BPM Analytics
What Is SIM Box Fraud? A Complete Guide to Detection and Prevention
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 a SIM box, routes international calls 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. This article explains how this fraud works, its business impact, and the modern methods to detect and prevent it.
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, often targeting MNOs 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, which are types of fraud, 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 Detect and 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, as well as collaborate with law enforcement agencies. 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 can also involve implementing advanced fraud detection systems.
Key Detection Techniques:
1. AI and Machine Learning-Powered Analytics
The most effective weapon in modern telecom fraud management is Artificial Intelligence (AI) and Machine Learning (ML). These systems analyze massive volumes of Call Detail Records (CDRs) in near real-time to identify patterns that are impossible for humans to detect. They can flag suspicious activities such as:
- SIM cards with abnormally high call volumes for an individual user.
- Calls that consistently last for very similar, short durations.
- A Subscriber Identity making calls from multiple locations in an impossible timeframe. By learning the behavior of normal traffic, AI models can instantly spot anomalies that indicate a SIM box is active on the network.
2. Real-Time Network Monitoring
Implementing 24/7, real-time monitoring of network traffic is essential. Automated systems can constantly probe the network, sending test calls from international locations to identify grey routes where traffic is being illegally terminated. When a test call is terminated locally instead of through the proper international gateway, the system can immediately identify and block the fraudulent SIM cards.
3. Implementing a Proactive Fraud Management System (FMS)
A robust Fraud Management System (FMS) integrates all fraud detection techniques into a single, cohesive platform. Instead of reacting to fraud after losses have occurred, a proactive FMS provides:
- A centralized view of all network activity.
- Automated alerts for suspicious behavior.
- The ability to quickly block and deactivate fraudulent SIMs.
- Advanced reporting to understand fraud trends and adapt defenses.
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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, including SIM box frauds and VoIP scams. With deep domain expertise, Infosys BPM offers three key services in its telecom fraud management solutions:
- Revenue Assurance and Fraud Analytics:We leverage our in-house RAFA platform and global team of analysts to analyze your call data in real-time, proactively identifying and stopping revenue leakages.
- Assessment Services & Automation: We assess your network's vulnerabilities and implement Robotic Process Automation (RPA) to automatically detect and block fraudulent SIMs faster than humanly possible.
- Digital Fraud and Revenue Assurance Operations: We provide an end-to-end managed service that integrates AI, ML, and our deep domain expertise to protect your revenue and improve customer experience.
Contact our telecom fraud experts today to build a robust defense against SIM box fraud.
Frequently Asked Questions About SIM Box Fraud
Why is SIM box fraud so difficult to detect?
It is challenging because fraudsters use thousands of SIM cards and constantly rotate them, a practice known as "churning," to avoid detection. They also mimic human behavior by spreading calls across many SIMs to ensure that no single card shows an obviously suspicious volume. This requires advanced analytics, like AI and Machine Learning, to identify the subtle patterns of fraudulent activity.
What is the main financial impact of SIM box fraud on a telecom company?
The main financial impact is the direct and immediate loss of revenue from international call termination fees. Mobile Network Operators (MNOs) are not paid the correct, higher rate for these international calls because they are illegally terminated as local traffic. Over time, these losses can amount to millions of dollars.
What role does AI and Machine Learning play in stopping this fraud?
AI and Machine Learning (AI/ML) are crucial because they can analyze millions of Call Detail Records (CDRs) in near real-time. Unlike manual analysis, AI models can instantly detect suspicious patterns—such as impossible call volumes or unusual call durations from a group of SIMs—that indicate a SIM box is active. This allows for the instant blocking of fraudulent numbers, minimizing financial loss.
Is SIM box fraud the same as interconnect bypass fraud?
SIM box fraud is a specific and very common type of interconnect bypass fraud. "Interconnect bypass" is the broader category for any method that illegally bypasses the official connection points between networks to avoid termination fees. SIM boxing is simply the technique used to achieve that bypass.
