Dmitry Sumin: Fraud, Risks and Security in Telecoms Today

Telecommunications has always been an economic force on all sectors. It allows us to remain in contact and exchange information with each other from anywhere in the world, strengthening our existing bonds and creating new business opportunities.

The development of this industry is dictated by technological innovation and market changes. It offers steadily rising revenues for those who have adapted along with it.

In a similar fashion, fraud schemes also evolve, capitalizing on technological advancements.

For example, according to some researchers, subscriber/identity  theft was prevalent in 2008 and 2011, but disappeared from the top 5 threats in 2013, 2015, and 2017. Instead, from 2011 to 2017, Interconnect Bypass fraud and International Revenue Share Fraud took top spots.

By 2021, the Communications Fraud Control Association reported that caller ID Spoofing, Wangiri, SMS Phishing or Pharming, Subscription Fraud and PBX Hacking as primary threats. Robocalls, one of the most notorious fraud schemes of the day, occupied tenth place in 2021.

While in some countries ID theft was a top cyber telecom crime of 2011, it’s on the rise in other countries only now. The industry has always faced new, emerging threats.

No one would have thought this sector might face today’s level and variety of fraud. The complexity of the problem is multifold. It’s of a global scale and overwhelming volume. It poses reputational and financial risks for telcos. It threatens the wallets of unwitting end-users. And there is an ongoing social dilemma regarding how to stop it.

Telecom fraud is no easy problem to solve. It requires cooperation between multiple parties, including governments, tech companies, and service providers.

International fight against fraud

Of all the fraud tactics, they all share one goal – stealing profits. Their targets are telcos, enterprises and end-users and they use various methods to achieve their goal.

Today, there are organizations involved in fighting fraud, bringing the agenda to government officials – bodies specifically designed to fight telecom fraud. Of the countries leading this movement are the United States and the United Kingdom. Other geographical regions have followed some protocols initiated by these states, with modifications to the local rules.

The USA made a significant step by introducing a structural, mandatory approach to fighting fraud when they passed the TRACED Act in 2019. The Traced Act imposed rules for large carriers to adopt the STIR/SHAKEN framework by June 30, 2021, and for small to mid-size carriers to complete adoption by 2023.

STIR/SHAKEN is a broad protocol for attesting the source of incoming calls, helping identify robocalls.

The U.S. government decided to take action, as robocalls have become a top threat in recent years. The new framework certainly helps the industry create a better, more regulated, organized reaction to fraud. Unfortunately, it offers no protection from fraud schemes besides robocalls and caller ID spoofing.

Meanwhile, other countries and telcos located internationally have adopted this framework too.

Such unification certainly helps in the fight against telecom fraud and should be viewed as a key step towards entirely eliminating this problem.

This threat, however, requires a much more nuanced response. The market consists of many international and national telcos involved in transit, termination, and other service provision. With the rise of fraud, new telecom companies have emerged. These are companies with one mission – to eliminate telecom fraud. This niche is relatively new to the telecommunications industry and exists only for fraud prevention.

Carriers often develop their own in-house solutions to protect their traffic and subscribers. However, the technology developed by companies focused on fraud prevention offer a much-needed, game-changing approach.

And if the past is any indication of the future, then fraudsters will continue evolving.

When will the fight end?

For quicker results and greater progress in the fight against fraud, all parties in this sector must continue exchanging the latest industry insights, forming knowledge-sharing communities and offering joint solutions, when possible. Newly emerging technology and initiatives in this field are helping establish a new set of global standards in fraud prevention among telcos.

New companies focusing explicitly on fraud-prevention are more technologically advanced, and their solutions deserve close attention. These innovations stop fraud and related losses in real time. They also guarantee protection from future, unprecedented, fraud manifestations we’ve yet to face.

The industry has changed. Its architecture involves one more layer – an anti-fraud solution that can save brand reputations and revenue loss and stop crime on your networks.

Dmitry Sumin is Head of Products at the AB Handshake Corporation. A graduate of the Moscow State University, he has more than 15 years’ experience in international roaming, interconnect and fraud management. He has worked for both vendors and network operators in the MVNO and telecommunications market. This piece is exclusive to Broadband Breakfast.

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