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February 2015

Combating SIM Box Fraud: Network Protocol Analysis to the Revenue Rescue

Combating the SIM Box Fraud Threat: Network Protocol Analysis to the Revenue Rescue

International call bypass is one of telecom’s toughest fraud problems.

The fraud is primarily accomplished through SIM boxes equipped with dozens to hundreds of SIM cards that disguise international calls toward wireless operators as local subscribers making domestic phone calls.

These SIM boxes are causing major revenue damage to wireless operators in many countries.  Interestingly though, no one quite knows the actual volume and magnitude of the revenue lost from SIM boxes because detecting the bypass is an art, and not yet a science.  Compounding the problem, the fraudsters constantly develop new techniques to avoid detection.

Operators are not the only losers by the way.  Many countries impose a tax on telecom services, so the governments in those countries lose tax revenue when calls are illegally bypassed.

One of the innovators in the fight to curtail SIM box fraud is a U.S.-based company, LATRO Services.  Their company’s CEO, Lex Wilkinson, now joins us to give a backgrounder on SIM box detection techniques and tells us about LATRO’s new technology, Protocol Signature™ detection data analytics based on network protocol analysis that detects SIM boxes as they sign onto the network.

Dan Baker: Lex, what percent of the countries in the world experience this SIM box fraud?

Lex Wilkinson: It’s difficult to identify the exact percentage of countries, Dan, but I think that the percentage is very high.  A major misconception is that SIM box fraud happens in countries with very high termination rates, but based on our experience, we’ve seen it occurring even in countries where the rates wouldn‘t be considered very high.

The money-making opportunity for the fraudsters is the differential between the international termination rate and the local termination rate.  So even in countries where that is only a few cents, there’s still enough margin for fraudsters to make money.

The biggest hotbeds for SIM box fraud that we see are Africa, the Middle East, Central and South Asia, Latin America, the Caribbean, and Eastern Europe.

Gee, you didn‘t leave many continents out of the picture.  I’m curious: how do these fraudsters get into the business anyway?

For a fraudster to set up a profitable SIM box operation, the proper infrastructure needs to be there.  For instance, there needs to be reasonably good Internet service such as DSL, satellite, or fixed wireless like WiMAX.  We’re also finding that some of the wireless 3G and 4G data services deployed in the developing world are good enough to support termination of VoIP traffic to the SIM Boxes.  There also needs to be a plentiful supply of SIM cards because the fraudsters need to access a large volume of SIM cards on a regular basis.

We usually see fraud operations set up in urban areas within developing countries.  It’s rare — but not unheard of — to see SIM box operations in rural areas: broadband Internet connections and readily available supplies of SIM cards tend to be in the bigger cities.  Often times, access to the SIM cards in volume is made possible through dealer fraud.  A lot of countries require registration to get a SIM card, such that buyers need to show an ID in order to purchase a SIM.  In our experience.  However registration controls do little to stop SIM Boxes, but result in a criminal business around fake and stolen IDs used to acquire SIM cards.

Lex, I’m eager to learn about your new SIM box detection technology.

Well, I think the most effective way of explaining our solution is to review the evolution of SIM box detection solutions.  Let me walk you through the strengths and weaknesses of the two primary solutions used in the past 10+ years — test call generation (TCG) and fraud management systems (FMS).  Then I’ll discuss some of the advantages of what our new technology — Protocol Signature™, data analytics based on network protocol analysis — brings to the table.

SIM Box Detection Technologies


Test Call Generation (TCG) Systems

When the SIM box bypass problem was first identified in the late 2000’s, test call generation was the first detection technique that proved effective.  The idea behind test calls is to set up test phone numbers in your network and make calls to those test number from lots of different countries, through many different interconnect voice routes around the world.  In this way, you can find out where the grey routes are originating and the paths they use to reach SIM Boxes in your country.

Test Call Generation is all about probability.  The more routes and the more test calls you make, the higher the chances of finding SIM boxes.  Once you find routes that have a high volume of SIM box terminations, you can focus your call campaigns on those routes in order to maximize detections as much as possible.

Test Call Generation technology worked very successfully for many years.  Yet in the last two to three years we feel the effectiveness of that approach has dropped off significantly.  There are a few reasons for that.  First, the SIM boxers have figured out how to avoid detection by test calls.  For instance, they perform analysis on the voice call traffic coming toward their SIM boxes.  Based on usage patterns and other patterns, they can determine which calls are real subscriber calls and which are originating from a test call generation system.

Then they can either block the test calls and prevent them from reaching the SIM box to begin with, or reroute the calls to a legitimate route in order to avoid detection.

We’ve also heard cases of fraudsters allocating pools of their SIM Box cards to be sacrificed.  That is, they allow these allocated SIM cards to be detected in order to make the losing wireless operators feel like their controls are producing adequate results.  This is really only a diversion.  Meanwhile, other undetected SIM cards are driving the bypass revenue losses.

Bottom line: test calls are a technology and methodology that’s now well-understood by the fraudsters.  You still need it.  We don‘t recommend anyone stop using test calls.  Test calls do get some results and allow a wireless operator to profile their interconnect partners and understand who’s sending bypass traffic toward their networks.

Fraud Management Systems (FMS)

Another solution traditionally used to detect SIM boxes is the Fraud Management System (FMS), an enterprise wide data analysis platform that works well in detecting many different types of fraud.  In SIM box detection, the FMS uses Call Data Records (CDRs) to create usage-based analysis profiles that detect SIMs being used in SIM boxes versus those used in legitimate subscriber handsets.

FMS and similar CDR Analysis platforms have been effective in detecting SIM boxes, but in recent years, fraudsters have figured out ways to evade usage profile detection.  For instance, SIM Box manufacturers have developed something called HBS — Human Behavioral Simulation software — that allows the SIM boxer to simulate the behavior of real mobile subscriber behavior.  HBS techniques involve automating features on the SIM Box such as SMS messaging, self-calling, and international dialing in order to frustrate detection algorithms used by FMS and CDR analysis.

Now in both cases — test calls and the FMS — by nature of their methodology, the fraud has been committed by the time you detect it.  So you are already losing money before the detections occur.  This is a major limitation.

Data Analytics based on Network Protocol Analysis

At LATRO Services, we figured there must be a better way to attack this problem.  Our expertise and background is in mobile network architectures and systems: we know a lot about protocol signaling and systems integration of network elements within a wireless network.

So we developed algorithms that use information available within the network itself to help detect SIM box fraud.  In fact, we can detect SIM Boxes on the network at the moment they connect.  So as soon as the SIM box is powered up and the SIMs are inserted, we can do the detection regardless of usage analysis and test calls.

As a wireless operator, you’re never quite sure when a SIM box is going to turn on within your network.  You have to always be looking in real-time for the patterns in individual protocol messages of all the wireless devices on your network.  So we developed a technology that allows us to flag what we call the Protocol Signatures of SIM box devices vs. the devices a normal mobile subscriber uses.

Now the information we are processing and analyzing is based on signaling data that is not available in CDRs.  So we feel we are offering something unique to the market.  Something that test calls, FMS, and CDR Analysis cannot leverage.

Lex, this rundown of the different kinds of detection platforms is very valuable.  And I would love to hear the FMS and test call vendors chime, too, so I invite them to comment.  Where do you feel operators need to modify their methods of combating the SIM Box?

I think too many operators assume their current suite of tools is sufficient to detect and control the SIM box problem in their network.  Yes, they are getting some results, but my hunch is the results are not really mitigating the problem effectively.

Looking at this from a revenue perspective, if a wireless operator is doing a good job of stopping SIM boxes on its network, the volume of international traffic to that network should be increasing.  We know there should be a strong correlation here: if you do a good job at SIM box detection, yet your international call revenue is decreasing, there’s a disconnect somewhere.

In fact, many operators are frustrated by revenue declines and are looking for SIM Box control solutions that go beyond what’s available today.  And that’s where we are looking to add value.

For an effective mitigation strategy, you need to approach the problem from multiple angles.  For example, though SIM registration and distribution control is a good strategy, it needs to be complemented by other strategies.  We would never say our solution alone is a silver bullet.  But we do feel we have an innovative technology that strongly complements and even outperforms other solutions currently in use.  Clients that implement our solution as part of their overall bypass fraud control strategy, gain incremental revenue to their top lines.

Now I understand that recently some fraudsters have been arrested thanks to results from your platform.

If you scan Google under “SIM box arrests” you will find a few stories of SIM boxer arrests in countries like Senegal, Ghana, Haiti, and Morocco.

And yes, some of our clients have asked us to do investigation work.  Using our technology, we are able to physically locate SIM Box equipment within the wireless network.  Then in cooperation with our clients, we support local police to make arrests.  We use our analytics platform to calculate initial location estimates based on network data and tower locations, then we have RF-based equipment used in drive testing to pinpoint the exact location of the equipment via direction-finding techniques.

In cases where the fraud has been prosecuted and equipment confiscated, we’ve seen fraud operations with tens of thousands of SIM cards found on-site.  These are SIM cards that were blocked by control techniques like test calls and FMS.  So all the fraudsters do is throw away the blocked SIM cards and replace them with new ones in their SIM Box equipment.  Clearly, the fraudsters expect a large number of SIMs to be blocked and they know how to get their hands on more and more SIM cards.

The quicker you can detect and block, the higher the cost to the fraudster — in both money and potential jail time.

Lex, thanks for a timely briefing and advice in this important SIM box area.  And good luck in your quest to find better ways to combat this fraud.

Copyright 2015 Black Swan Telecom Journal

 

About the Expert

Lex Wilkinson

Lex Wilkinson

William “Lex” Wilkinson is the Chief Executive Officer of LATRO Services, Inc., a privately funded company based in Easton, PA.  He was a pioneer in fighting fraud during the cellular market explosion of the early 1990’s and was an original member/founder of the CTIA Fraud Task Force in 1991.  As a security consultant to industry associations and wireless operators around the world, Lex has seen first-hand the many ways fraud can affect organizations and cost millions in lost revenue.

Later as an executive with Rural Cellular Corporation, he participated in the sale and integration of RCC to Verizon Wireless where he remained until 2010.  Based on his years of experience in the industry and as a Tier 1 telecom executive, he created LATRO Services, a company that develops and implements next generation fraud analysis tools and managed services for wireless operators around the world.

Mr.  Wilkinson is a U.S.  Army Veteran, retired Police Detective and a graduate of DeSales University in Center Valley, Pennsylvania.  Today, LATRO Services operates in over twenty-five markets on four continents.   Contact Lex via

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  • Why Deep Packet Inspection Analysis is Essential for Detecting IP Fraud by Dror Eshet — The IP and mobile broadband revolution is in full swing: time for fraud managers to totally rethink their existing controls and areas of exposure.  In this article, a fraud expert discusses the power of DPI technology and the key impact its analysis is having in an FM world where knowing what’s inside the packets is as important as figuring out where those IP packages are going.
  • Flexibility & Fraud Management Systems: 8 Questions for Luke Taylor of Neural Technologies interview with Luke Taylor — Meeting today’s fraud threats is not just about technology, but also the speed of threat detection, the scanning of data outliers, and being enormously flexible.  A leading fraud management vendor takes a bead on current FM issues and points to where software is headed.
  • Recruiting Smartphone Users as Partners in Telecom Fraud & Security Control by Tal Eisner — Premium Rate Service (PRS) fraud and spyware on a mobile phone can ruin an operator’s relationship with a  subscriber.  The attacker uses malware to automatically generate phone calls, SMSs and data sessions to high cost (premium) phone numbers.  This article discusses a new crowd sourcing mobile app that addresses the problem and helps operators better manage the threat.
  • Roaming — if Managed Correctly --  Can Be a Spark to Revenues by Brian Silvestri — Major analyst firms are predicting that roaming revenues will almost double in five years.  What’s more, roaming remains at the pivot point of Wireless Carrier strategy.  Drawing lessons from the incredible rise of AT&T’s Digital One Rate Plan, this article points to future challengtes and raises key  questions about how mobile operators will ultimately come to terms with smartphone market profitability, service quality, and data roaming.
  • What Makes Good Fraud Management Software?  9 Questions for Tal Eisner of cVidya interview with Tal Eisner — How do you know if the fraud management software you own or are considering is a good one?  That’s the starting point of a conversation Black Swan had with a product strategist of a leading FMS vendor.  The article discusses everything from maturity and customer collaboration... to PBX hacking and enabling the FMS to actually enhance the relationship a telco has with its enterprise customers.
  • International Revenue Share Fraud: Are We Winning the Battle Against Telecom Pirates? interview with Colin Yates — International Revenue Share Fraud (IRSF) is one of the telecom industry’s most enduring problems.  Yet many of us have only a foggy notion of how IRSF works and how operators around the globe are coping with the issue. This interview covers the bases: the origins of IRSF, typical fraud scenarios, efforts to get international cooperation on the issue, and the future outlook of IRSF.
  • Fraud Management at Kyivstar in Ukraine interview with Anton Pivala — Kyivstar from Ukraine is a leading mobile operator in both  voice service quality and consumer value.  This case study gives details on Kyivstar’s fraud control program, reveals some of the unique operator challenges faced in Eastern Europe, and explains how Kyivstar is successfully winning the battle against  IRSF and SIMbox fraud.
  • Converging Criminal and Technical Intelligence: Secret to Combating the Explosion in Telecom Fraud and Security Threats interview with Mark Johnson — A fraud and security expert gives a big picture talk on why industry convergence is driving the need for a broader “revenue risk intelligence.”  His prescription?  Yes, telecoms surely need to excel in technical  infrastructure such as traffic usage data, IP intrusion appliances, and physical barriers.  But just as important is the need to pair that knowledge with the real-life lessons of fighting criminals in general.
  • Gratifying Ghana: Why Listening to Operators Trumps Vendor Technology and Size interview with Ludvig Lindqvist — The value of technically excellent software is negated if the solution is not implemented right.  This article makes a strong case that vendors need to focus on first things first — get in full synch with a service provider’s business, capabilities and unique needs before you recommend or implement any software.  Topics discussed include: the benefits of retaining in-house expertise, implementation challenges in Africa, and the meaning of “thorough engagement” with the client.
  • Roaming Fraud: The Importance of Real-Time Data Exchange and Analysis interview with James Stewart — The Near Real Time Roaming Data Exchange (NRTRDE) is a GSM standard allowing operators to gain fast access to the roaming records of service providers half way around the world.  The article explains how 65 carriers are using this data to combat fraud through a service bureau.  Learn about the dangers of international roaming fraud and the value a roaming service bureau brings to the table.
  • Is the M2M Device in Your Refrigerator a Telecom Fraud Threat? interview with Simon Collins — Machine to machine (M2M) technology is being applied in hundreds of monitoring apps, such as smart metering and health diagnosis.  It’s even being used to monitor driving patterns tied to auto insurance rates.  But this article shows the serious M2M fraud and security threat that stem from the theft of the SIM/USIM device used in every M2M device.  The article discusses the RA and fraud strategies operators need to employ to manage the risks that will come from wider M2M deployments.
  • “Fraud Is a Wind that Always Blows” and Other Wisdom From a 28-Year Old Software Firm interview with Gary Beck — Here’s the amazing story of how Beck Computers was pulled out of a Tier 1 account only to be brought back in a few months later.  The article explores software vendor service and support challenges, real-time computing requirements, advanced fraud management functions, and ways to educate management on the value an FMS investment.
  • Insider Fraud: Detecting Criminal Activity in the Telecom Sales Process interview with Tal Eisner — One of the biggest problems telecoms now face is fraud done inside their offices, dealer stores and firewalls.  This type of fraud is especially dangerous because it’s performed by people fully authorized to transact for the company.  The story dicusses the major causes of insider fraud, presents a case study, and explains basic techniques that software uses to detect insider fraud.
  • Fraud & Credit Risk Software: Setting the Client Free to Innovate interview with Luke Taylor — Not every operator wants the freedom to configure its own fraud management solution, but certain providers wouldn‘t live without such a “framework” approach .  This article discusses: the reasons why operator choose this strategy as it covers many other fraud and credit software implementation issues.
  • Why Selling to Business Customers Makes You a High Risk Target for Fraud by David West — There’s a saying in the fraud business: “It’s not a question of whether you’ll be hit by fraud — only when, how bad, and from which direction.“  Citing four recent cases where operators were hit by fraud, this article explains why investing in a fraud soluiont — and keeping up-to-date — are so critical.  The article gives several examples of vulnerability points that fraudsters commonly exploit.