BPM Analytics

SIM box fraud and its implications

Global communications businesses proliferated in the pandemic years with the rise of work from home (WFH). At the same time, businesses suffered from rising fraud management cases as newer and more complex methods of fraudulent activities robbed telecom corporations of billions of dollars. Such frauds have not only dented businesses financially but have also caused a loss of reputation and trust, triggering customer churn. In its latest Fraud Loss Survey report, the Communications Fraud Control Association shows an estimated global fraud loss in the telecom industry at $39.89 billion - about 2.22% of the total global revenue from this industry. What is a SIM box fraud and why it features among the top telecom scams in the past few years let us understand that.

What is a SIM box fraud?

SIM box fraud is among the most demanding challenges telecom operations face globally. The Fraud Loss Survey Report 2021 has pegged losses from SIM box fraud and the broader interconnect bypass fraud at $3.11 billion, or 7.8% of global telecom fraud losses. A SIM box fraud diverts international calls to a cellular device through the internet. This device, called as a SIM box, routes the connections back into the network as local calls, using hundreds of low-cost or even unpaid SIM cards, which are often obtained with forged identities. SIM box scams thus benefit by exploiting the difference between local and international charges by paying just local rates or none at all to cell carriers after billing international rates from the source. The caller pays the high call rates, but the local telecom operator does not collect these, leading to revenue losses.

Although telecom scams are spread globally, regions with high call termination costs attract fraudsters who take advantage of the voice traffic routes and profit from it. Hence, interconnect bypass frauds are more rampant in the Falkland Islands, Seychelles, Cuba, Chad, Maldives, Algeria, and European Union, among many other countries.

How SIM box fraud affects your business?

SIM box frauds and interconnect bypass frauds have severe implications on businesses other than the apparent revenue loss.

• Financial and revenue loss: Telecom operators face the flak of interconnect bypass frauds as they often go undetected leading to financial losses. Moreover, these scams escape government taxes and surcharges, depriving governments of revenues to fund infrastructure and welfare schemes.
• Poor service quality: SIM box frauds use a cheap and substandard setup that affects call quality and service. These reflect poorly on the service quality standards of telecom businesses, thereby affecting reputation, customer trust, and erosion of customer base.
• Damage to infrastructure: Overloading local networks affects the region’s infrastructure. Moreover, such scams demotivate businesses, resulting in low or no investment.
• Compromised security and privacy: SIM box frauds compromise legitimate connections that have privacy and security encryptions, making information theft easy for hackers. Moreover, SMSs that are often used to communicate sensitive information via automated routes lose all privacy and security.
• Threat to national security: SIM box frauds and interconnect bypass frauds escape legal intercepts by national security agencies, which track criminal activities. This becomes a significant security threat for the country.

How to prevent SIM box fraud?

The first step to protecting your business from potential losses is to have a fraud management system that can detect rerouting traffic through grey channels by doing a stress test of your network or undertake real-time monitoring. Other than making technical changes, having a strong legal team that can safeguard contracts with all stakeholders can help reduce the impact of fraud. Employing the latest forensic detection methods through reliable partners can reduce the incidence of fraud and improve the efficiency of your business. Powered by artificial intelligence (AI) and machine learning (ML), real-time and in-depth analytics can help you fight the ever-changing interconnect bypass frauds, safeguard revenue streams, and improve customer experience.

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How can Infosys BPM help?

Timely and continued use of the latest solutions can ensure efficient fraud management systems that challenge the ever-evolving telecom fraud scenarios. With deep domain expertise, Infosys BPM offers three key services in its telecom fraud management solutions:

• Revenue Assurance and Fraud Analytics
• Assessment Services & Automation
• Digital Fraud and Revenue Assurance Operations