by AB Handshake

Total global revenue losses to telecom fraud in 2021 amounted to $39.89 billion. This was only 2.22% of total global telecom revenue that year. When fraudsters maintain even a small foothold in the market, the yearly losses are enormous.

By stopping telecom fraud globally, we can return billions of dollars in revenue losses to telcos and enterprises.

However, the benefits of eliminating telecom fraud don’t stop at financial recovery. Once you stop the fraud, the market opens up in new ways. Current tools and processes that telcos and enterprises already use can strengthen and boost their operations that were before hindered by fraud. 

We can: 

• Stop customer churn
• Simplify troubleshooting and dispute resolution
• Traceback requests become more efficient 

And much more. 

By eliminating telecom fraud, we unleash a wealth of additional benefits that are as invaluable to a company’s success as increasing the bottom line. 

Let’s look at this in detail. 

True Impact of Fraud on the Telecom Industry

To understand the benefits of eliminating telecom fraud, we first need to understand how telecom fraud currently affects telcos and enterprises around the world. 

Here’s a quick list of the fraud schemes prevalent today:

• Robocalls: A computerized autodialer calls and delivers pre-recorded messages.
• Wangari: A fraudster makes a zero-duration call usually to a mobile device, leaving a high-rate missed call number luring the owner of the phone to call back and rack up charges.
• CLI Spoofing: A fraudster disguises a call by changing the caller ID information displayed to the recipient of a call.
• Short Stopping: A corrupt operator ends a call on their network before it reaches its intended destination and passes it onto a high-rate destination.
• Call Stretching: Recording part of a conversation in a call before dropping the call on the B-side and keeping the A-side on hold with the audio recording playing back repeatedly.
• Interconnect Bypass: Exploiting the difference between low and high interconnect rates for off-net and on-net calls.
• PBX Hacking: When a fraudster accesses a business’ PBX system and earns a profit by placing international calls at the business’s expense.
• Wangiri 2.0: Fraudsters initiate calls from companies to high-rate numbers via bots filling out a company’s online contact form.

Let’s look at how Short Stopping impacts companies beyond revenue losses. 

Case Study: Short Stopping

In simple terms, short-stopping occurs when a fraudster hijacks a call before it reaches its destination. Together with a fraudulent transit carrier in the call chain, they pump the hijacked call to a high-rate destination country. 

After rerouting (“short-stopping”) a call, the fraudsters use a range of tactics to keep the caller on the line and rack up a charged duration. After some time, the caller realizes something’s wrong and hangs up. Often, the caller doesn’t even know fraud has occurred until they get their monthly phone bill. 

The fraudsters hijack thousands of such calls, splitting the resulting profits, paid either by a carrier or the end customer. Total revenue losses to short-stopping and other forms of International Revenue Share Fraud (IRSF) in 2019 totaled $4 billion.

These attacks create more problems than financial loss.

Short Stopping – Financial Loss, Churn and Ineffective Dispute Resolution 

If this becomes a rampant problem, major issues develop. Callers become confused about the enormous charges on their monthly phone bills and start submitting complaints.

Without effective fraud management technology, the providers struggle to accurately identify the source of the problem and face a dilemma – either foot the bill for their customers or risk immense churn. 

Without an effective way of stopping these attacks, many operators take the desperate measure of simply blocking the whole numbering plan of entire high-rate, high-risk countries. 

Subscribers who then make legitimate calls to these countries are blocked, leading to increasing lost revenues, customer dissatisfaction and further churn.

Each of the above-mentioned fraud schemes poses similar problems for telecommunication companies and enterprises around the world. 

The main problem is that traditional fraud management systems take an isolated, inward-focused approach to stopping telecom fraud.

Problems in Traditional Fraud Management 

Traditional fraud management tools integrated on various operator networks work in isolation from one another. They aim to better fortify the boundary between their network and the fraudsters. 

The result of such isolation is that operators don’t know what’s happening at each point in the call chain. A fraudster can embed themself at any point in the chain, reroute calls, spoof the CLI or commit other crimes, and go undetected.

Additionally, most traditional approaches to mitigating fraud are reactive. These systems detect fraud attacks after they occur. Operators then adjust their protocols in hopes of being better protected from future attacks. 

The result is a game of cat and mouse in which the fraudsters evolve their tactics and remain steps ahead of the fraud management systems. 

The concept of real-time call validation of call details drastically changes this picture. By connecting operators around the world and giving them the means to communicate in real-time before calls connect, we can eliminate telecom fraud and start reaping all the related benefits.

Call Validation – How it works

AB Handshake’s proposed call validation technology allows operators around the globe to cross validate A and B call details to detect voice fraud attacks and block fraudulent calls before they connect. 

Call validation technology ‘plugs the holes’ in the call chain and eliminates 100% of all voice fraud.

Here’s how it works:

1. When a call is initiated, the details of that call are immediately sent to a call registry.
2. The call registry then simultaneously sends a validation request to the terminating network, which reaches that network before the call connects. 
3. The technology then cross-validates the call details of both networks to detect even the slightest forms of manipulation.

Any inconsistency in the call details indicates only one thing – fraud. Such a call is then flagged and the operator can either immediately block it before it connects or let it connect (as is sometimes appropriate). 

Any operator employing call validation technology is a part of a network of fraud-free traffic. All live traffic within the ecosystem is constantly validated in real-time, resulting in a 100% fraud-free community of operators.

As more members join the community, the volume of fraud-free traffic grows while the amount of vulnerable traffic shrinks, leaving the fraudsters with nowhere to go. If adopted on a global scale, call validation technology can eliminate voice fraud globally.

Here is what telcos and enterprises gain by joining the fraud-free community.

Benefits of the Fraud-Free Community

1. Recover lost revenue 

The first thing telcos and enterprises experience is greater revenue retention. 

2. Less customer churn 

By experiencing less fraud, end-users call more actively and develop loyalty to one provider or brand.

3. Simple and effective dispute resolution

Transparency and accuracy along the entire transit route simplify negotiations between transit carriers for dispute resolution.

4. Transparency

Additionally, any inspections of the transit route are more efficient. Data is readily available, making traceback requests from authorities faster and simpler. 

5. Confidence 

Zero false positives. Only fraudulent calls are blocked – legal calls aren’t. By accurately blocking the right calls, we make services more trustworthy. End-users receive a more secure service that facilitates trust.

6. Eliminate country-specific call blocking 

Operators from high-rate destinations no longer suffer from country-wide call blocking that prevents legitimate calls.

7. Improve SMS revenues

As A2P SMS termination rates have risen, the use of flash calls to bypass SMS rates has also increased. By validating every call, operators can easily filter out such calls and start recovering SMS revenues.

8. Replace costly solutions

We can decommission ineffective, costly technology like test-call generators and reduce overall fraud prevention costs while improving efficiency.

9. Greater security for end-users

By eliminating telecom fraud, voice channels can be used as a reliable verification method. Calls can be used for authenticating various actions like highly sensitive financial services.

In the absence of telecom fraud, the telecommunications landscape is a different playing field. Telcos, enterprises and end-users thrive. It’s a win-win solution for all parties.

Final Words

Eliminating fraud is about recovering more than lost revenue. It’s about improving traceback requests, verification methods, revenue retention, brand loyalty and more. 

And cross-validation is the tool that makes it possible. The technology is already validating live traffic to all countries around the world and hundreds of operators are reaping the benefits of joining the fraud-free community. 

Today, a global fraud-free community isn’t just a dream, it’s a possibility.