Fraud Prevention / IRSF / SMS Toll Fraud

Telecom Fraud Trends

August 8, 20235 min Read

Telecom fraud is becoming a growing concern as is a complex issue that impacts telecom companies and their customers worldwide. Understanding telecom fraud trends is crucial for businesses to protect themselves and their customers from revenue loss, service disruption, and reputational damage.

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What Is telecom fraud?

Telecom fraud refers to the unauthorized use of telecommunications services or equipment for personal gain, often resulting in financial losses for individuals and businesses. To accomplish this, cybercriminals use various techniques such as identity theft, social engineering, and phishing scams to carry out their illicit activities.

How has telecom fraud evolved over time?

Telecom fraud is not a new phenomenon, but it has evolved significantly over time with the advent of new technology and methods. In early forms of telecom fraud, individuals would use payphones to make free long-distance calls or sell stolen phone numbers. However, today's fraudsters employ more sophisticated tactics such as hacking into phone systems or using fake caller IDs to deceive people into giving away personal information.

The rise of mobile technology has also led to new types of fraud, including SIM swapping and SMS phishing attacks, along with SMS Toll Fraud or International Revenue Share Fraud. As such, telecom companies and their security teams are constantly working on adapting their security measures to stay ahead of these evolving fraud trends in a cat-and-mouse game.

How bots enable telecom fraud

Bots and botnets are playing a major role in enabling fraudulent activities. Cybercriminals can use bots for SIM card registration, call and message routing, phishing, hijacking one-time passwords, and other nefarious purposes. Making matters more difficult is that bots can mimic human behavior patterns, making it challenging to detect suspicious activity.

Common cybercriminal tactics

Telecom fraud is an ever-evolving problem, and understanding the latest trends can help individuals and companies protect themselves. Here are some common tactics used by cybercriminals:

  • SIM swapping where fraudsters gain access to a victim's mobile number to intercept calls and messages
  • Wangiri fraud where scammers use automated systems to make large numbers of phone calls with the intention of tricking people into calling back and incurring charges
  • PBX hacking occurs when criminals gain unauthorized access to a company's phone system to make expensive international calls
  • Robocalls remain an ongoing issue that tricks people into revealing sensitive information or making payments via scam calls

As if some of the common fraud tactics weren’t enough for security teams to worry about, here are some emerging trends, often enabled by cybercrime-as-a-service offerings, to be aware of:

AI-based fraud

Artificial Intelligence (AI)-based fraud is becoming more prevalent as fraudsters use machine learning and other AI technologies to bypass traditional fraud detection systems. AI-based fraud can take many forms, including subscription fraud, identity theft, and phishing attacks.

VoIP fraud

VoIP (Voice over Internet Protocol) fraud involves stealing services or money through the use of internet-based phone systems. Due to their anonymity and ease of access, VoIP frauds have been on the rise in recent years. Cybercriminals can exploit vulnerabilities in VoIP technology to make unauthorized long-distance calls, sell fake calling cards, or engage in other criminal activities.

SMS Toll Fraud and International Revenue Share Fraud

SMS Toll Fraud, which is also called International Revenue Share Fraud (IRSF), has quickly become a growing problem for businesses. ISRF originated as a scam targeting telecom companies, but now is affecting businesses of various industries as they look to secure digital accounts using voice and SMS one-time passwords (OTP). This type of fraud happens when cybercriminals illegally infiltrate a telecom operator’s networks or use rogue carriers to redirect calls and texts to premium rate numbers. Cybercriminals then use automated attacks on digital touchpoints that trigger OTP, such as account sign-ups and logins, earning a per-transaction payout of $1 or more. This can lead to massive costs for businesses.

Use our calculator to estimate the potential cost savings from stopping SMS Toll Fraud!

Mitigating telecom fraud with technology and people strategies

Telecom fraud is a growing concern for businesses, and it's essential to mitigate the risks through the use of technology and people strategies. One way to detect fraudulent behavior is to use machine learning algorithms that can analyze call data records in real time. Multi-factor authentication (MFA) is another effective tool for verifying user identity and authorizing access. Regular monitoring and analysis of call data records can help identify unusual activity, allowing you to take immediate action. Your employees are on the front lines in the fight against fraud. As such, employee training is a critical step to take. Conducting regular training sessions on best practices and fraud prevention can help your team stay vigilant and aware of potential threats.

Arkose Labs secures telecom businesses

The problem with IRSF and other types of fraud is that it is often not detected until it is too late and cybercriminals have already done their damage. It’s challenging for businesses to get real-time visibility into these attacks early enough to prevent them, as attackers have access to a range of tools to abuse consumer touchpoints and bypass traditional anti-bot defenses.

Arkose Labs helps businesses save money and achieve a better return on investment by detecting bogus account sign-ups and malicious logins, and eliminating the persistent attacks on user touchpoints that trigger OTP verifications. Our advanced security solutions are designed to protect against fraud, reduce the costs associated with manual reviews, and provide a secure and seamless user experience.

If you’d like to learn more, please book a demo with us today.