Rapid advances in telecommunications technology over the last few years and widespread digitisation are revolutionising how we interact, conduct business, and more. While the sophistication of telecom infrastructure comes with a number of benefits, it also provides more opportunities for fraudsters to commit telecommunication fraud by exploiting vulnerabilities in networks and systems. The widespread use of mobile devices and associated digital services offers cybercriminals a large attack surface to target users through ever-evolving scams using the latest technology. This blog will shed light on telecommunication fraud in the digital age and look at the implementation of modern telecom fraud prevention strategies.
How big is the identity fraud problem in telecom?
Telecommunication fraud, also known as phone fraud, is not a new issue. With the advent of digitisation, the strategies and technologies used in committing such crimes are constantly evolving. Today, there are a number of ways in which malicious individuals can misuse the global telecom infrastructure for profit while evading detection and causing service providers and consumers to face major financial losses. The Communications Fraud Control Association’s (CFCA) Global Fraud Loss Survey 2023 estimated telecom fraud losses at US$38.95 billion in 2023, and many of these schemes start with a stolen or fake identity.
What is identity fraud in telecom?
Identity fraud in telecom is the use of stolen, borrowed or fabricated identity details to open, take over or misuse telecom accounts, devices and phone numbers. Telecommunication fraud refers to any illicit and unauthorised activity aimed at exploiting vulnerabilities in telecom systems and misusing the telecom infrastructure. Scammers often use stolen identities to covertly target various aspects of telecom operations, including communication networks, subscription accounts, and payment channels. The first step in incorporating effective telecom fraud prevention measures and strategies is understanding the various methods employed by scammers to commit telecommunication fraud. Some of the most common telecom scams used today are explained below.
Identity fraud
Identity theft is a starting point for various kinds of telecommunication fraud based on identity verification. Fraudsters use stolen or fabricated identities to register new telephone connections, lease or purchase new devices, and even impersonate legitimate individuals to commit a variety of crimes.
Subscription fraud
Scammers often use fabricated or stolen identity information to obtain and use mobile devices and telecom services without any intention of making payments for it. This kind of subscription fraud results in substantial financial losses for service providers as well as consumers.
SIM swap fraud
SIM swapping is when scammers trick a telecom service provider into transferring genuine customers’ phone numbers to a SIM card under their control. Once done, the scammers can intercept and access the user’s personal information, complete unauthorised actions on their accounts, and possibly commit more crimes with identity theft. SIM swap fraud is especially damaging because many banks and online services still send one-time passcodes by text message, so control of the number often means control of the victim’s accounts.
Port-out fraud
Port-out fraud is a close cousin of SIM swapping. Posing as the victim, the fraudster opens an account with another carrier and asks for the victim’s number to be ported to it. The result is the same: calls and text messages, including security codes, reach the fraudster instead.
Device and deposit fraud
This scam involves the purchase of SIM cards, mobile phones, tablets, routers, and a number of other devices and telecom services via the online sales channels of targeted telecommunication service providers, using stolen credit card information. This results in massive financial losses for the operator as it is almost impossible to trace the scammers to recover the product or secure payment.
SMS phishing(smishing)
Just as with email fraud, SMS phishing involves the use of text messages to deceive users into divulging sensitive information by impersonating trustworthy entities. The messages often contain fake links or prompts, leading recipients to malicious websites or tricking them into providing personal data, passwords, or financial information. Fraudsters can then access and misuse their accounts, which is a serious risk to personal security and privacy.
How to prevent identity fraud in telecom
The following are some of the strategies that telecom service providers should incorporate to reduce the chances of being victims of telecommunication fraud.
Verify identity at onboarding
Check identity documents automatically, add selfie and liveness checks for higher-risk sales, and validate names, addresses and payment details against trusted data sources before activating a line or shipping a device.
Authenticate every SIM change and port-out
Treat SIM changes and number ports as high-risk events. Use step-up authentication, account PINs or locks, and notify the customer before the change completes. In the US, the Federal Communications Commission’s 2023 rules now require wireless providers to use secure authentication before SIM changes and port-outs and to alert customers when such requests are made.
Bind devices and watch behaviour
Device fingerprinting, velocity checks on orders and behavioural analytics help spot an account that suddenly behaves differently, such as a new device, unusual location or burst of high-value orders, before losses build up.
Use secure and up-to-date network infrastructure
Outdated network infrastructure is extremely vulnerable to telecommunication fraud. Telecom service providers must invest in updating their infrastructure to keep their networks secure from fraudsters who are always looking for weaknesses to exploit.
Adopt contemporary telecom fraud prevention measures
Modern fraud prevention and management solutions use cutting-edge technology to monitor telecom networks in real time and identify fraudulent activity before too much damage is done.
Keep consumers informed
Keeping customers updated on the methods used by fraudsters to conduct their scams is an excellent way to keep consumers vigilant so that they don’t fall prey to telecommunication fraud. Encourage customers to set an account PIN or number lock, use app-based authentication rather than text-message codes where possible, and report a sudden loss of signal immediately, as it is a common sign of a SIM swap.
Collaborate
Through collaboration, telecommunications providers can exchange information regarding emerging fraud techniques and collaborate to formulate preventive measures to keep their networks secure.
How can Infosys BPM help you prevent identity fraud?
With a comprehensive telecom fraud prevention solution, Infosys BPM can help telecom service providers identify and eliminate fraud and revenue leaks in their networks. The service leverages advanced real-time analytics, assessment and automation services, and digital RA/FM operations to prevent telecom fraud.
Frequently asked questions
Warning signs include a request made soon after a password or contact-detail change, a new or unfamiliar device, an unusual channel or location, and repeated failed authentication attempts. Risk scoring these signals lets operators add extra checks only where they are needed.
Contact the mobile operator immediately from another phone, change passwords for email and banking, alert the bank, and review recent account activity. Acting within minutes limits how much a fraudster can do with the number.
Subscription fraud is one form of identity-related fraud: opening an account with no intention of paying, using a stolen, synthetic or even the fraudster’s own identity. Identity fraud is broader and also covers account takeover, SIM swaps and port-outs.
It is better than a password alone, but text-message codes can be intercepted through SIM swap or port-out fraud. App-based authenticators and passkeys are safer for high-value accounts such as banking and email.
