© 2022 Black Swan Telecom Journal | • | protecting and growing a robust communications business | • a service of |
Telecom fraudsters behave a lot like electricity: they follow the path of least resistance, gold being their favorite conductor of electrons.
And when it comes to International Revenue Share Fraud (IRSF) — a fraud that robs telecoms of a cool $4 billion a year — that new path of least resistance is the MVNO, the 900+ mobile operators who generally own no mobile networks, but sell mobile service virtually — reselling the facilities of a network operator.
That’s the analysis of Colin Yates, a foremost consultant and authority on fighting IRSF fraud, and he’s here to tell Black Swan readers all about this new threat — and explain what MVNOs should do to protect themselves.
Dan Baker: Colin, what’s the scoop? What’s changed to make MVNOs more susceptible to IRSF? And maybe we should change the meaning of the term MVNO to “Massively Vulnerable Network Operator”. |
Colin Yates: Dan, the MVNOs definitely are massively vulnerable. Without fraud management domain knowledge, training, and tools, you’re an easy target to be picked off by IRSF fraudsters. Data I’ve collected suggests that in the last 3 or 4 months there has been a gradual shift toward fraudsters attacking MVNOs more and more.
I think that’s a conscious decision by the fraudsters. Mobile and fixed operators have suffered IRSF attacks for 7 or 8 years now, but over time they have become skilled at putting in controls for prevention and early detection.
Big damage has already been done. Last month I spoke to two MVNOs who suffered losses of around $500,000 each. And neither of them had any effective controls. One of those MVNOs missed out entirely on the required knowledge transfer and intelligence around IRSF.
Now the mobile networks have got their education networks in place such as the GSMA Fraud Forum, but many MVNOs are outside that information loop. So they are hiring guys like me to come in and do fraud reviews to bring them up on industry best practices.
What are these MVNOs doing wrong? |
They basically don’t understand the fundamentals of fraud management. For example, in near real-time roaming data exchange, they often don’t look at those records because they don‘t understand their importance. Many are not even aware that IRSF exists.
Now the ‘Light’ MVNOs are probably in a bit better shape because their traffic is going through a large network operator who has the necessary fraud defenses in place.
Those ‘Full’ MVNOs who have their own core network are probably more exposed because most have not implemented any fraud management tools. Then the other thing that works against MVNOs is that their operations are very lean and they make their money on volume and low prices.
Sure, they treat telecoms as a no-risk commodity to offer, like selling cinema or lottery tickets. Some of these MVNOs are grocery store chains. |
Yes, most of the emphasis is on acquiring customers. Even if the MVNO appoints someone to be a fraud manager, that function often gets low priority.
They also don’t realize that they can get into a fraud management system for a reasonable price these days. Some excellent tools are available that run around $100,000. The days of million dollar fraud systems for small to medium operators are gone. And some of these suppliers are offering 24/7 fraud monitoring via a managed service. The managed service is a good fit for a medium-sized MVNO because it’s not efficient for them to employ dedicated people to look at fraud records.
So what do you prescribe for these MVNO organizations? What do you consider they need to do? |
Well, I think the actions they need to take generally boil down to five steps:
Colin, when you go in and consult with an MVNO, what’s the typical procedure? |
When I do get called in to consult, I get all the information I can about the organization — who they are, customers, and products and services. Then, over a 5 to 7 day period, I’ll typically interview all of the execs from the CEO on down and any Key Stakeholders in the next level of management.
With that information I’ll have a better understanding of their products and services. If they’ve suffered a fraud loss in the last year, I’ll review each fraud case and identify every point of failure that contributed to that fraud.
From there, I start compiling a complete risk profile for the organization, what controls are missing, and what opportunities there are. Typically I’ll come out with 15 to 40 recommendations on where to protect their network.
So usually within 2 week’s elapsed time, they come away with a complete framework for what they need to do. And I also leave them with documented policies and instructions as well.
Sounds like a must-have audit for an MVNO. Thank you, Colin. |
Copyright 2015 Black Swan Telecom Journal