revenue drop, the originating side faces both revenue drop and eroding call quality.

Traffic that has been rerouted via a SIM Box, refiled or disguised as on-network traffic is also unstable, cuts out, drops and has a very low ASR (Answer Seizure Ratio – the percentage of calls that are answered). In general, it's of lower quality and the low ASR results in further revenue loss.

In the end, the financial troubles caused by this scheme are compounded by deteriorating trust between international operators and eroding brand loyalty among subscribers. And traditional telecom fraud management systems struggle to stop it.

How Can You Protect Yourself From Telecom Fraud?

Without a telecom fraud management system that offers complete transparency along the entire call chain and an effective means of tracing the call back to its origin, operators fail to identify the source of the fraud. They're unable to hold the responsible party accountable, resolve customer disputes and ultimately stop the attacks.

In most cases, they're left without a choice – they accept the losses. For example, with unresolvable dispute tickets, operators face a dilemma – they simply have to choose between footing their subscribers' bills or risking mass churn.

The above complications are only the result of Interconnect Bypass fraud. In the case of Call Stretching fraud, victims face more than shocking charges on their monthly phone bills. They also face the uncomfortable realization that a part of their private conversation was recorded. This is especially unacceptable today, when data privacy is of utmost importance.

Each individual fraud scheme presents its own set of unique threats to operators and subscribers.

While operators may turn to highly-advanced, well-intended telecom fraud management systems, they fail to accurately detect and stop 100% of all voice fraud in real-time. The losses persist.

The Problem With Traditional Telecom Fraud Management Systems

Traditional telecom fraud management systems (FMSes) are designed to analyze call patterns, detect illegal routing, call-generation, common patterns typical of massive volumes of calls and other indicators of fraud.

Regardless of the level of accuracy they achieve, most of them provide after-the-fact detection – an operator's FMS signals a fraud attack after it has occurred. The operator then adjusts the system settings accordingly in hopes of preventing similar attacks in the future. However, the fraudsters evolve, finding new ways to evade detection, and the cycle continues.

Additionally, enhancing telecom fraud management systems via the traditional approach is akin to further fortifying the wall surrounding an individual operator's network. Ultimately, it leads to increased isolation.

One of the small benefits of this scenario may be the profits generated from the competition. However, the costs of this isolated approach far outweigh the benefits of eliminating the fraud altogether.

Holding on to these small profits ultimately prevents us from enjoying the wealth of benefits available when telcos operate in a fraud-free landscape:

  • Efficient and accurate inspections into the transit route
  • No country-specific call blocking
  • More secure services for subscribers (eg. voice to verify financial transactions)
  • No more outdated and costly solutions

The entire list of benefits of eliminating fraud goes well beyond recovering revenue loss and repairing brand loyalty.

But a telecom fraud management system must facilitate transparency and cooperation. This allows carriers to monitor events along the entire call chain, detect fraud in real-time and block compromised calls before they connect. Before AB Handshake's Call Validation technology, this hasn't been possible. Voice fraudsters have continued carrying out their business, going undetected.

The mechanism of the call chain is another factor lending to their success.

Telecom Fraudsters Take Advantage of the Transit Space

As I mentioned above, calls are often delivered via many different network operators before reaching their destination.

For example, a single call may originate from a mobile phone in the USA, transit the globe via one long-distance network or several networks provided by several operators before terminating on yet another mobile network, within the EU.

This space on the call chain handled by these transit carriers is often thought of as the 'Wild West' of voice traffic because operators here are free to manipulate traffic in various ways, mostly without consequence.

  • In this space, a fraudulent transit operator may reroute traffic through a SIM Box and pass it on as low-rate traffic to (illegitimately) increase its profit margins, as we discussed above.
  • They may hijack an incoming call, reroute it to a premium-rate number and collect the profits.
  • They may cut an active call and 'stretch' the charged duration by playing the A-side a recording of the conversation.

Or any numerous other fraud tactics.

As long as there is no transparency along the entire call chain, carriers are mostly free to do what they wish with the traffic. Telecom fraud management systems continue to detect only a portion of the attacks after the fact, while the scale of financial loss and reputational damage from telco fraud continues to grow each year.

We ask ourselves, who truly owns the call? The operators? Fraudsters? The caller? At this point, can we confidently say?

Competition → Cooperation

To take back control of the transit space, it's necessary to establish an effective level of transparency along the entire call chain.

The answer is a fast, secure, out-of-band network link between the originating and terminating operators. To cross validate key call event data and verify each call's integrity before it connects.

Interestingly enough, all calls made at any point in time on any network share some common features – the originating and terminating call details.

Operators can use such a network link to cross validate the call details of a call's A and B numbers in real time. Such cooperation allows all operators using the 'handshake' to immediately detect any manipulation of a call before it connects. And it also allows the operators to decide for themselves what to do with it. This system needn't reveal the connection status of a call – only status changes.

This is the basis on which AB Handshake's Call Validation technology operates. To trust such a solution, we need a deeper understanding of how it works. Fortunately, its simplicity is key to its effectiveness.

Call Validation Technology - Next-gen telecom fraud management system

At the end of the day, operators already cooperate with one another, but in a conflicting manner. We suggest another level of cooperation – not to reverse or repair the consequences of telecom fraud, but to stop attacks before they strike.

AB Handshake's call validation technology is based on one relatively simple concept. As we mentioned above – the cross validation of call details from the A and B call registries.

With the AB Handshake telecom fraud management system integrated into their native system, A and B operators can detect even the slightest form of manipulation at any point along the call chain on any inbound or outbound call. Most importantly, they can block a fraudulent call before it connects.

Here's how it works:

  • Each time a call is initiated, the A and B call details are sent to their respective Call Registries.
  • The A Call Registry routes a validation request to the terminating network, which reaches there before the call.
  • The call details from both registries are cross validated to check the validity of the call.

The slightest discrepancy between these call details indicates one thing only: fraud. The call is signaled, allowing the operator to either block it or allow it to connect (as is sometimes appropriate).

All communications carried out in the system via HTTPS are performed with TLS encryption.

This telecom fraud management system guarantees 100% elimination of all types of voice fraud on all traffic between member operators using the handshake and zero false positives.

Fraud-Free Community - AB Handshake

Because all traffic between operators using the handshake is guaranteed to be 100% fraud-free, the community becomes inherently stronger with each new member. By cooperating via the handshake, each new member expands the portion of fraud-free traffic.

As more operators join, the community grows. The volume of secure traffic expands while the volume of penetrable traffic shrinks, eventually leaving the fraudsters with nowhere to operate.
If adopted on a global scale, AB Handshake's call validation technology can eliminate telecom fraud worldwide
Instead of working in isolation, the AB Handshake telecom fraud management system allows operators to work in a state of cooperation between one another and successfully eliminate all fraud attacks on their networks (Wangiri, Wangiri 2.0, Call Stretching, PBX Hacking, etc.).

International Cooperation: The only way to stop telecommunications fraud

Telecom fraud is generally accepted by many in the industry as an inevitable loss we must face each year that can't be completely mitigated.

Attempts to strengthen traditional telecom fraud management systems and raise the bar on individual, isolated protection guarantees that fraudsters will always succeed to a meaningful degree.

While there may be some small advantage to competing against one another (such as financial profit), the losses far outweigh the costs.

By working as cooperators instead of competitors and cross validating network traffic with a universal handshake, we set the stage for realizing the vision of a fraud-free world.

Eliminate Voice Fraud on Your Network Today With AB Handshake

A fraud-free world is the ultimate vision. However, any operator who integrates the AB Handshake solution into their network enjoys immediate elimination of all telecom fraud on all network traffic exchanged between themselves and other members.

AB Handshake's telecom fraud management system guarantees real time protection from all forms of telecommunications fraud.

Our team is currently working with 200+ operators at various integration stages, including negotiation, contract-signing and onboarding. The AB Handshake telecom fraud management system is already validating live traffic to every country in the world.

If you're interested in joining the fraud-free community today, simply contact us here. One of our onboarding specialists will be in touch.