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New Era of Fraud Prevention

by | Dec 20, 2021 | News | 0 comments

By AB Handshake

Despite numerous technological innovations to detect and prevent telecom fraud, the criminals have always succeeded to some extent, taking major profits with them. Moreover, fraud has not only maintained its presence but has continuously grown and evolved with time. Even with a small foothold in the market, they steal billions of dollars in revenue.

While traditional fraud prevention systems have always left openings for fraud to succeed, the concept of call validation, proposed by AB Handshake, is changing this. Is there any hope?

Fraud Schemes and Their Impact

The most common fraud schemes of today include:

  • Imposter fraud
  • Robocalls
  • Calling line identity (CLI) spoofing
  • Wangiri fraud
  • Traffic refiling

And many more.

Its impact on the telecom industry is massive, costing all types of telecom operators billions of dollars in total revenue each year. The Communications Fraud Control Association (CFCA) has reported fraud losses in the telecom industry amount to US$18.2bn each year.

This includes:

  • International revenue share fraud (IRSF): US$5bn in losses
  • Call stretching and short-stopping: US$4bn
  • PBX hacking: US$3.6bn
  • Interconnect bypass: US$2.7bn
  • CLI spoofing: US$2bn
  • Robocalls: US$0.9bn

The scale of the problem is so large that operators and national regulators alike have put forth major resources and time in trying to mitigate it.

Past Efforts to Eliminate Fraud

Most recent efforts include the TRACED anti-robocalling act and the STIR/SHAKEN protocol in the USA, but fraudsters aren’t deterred, especially when there is so much money to be made in telecom fraud.

Despite relentless efforts to outsmart the fraudsters, the pace of these criminals usually leaves operators on their back foot and, while operators mitigate some fraud, much of it still occurs on the scale identified by CFCA in the above numbers.

One of the main reasons fraud is so difficult to stop on a wide scale is the fragmentation of the telecom industry. Not only do different jurisdictions have different regulations, moreover, telecom services are usually delivered over multiple network operators. A single voice call can originate on one cellular network and terminate on a fixed-line network, involving a different provider, passing several links along the way.

Even such a simple example leaves major opportunities for fraudsters. A more complex session can begin on a cell phone in one region, then cross multiple global long-distance networks provided by several operators before terminating on a different mobile network.

Every connection is an opportunity for a fraudster to embed itself in the call chain and steal enormous revenues from operators, using any of the above-mentioned schemes, and more.

The Key Problem

These interlinks are difficult to protect, or “seal off”. This is largely because the traditional fraud management systems that operators invest in, use an inward-looking approach to detecting and preventing fraud. These systems focus on what’s happening on the operator’s individual network, try to put up a “wall” of protection, so to speak, and set out to protect it as best as possible, without trying to understand what’s happening beyond, on neighboring networks. 

Part of the reason the telecom industry has become characterized by such individualism is due to the nature of the damage fraudsters cause. Fraud doesn’t only amount to financial losses. The costs of fraud also involve reputational damage, which has resulted in distrust among operators. Additionally, when fraud strikes, there is often a fraudulent carrier involved in the call chain. Not being able to identify the corrupt carrier only adds to this mistrust.

The result is a landscape of operators that use fraud protection systems meant to protect their own networks, with no compatibility with the fraud systems of other operators nor an understanding of what’s happening beyond their networks. More importantly, there has been no way to interlink fraud-related information between different operators.

As the fraudsters continue to succeed, operators attempt to build up greater “walls” around their operations, further isolating their strategies from one another. It’s partially a self-perpetuating cycle, that no fraud system has yet been able to break.

Another key problem with traditional fraud management systems is that they offer only a reactive approach to protecting their networks. They generally detect fraud after it occurs, react and hope their adjustments will prevent similar future attacks.

However, using cross-validation in fraud management can change everything.

Collaboration via Cross-Validation

Because of the isolated, reactive approach to fraud prevention, in which operators only analyze data and calls happening on their own network, they only gain insight into the parts of a call chain that occur on their networks.

Operators need a way to share the full extent of call data happening in real-time on all calls across everyone’s network end-to-end. If they cross-validate this data before calls connect, they can completely eliminate all telecom fraud for good. A robust solution for cross-validation of call details makes this possible.

Operators shift from reactively understanding that fraud has occurred to proactively co-operating to validate calls across multiple operators and detecting fraud with 100% accuracy and no false positives.

Real-time call-validation between originating and terminating operators performed by a robust solution can guarantee the telecom community across the globe becomes 100% fraud-free.

Such a solution addresses the entire operator landscape since it is compatible with both TDM and IP networks. Any type of operator can take advantage of such a system. This is a game-changer in the telecoms fraud industry, which has traditionally been composed of only network-specific systems.

Fraud-Free Community

The key element of this solution is the community of operators it forms, who are sharing their call details with one another. Such a community is composed of operators and associated organizations like DID number owners to create an end-to-end mechanism through which calls are validated.

Instead of retrospectively detecting fraud and then making adjustments aimed at preventing it from happening again, operators’ network activity is continuously shared in real-time. This ensures that all traffic within the community of networks is regularly validated, fraudulent calls are stopped before they connect and all traffic remains fraud-free.

Because the system is based on cross-validation, the community becomes stronger as more operators continuously join. Each additional member strengthens the ecosystem, expands the network of validated traffic, and enables more traffic to be validated.

As this ecosystem grows, the portion of fraud-free traffic around the world will grow, eventually leaving fraudsters with nowhere to go. If adopted on a global scale, it can eliminate fraud around the world, for good.

This model is comparable to the SWIFT financial clearing mechanism that banks use as a trusted method for international transfers of funds.

It’s important to note that no such vision could become a reality if the solution wasn’t affordable and easily integrated into the default settings of any operators’ existing network. Moreover, integration of such a solution is quick.

Specialists install the software on a dedicated server and connect it to the operator’s network equipment. It’s then ready to use and operators can customize their own security policy for signaling solutions.

A web interface allows them to see and monitor the validation processes occurring on the system with full transparency. The interface is also equipped with necessary logging and export capabilities, allowing operators to transfer the data and enrich their existing fraud management systems.

A Global Solution for Telecom Fraud

The concept of cross-validation, proposed by AB Handshake, can equip the telecom community with a flawless solution for finally ending the fraud problem on a global level. Supported by easy integration, affordability, transparency, and compatibility with existing systems, it is a game-changer for the telecom fraud prevention industry.

The concept of call-validation between operators can eliminate fraud across any involved network and is the strongest weapon the telecoms industry has against fraudsters today. It is ushering in a new era in fraud prevention and with such a solution, we can stop telecom fraud around the globe, once and for all.

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