October 2015

Nine Simple Strategies for Protecting an Operator or MVNO from Telecom Fraud

interview with Jim Bolzenius

One of the biggest challenges in fighting telecom fraud is simply knowing where to start.

Fraud threats are so diverse and complex that’s it’s hard for fraud managers to get their minds around the problems.

Well, I recently attended the WeDo Technologies Conference in Washington DC where I heard some fine briefings by key experts and members of the fraud prevention association, CFCA.

One of these experts was Jim Bolzenius, Head of Anti-Fraud Services at TNS, a leading provider of roaming, clearing/settlement, signaling, interoperability, and information validation solutions to the telecom industry. Prior to joining TNS two years ago, Jim held the high profile job of Executive Director of Fraud and Prevention at Verizon Wireless.

I think you’ll thoroughly enjoy reading Jim’s clear, cut-to-the-chase way of explaining fraud management issues. He begins by giving us a quick backgrounder on International Revenue Share Fraud (IRSF) and subscription fraud. He then follows that with nine solid strategies for aiming a carrier’s or MVNO’s fraud prevention program in the right direction.

	Dan Baker: Jim, people are familiar with the basics of IRSF fraud, but the details on exactly how fraudsters make their money there are less clear. Can you shed some light on that?

Jim Bolzenius: Sure, Dan. It’s really a case of “following the money.” If you trace the way money flows in these schemes, understanding IRSF and premium rate fraud becomes rather simple.

Basically the fraudsters need to cut a deal with a supportive local exchange carrier (LEC) in a country that has a high exchange rate. Historically, these locations included Somalia, Gambia, and Latvia. These are the popular destinations.

In some cases the LEC is owned by the government, so if you seek help from that government to stop the fraud, they really don’t care. This is especially true if the government official working with the fraudster just bought himself a new Bentley :- )

To generate traffic, the fraudsters use a conference call line, a hacked PBX, stolen wireless service or a variety of other means to push traffic to these high rate destinations. And then the terminating carrier splits the revenue with the fraudster who generates all of the calls.

In the end, it’s the “A number” home carriers who lose money. Whoever’s customer generated those calls has to pay the bills all the way down the line. And there’s no relief from that.

Now the US domestic version of IRSF is called “traffic pumping”. And here the LECs are located in various States: Iowa has been a typical location.

You see a lot of calls being pumped to those LECs for things like free conference calls. And it’s the same model as IRSF: they are paying someone to pump phone calls into these locations so the carrier can make money and share the revenue with the people generating the calls. Please note that this Domestic Traffic Pumping is not illegal and some businesses are valid, but not all. Carriers just need to be aware of this process and look for suspicious activity.

Now you can think of IRSF as US domestic traffic pumping times 20 — because that’s the likely exchange rate difference.

So when you add it all up, IRSF, premium rate fraud, and traffic pumping are based on a very simple model.

	Of course, the other big hurdle for the bad guys is getting in the door. They need to gain access to actual phone lines to do their traffic pumping fraud.

That’s right. And subscription fraud remains the number one method of gaining access. Now there are many ways to perform subscription fraud, and how to prevent and identify subscription fraud is a subject I could talk about for hours.

But the two basic schemes are to steal a person’s ID (True Name Fraud) or to take over an existing account or add-on lines to an existing account via Social Engineering.

Of course, what the fraudsters really love is a faceless transaction. That way, the bad guys don’t have to go to a store, show an ID, or risk having their picture taken by the store’s video camera.

This is why much of today’s fraud occurs over the internet and through wholesalers or telesales. Dealers need to be closely monitored because we pay them a commission on sales. Do they really care if this guy is a little bit suspicious? Maybe not if the carrier has not implemented a commission charge-back process for subscription fraud activations.

Jim, how can carriers get their fraud management problems into high gear? What are some of the programs you feel are essential?

Well, I’ve put together a short list of 9 things that guide my own thinking. So here they are:

1	Make Timely Detection & Blocking your Key Goal

As a fraud fighter, you need to be realistic. You can’t really stop IRSF. The only way to totally stop it would be to disallow all international calls. And if you did that, I think sales would have a bit of a problem with that strategy.

So if you can’t stop it entirely, your key mission is to detect and block fraud as soon as possible.

The fraud losses can add up very fast. Let’s say you’ve got a fraudulent phone that’s reaching a $2 a minute destination and the fraudster is using the conference call function to generate six simultaneous calls or they activate lines via subscription fraud.

Now if you have real-time tools in place to look for that type of fraud, in 30 minutes or less you could identify and stop the fraud, so your fraud loss is still going to be around $360. No matter what, you are still going to lose money because you are not preventing the initial call, just detecting it as fast as possible.

But if you have no monitoring in place and are waiting, say, for the TAP records or CIBER records to come in, it could be two-days before you catch the fraud. So by not having the proper tools in place, that one fraud account could cost you $34,000. And that’s potentially just one phone with a six-way conference feature.

Now imagine your subscription fraud account had 10 phones with a six-way conference call feature. Well, you’re then talking about $300,000 in a matter of two days! That’s the money you lost because you didn’t have a real-time data feed and a Fraud Management System.

Real-time data exchange is quite critical. If you don’t have a NRTDE feed set up, you’re waiting for the billing records to come in. And by the way, the carriers partnering with the fraudsters are in no hurry to send you a billing record because the longer the fraud goes undetected, the more money they make.

This is why actively monitoring for calls to suspicious locations is key. You need to know where these are so you can identify them on the first call.

2	Use Social Network Analysis to Multiply Your Blocking Capability

It’s clear that when the first call from the first phone is identified as a fraudster, you should shut down that entire account right away.

But that one phone call can lead to other fraud prevention opportunities too. The secret is to run a linkage analysis back for accounts who the fraudulent account also called.

If I now have one bad account A, there’s an account B, account C and so forth that are associated with Account A, so you can potentially shut down 50 or 60 lines by doing that social network analysis.

So detecting one bad phone call should lead you to other suspicious numbers.

3	Don’t Make PBX Hacking Easy for the Fraudster

Hacking a PBX to pump traffic to international destinations has been around for two decades or more, but it’s still a huge business for the fraudsters.

There are MVNOs out there serving business clients, and if they are not diligent with their security procedures regarding access ports, default passwords, and training employees regarding social engineering techniques, people will get into that PBX.

It’s amazing how many times a PBX is hacked because the default password on the PBX was never changed. Most hackers know the PBX manufacturer’s default password. So if you never change it, you’re going to have a lot of fraud.

4	Educate Customers & Call Center Reps about Social Engineering Schemes

One of the weakest points in a carrier’s defense is that customers and call center reps are often easy prey for the fraudsters.

Calling into a call center is a very popular path. They pretend to be a customer and attempt to take over accounts to add lines of service and international dialing features.

“Hi, I’m from General Motors (GM) and I’m the new telecom account manager here. I need 10 more mobile phone lines.” So with social engineering and phishing, people who are very experienced at this game can get your customer care rep to send them phones and add it to GM’s bill.

Another tactic is to send a text message to customers directly, saying, “Hey, I’m with Verizon Wireless, and you need to verify this information on your account or we will have to shut it off.” You’d be surprised how many people will send their sensitive ID information back by text or call the 800-number left by the message.

Or the text will send the customer to a website owned by the criminal where they gather information. They may have a Verizon or AT&T logo on the web page to convince the customer that the web site is valid.

5	Implement Processes to Limit the Wangiri Fraud

One of the easier methods to commit IRSF or PRS fraud is via a method called Wangiri fraud (also known as a One Ring Scheme). Once again, it’s a very easy process. The fraudster sets up an auto-dialer to call thousands or millions of your customers; after one ring the call disconnects.

Now, amazingly, about 15% of people will actually call that number back.

So let’s say the call goes to Grenada. Well, the idea is to keep the customer on the line, talk to them with recorded messages, and all that time they’re being charged $10 a minute.

Then, when your customer sees the bill, he calls to say, “Hey, Mr. Carrier, I don’t have international service with you, so why are you billing me for international calls?” So you guessed it: the carrier gets stuck with the bill.

And the fraudsters setup the Wangiri fraud by choosing the right call back numbers. If you aim to defraud US customers, the best place for the fraudsters to have their premium rate numbers is in places like Jamaica, the Dominican Republic, or Grenada. Calls to these countries are 10-digit numbers, so the customer looks at the area code and figures it’s a free US long distance call.

Now the cure to blocking this Wangiri fraud is to put in the right processes.

Do you allow the Caribbean to be 10-digit dialing? It’s part of the North American dialing plan, so an International Dialing feature is not required to call these locations unless the carrier has established these locations as requiring that feature in their networks.

As these attacks are identified, it is imperative that the carrier notify and educate their customers to prevent further losses.

6	Control or Turn Off Dangerous Calling Features & Destinations

Does someone who lives in rural Minnesota ever need to call someone in the country of Latvia?

I think the prudent thing is to block certain capabilities and dangerous calling features.

You really should consider blocking call-forwarding, multi-party calls, and explicit call transfers for all international roamers and international calls. The need for a valid customer to forward their phone to an international location or establish 10 simultaneous calls to an international location is very small and not worth the fraud risk. People doing that — 99% of the time — are criminals.

And for the 1% who need that capability, well, I’m not sure those customers are worth the risk.

7	Monitor and Test your International Roaming Rules

Ok, you’ve set up your roaming rules to block six simultaneous calls because there’s a strong likelihood that’s criminal activity. It’s too much risk.

But how do you know your roaming partners are following these rules? How do you know they are not over-riding those rules?

Well, you need to test that. Depending on what switches they are using, the fraud prevention rules you set up may not be read properly. So make sure to test that your roaming rules are being followed in every market you roam.

8	Don’t Let Your Guard Down over the Holidays

What is the number one day for fraud losses?

Well in the United States, it’s the Wednesday before Thanksgiving. That’s because many carrier fraud centers are closed on Thursday, Friday, Saturday and Sunday over the Thanksgiving holiday. Go back and look at write-offs and fraud losses for that time last year.

If you don’t have a 24/7 shop that cycles through the big alarms — or if your system doesn’t send you alerts or text message alerts — you will be hit hard during the Thanksgiving break. On Monday morning you could have thousands of alarms waiting for you.

People really need to come in over the holidays and watch for the big alarms.

9	Recognize that a Fraud Management System Alone is Not Enough

Finally, you need to ensure that the three legs of your program — systems, processes and people — all work together.

You need all of them. You could have the greatest system in the world, but if you don’t have the processes and trained people behind it, the system doesn’t do any good. People may not be working the system properly or identifying the right things. Your processes and system may be outdated if you do not stay current with the new fraud trends and types of attacks.

So that’s a critical point if you want to ever have a chance of identifying and mitigating your fraud losses.

Jim Bolzenius

Jim is an industry expert in the Telecom fraud prevention and detection arena. Jim participates and contributes to several Global Fraud and Security Associations. He has worked in the Telecom fraud prevention space for about 20 years.

Jim is currently the Head of anti-fraud Services at Transaction Network Services (TNS). Prior to that, Jim was the Vice President of Product and Market Development for RoamEx Inc. Jim also worked for Verizon Wireless for 27 years. He was the Executive Director of Fraud Prevention and Strategy at Verizon Wireless for 12 years. Contact Jim via

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Pure Play NFV: Lessons Learned from Masergy’s Virtual Deployment for a Global Enterprise — interview with Prayson Pate — NFV is just getting off the ground, but one cloud provider to enterprises making a stir in virtual technology waters is Masergy. Here are lessons learned from Masergy’s recent global deployment using a NFV pure play software approach.
The Digital Enabler: A Charging, Self-Care & Marketing Platform at the Core of the Mobile Business — interview with Jennifer Kyriakakis — The digital enabler is a central platform that ties together charging, self-care, and marketing. The article explains why leading operators consider digital enablers pivotal to their digital strategies.
Delivering Service Assurance Excellence at a Reduced Operating Cost — interview with Gregg Hara — The great diversity and complexity of today’s networks make service assurance a big challenge. But advances in off-the-shelf software now permit the configuring and visualizing of services across multiple technologies on a modest operating budget.
Are Cloud-Based Call Centers the Next Hot Product for the SMB Market? — interview with Doron Dovrat — Quality customer service can improve a company’s corporate identity and drive business growth. But many SMBs are priced out of acquiring modern call center technology. This article explains the benefits of affordable and flexible cloud-based call centers.
Flexing the OSS & Network to Support the Digital Ecosystem — interview with Ken Dilbeck — The need for telecoms to support a broader digital ecosystem requires an enormous change to OSS infrastructures and the way networks are being managed. This interview sheds light on these challenges.
Crossing the Rubicon: Is it Time for Tier Ones to Move to a Real-Time Analytics BSS? — interview with Andy Tiller — Will tier one operators continue to maintain their quilt works of legacy and adjunct platforms — or will they radically transform their BSS architecture into a new system designed to address the new telecom era? An advocate for radical transformation discusses: real-time analytics, billing for enterprises, partnering mashups, and on-going transformation work at Telenor.
Paradigm Shift in OSS Software: Network Topology Views via Enterprise-Search — interview with Benedict Enweani — Enterprise-search is a wildly successful technology on the web, yet its influence has not yet rippled to the IT main stream. But now a large Middle Eastern operator has deployed a major service assurance application using enterprise-search. The interview discusses this multi-dimensional topology solution and compares it to traditional network inventory.
The Multi-Vendor MPLS: Enabling Tier 2 and 3 Telecoms to Offer World-Class Networks to SMBs — interview with Prabhu Ramachandran — MPLS is a networking technology that has caught fire in the last decade. Yet the complexity of MPLS has relegated to being mostly a large carrier solution. Now a developer of a multi-vendor MPLS solutions explains why the next wave of MPLS adoption will come from tier 2/3 carriers supporting SMB customers.
Enabling Telecoms & Utilities to Adapt to the Winds of Business Change — interview with Kirill Rechter — Billing is in the midst of momentous change. Its value is no longer just around delivering multi-play services or sophisticated rating. In this article you’ll learn how a billing/CRM supplier has adapted to the times by offering deeper value around the larger business issues of its telecom and utility clients.
Driving Customer Care Results & Cost Savings from Big Data Facts — interview with Brian Jurutka — Mobile broadband and today’s dizzying array of app and network technology present a big challenge to customer care. In fact, care agents have a hard time staying one step ahead of customers who call to report problems. But network analytics comes to the rescue with advanced mobile handset troubleshooting and an ability to put greater intelligence at the fingertips of highly trained reps.
Hadoop and M2M Meet Device and Network Management Systems — interview with Eric Wegner — Telecom big-data in networks is more than customer experience managment: it’s also about M2M plus network and element management systems. This interview discusses the explosion in machine-to-machine devices, the virtues and drawbacks of Hadoop, and the network impact of shrink-wrapped search.
The Data Center & Cloud Infrastructure Boom: Is Your Sales/Engineering Team Equipped to Win? — by Dan Baker — The build-out of enterprise clouds and data centers is a golden opportunity for systems integrators, carriers, and cloud providers. But the firms who win this business will have sales and engineering teams who can drive an effective and streamlined requirements-to-design-to-order process. This white paper points to a solution — a collaborative solution designs system — and explains 8 key capabilities of an ideal platform.
Big Data: Is it Ready for Prime Time in Customer Experience Management? — interview with Thomas Sutter — Customer experience management is one of the most challenging of OSS domains and some suppliers are touting “big data” solutions as the silver bullet for CEM upgrades and consolidation. This interview challenges the readiness of big data soluions to tackle OSS issues and deliver the cost savings. The article also provides advice on managing technology risks, software vendor partnering, and the strategies of different OSS suppliers.
Calculated Risk: The Race to Deliver the Next Generation of LTE Service Management — interview with Edoardo Rizzi — LTE and the emerging heterogeneous networks are likely to shake up the service management and customer experience management worlds. Learn about the many new network management challenges LTE presents, and how a small OSS software firm aims to beat the big established players to market with a bold new technology and strategy.
Decom Dilemma: Why Tearing Down Networks is Often Harder than Deploying Them — interview with Dan Hays — For every new 4G LTE and IP-based infrastructure deployed, there typically a legacy network that’s been rendered obsolete and needs to be decommissioned. This article takes you through the many complexities of network decom, such as facilities planning, site lease terminations, green-safe equipment disposal, and tax relief programs.
Migration Success or Migraine Headache: Why Upfront Planning is Key to Network Decom — interview with Ron Angner — Shutting down old networks and migrating customers to new ones is among the most challenging activities a network operators does today. This article provides advice on the many network issues surrounding migration and decommissioning. Topics discussed include inventory reconciliation, LEC/CLEC coordination, and protection of customers in the midst of projects that require great program management skills.
Navigating the Telecom Solutions Wilderness: Advice from Some Veteran Mountaineers — interview with Al Brisard — Telecom solutions vendors struggle mightily to position their solutions and figure out what to offer next in a market where there’s considerable product and service crossover. In this article, a veteran order management specialist firm lays out its strategy for mixing deep-bench functional expertise with process consulting, analytics, and custom API development.
Will Telecoms Sink Under the Weight of their Bloated and Out-of-Control Product Stacks? — interview with Simon Muderack — Telecoms pay daily for their lack of product integration as they constantly reinvent product wheels, lose customer intelligence, and waste time/money. This article makes the case of an enterprise product catalog. Drawing on central catalog cases at a few Tier 1 operators, the article explains the benefits: reducing billing and provisioning costs, promoting product reuse, and smoothing operations.
Virtual Operator Life: Enabling Multi-Level Resellers Through an Active Product Catalog — interview with Rob Hill — The value of product distribution via virtual operators is immense. They enable a carrier to sell to markets it cannot profitably serve directly. Yet the need for greater reseller flexibility in the bundling and pricing of increasingly complex IP and cloud services is now a major channel barrier. This article explains what’s behind an innovative product catalog solution that doubles as a service creation environment for resellers in multiple tiers.
Telecom Blocking & Tackling: Executing the Fundamentals of the Order-to-Bill Process — interview with Ron Angner — Just as football teams need to be good at the basics of blocking and tackling, telecoms need to excel at their own fundamental skillset: the order-to-cash process. In this article, a leading consulting firm explains its methodology for taking operators on the path towards order-to-cash excellence. Issues discussed include: provisioning intervals; standardization and simplicity; the transition from legacy to improved process; and the major role that industry metrics play.
Wireline Act IV, Scene II: Packaging Network & SaaS Services Together to Serve SMBs — by John Frame — As revenue from telephony services has steadily declined, fixed network operators have scrambled to support VoIP, enhanced IP services, and now cloud applications. This shift has also brought challenges to the provisioning software vendors who support the operators. In this interview, a leading supplier explains how it’s transforming from plain ol‘ OSS software provider to packager of on-net and SaaS solutions from an array of third party cloud providers.
Telecom Merger Juggling Act: How to Convert the Back Office and Keep Customers and Investors Happy at the Same Time — interview with Curtis Mills — Billing and OSS conversions as the result of a merger are a risky activity as evidenced by famous cases at Fairpoint and Hawaiian Telcom. This article offers advice on how to head off problems by monitoring key operations checkpoints, asking the right questions, and leading with a proven conversion methodology.
Is Order Management a Provisioning System or Your Best Salesperson? — by John Konczal — Order management as a differentiator is a very new concept to many CSP people, but it’s become a very real sales booster in many industries. Using electronics retailer BestBuy as an example, the article points to several innovations that can — and are — being applied by CSPs today. The article concludes with 8 key questions an operator should ask to measure advanced order management progress.
NEC Takes the Telecom Cloud from PowerPoint to Live Customers — interview with Shinya Kukita — In the cloud computing world, it’s a long road from technology success to telecom busness opportunity. But this story about how NEC and Telefonica are partnering to offer cloud services to small and medium enterprises shows the experience of early cloud adoption. Issues discussed in the article include: customer types, cloud application varieties, geographic region acceptance, and selling challenges.
Billing As Enabler for the Next Killer Business Model — interview with Scott Swartz — Facebook, cloud services, and Google Ads are examples of innovative business models that demand unique or non-standard billing techniques. The article shows how flexible, change-on-the-fly, and metadata-driven billing architectures are enabling CSPs to offer truly ground breaking services.
Real-Time Provisioning of SIM Cards: A Boon to GSM Operators — interview with Simo Isomaki — Software-controlled SIM card configuration is revolutionizing the activation of GSM phones. The article explains how dynamic SIM management decouples the selection of numbers/services and delivers new opportunities to market during the customer acquisition and intial provisoining phase.
A Cynic Converted: IN/Prepaid Platforms Are Now Pretty Cool — interview with Grant Lenahan — Service delivery platforms born in the IN era are often painted as inflexible and expensive to maintain. Learn how modern SDPs with protocol mediation, high availability, and flexible Service Creation Environments are delivering value for operators such as Brazil’s Oi.
Achieving Revenue Maximization in the Telecom Contact Center — interview with Robert Lamb — Optimizing the contact center offers one of the greatest returns on investment for a CSP. The director of AT&T’s contact center services business explains how telecoms can strike an “artful balance” between contact center investment and cost savings. The discussion draws from AT&T’s consulting with world class customers like Ford, Dell, Discover Financial, DISH Network, and General Motors.
Mobile Broadband: The Customer Service Assurance Challenge — interview with Michele Campriani — iPhone and Android traffic is surging but operators struggle with network congestion and dropping ARPUs. The answer? Direct resources and service quality measures to ensure VIPs are indeed getting the quality they expect. Using real-life examples that cut to the chase of technical complexities, this article explains the chief causes of service quality degradation and describes efficient ways to deal with the problem.
Telco-in-a-Box: Are Telecoms Back in the B/OSS Business? — interview with Jim Dunlap — Most telecoms have long since folded their merchant B/OSS software/services businesses. But now Cycle30, a subsidiary of Alaskan operator GCI, is offering a order-to-cash managed service for other operators and utilities. The article discusses the company’s unique business model and contrasts it with billing service bureau and licensed software approaches.
Bricks, Mortar & Well-Trained Reps Make a Comeback in Customer Management — interview with Scott Kohlman — Greater industry competition, service complexity, and employee turnover have raised the bar in the customer support. Indeed, complex services are putting an emphasis on quality care interactions in the store, on the web, and through the call center. In this article you’ll learn about innovations in CRM, multi-tabbed agent portals, call center agent training, customer treatment philosophies, and the impact of self-service.
21st Century Order Management: The Cross-Channel Sales Conversation — by John Konczal — Selling a mobile service is generally not a one-and-done transaction. It often involves several interactions — across the web, call center, store, and even kiosks. This article explains the power of a “cross-channel hub” which sits above all sales channels, interacts with them all, and allows a CSP to keep the sales conversation moving forward seamlessly.
Building a B/OSS Business Through Common Sense Customer Service — by David West — Delivering customer service excellence doesn‘t require mastering some secret technique. The premise of this article is that plain dealing with customers and employees is all that’s needed for a winning formula. The argument is spelling out in a simple 4 step methodology along with some practical examples.

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