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Tight management controls and technological fraud detection strategies can work together to stem the tide of fraud facing telecom providers worldwide.
Telecom fraud may have grown in sophistication from the days when pay phones were jammed with foreign coins and telephone wires were tapped. But in some ways, telecom fraud is as simple and low-tech as ever. Fraud used to be accompanied by great risk of detection, but little risk of prosecution; now perpetrators can avoid both. Today, as rapid advances in technology have reduced the risk of detection and increased the number of exploitable loopholes, telecom fraud is more attractive than ever.
Catching the offenders is both difficult and expensive. Most telecom providers prefer to cut their losses by removing service rather than spending money on the uncertain process of criminal prosecution.
Analog phones provide a striking example of how a technology can present an open invitation to fraud. With relatively inexpensive and readily available equipment, a perpetrator can monitor signals between analog phones and the network, picking off phone identity codes and reprogramming-or cloning-stolen phones to imitate legitimate identities. A cloner can make thousands of dollars renting the phone (or selling calls) before the fraud is discovered and the identity shut down. In that time, hundreds of thousands of dollars in call revenue may be lost. The prevalence of analog networks in the United States may partly explain the technology-driven nature of many U.S. providers' responses to fraud prevention: sophisticated, realtime detection systems that analyze network traffic. For example, such systems can flag as fraud an identity making a call from one location and two minutes later making a call from another location on the other side of the country.
Digital technology is more robust than analog. Nevertheless, GSM service providers are vulnerable to people who use airtime with...