The telecom industry is growing rapidly and becoming a pivotal enabler of the world’s progress. Various factors, like the advent of 5G, remote and hybrid work, rising demand for high-speed data services, etc., are now seen as integral to this growth. Of course, the use of IoT, AI, and edge computing has also catapulted the telecom industry to the forefront in the business innovation stakes.
According to Statista’s research, $1.5 trillion will be spent worldwide on telecom this year alone. While this shows the size and scale of the industry, some concerns remain persistent. Key among those are concerns about rising fraud in the telecom industry worldwide. In 2021, the telecom industry worldwide lost about $40 billion due to fraud.
Let’s find out how fraud in telecom industry has shocked companies, customers, and lawmakers and why a robust fraud management system in telecomis necessary to curb them.
Five Stories of Fraud in Telecom World
To better elucidate the impact of telecom fraud, here’s a rundown of the five security scares that plagued the telecom industry:
1. Why Vodafone Is Issuing Warning About Wangari Fraud
Wangari is a Japanese term that means one and cut. In this scam, the scammers call a targeted list of subscribers and hang up the phone before they answer. They usually call at a time when the subscriber is less likely active. When the subscriber calls back on that number, the call is re-routed to an international premium number, and they are charged for the call.
Owing to the growing number of Wangiri frauds, Vodafone recently released an official security memo, warning users to exercise caution and avoid returning calls to unknown numbers. They added that users who are not careful about such fraud in telecom would be left with a hefty bill without realizing it.
2. How SIM Box Fraud Cost Telecom Companies $3 Billion
A SIM box is a hardware device. It allows operators to manage SIM cards from different service providers and access GSM gateways located in different places. Operators usually use it to route Voice over Internet Protocol (VoIP) calls through local GSM networks. This is done to avoid paying international calling tariffs.
Recently, telecom providers have witnessed an increase in SIM Box fraud. In this fraud, international numbers pretend to be local numbers and cost telecom companies the international call fees. According to the Communications Fraud Control Association (CFCA), SIM Box fraud cost the telecom industry $3.11 billion in 2021.
SIM Box fraud has emerged as the topmost telecom fraud in recent years. Besides losing revenue, telecom companies also lose their reputation as end users suffer from poor service quality. As such, they need to improve telecom security to reduce such fraud.
3. Scammers Steal Bank Information in the Name of 5G SIM Upgrade
As customers mull over upgrading to 5G, telecom companies and state police departments in India are issuing warnings about 5G fraud. In this fraud, customers receive text messages with a link to upgrade their SIM card from 4G to 5G. When the customer clicks on the link, there is a risk of hackers hacking the phone and stealing personal and bank information.
According to police departments, there have been instances of accounts getting emptied due to the 5G SIM upgrade scam. Telecom companies and police departments have clarified that upgrading SIM cards to 5G is not necessary. The 5G connection will work on compatible smartphones with the old 4G SIM.
4. How Mobile Users Lost $58 Billion in 2023 Due to Robocalls
Popularized during COVID-19, robocalls are automated calls where a recorded voice speaks instead of a live person. Robocalls are typically used for selling products, sending reminders, or providing information. However, scammers are also using them to steal money or personal information from customers.
According to Juniper’s research, mobile users lose $58 billion worldwide due to scam calls like robocalls. The report predicts that by 2027, the losses will reach $70 billion globally. North America continues to be one of the most affected regions.
5. IRSF Losses Have Increased Six-Fold Over the Past Decade
International Revenue Share Fraud (IRSF) is a type of fraud where scammers use illegal ways to access an operator’s network. This allows them to perform illicit activities, such as:
- Increasing the volume of international traffic to high-cost destinations with revenue-sharing agreements
- Generating revenue by using complex pricing structures for international calls and SMS traffic
Recent studies show that IRSF losses have increased more than six-fold over the past decade. Such fraud can also lead to revenue leakage for telecom companies and leave customers unhappy due to unnecessary financial loss.
It’s critical that companies use telecom security solutions powered by Artificial Intelligence (AI) and Machine Learning (ML). They can help detect IRSF patterns early and curb them on time. Otherwise, companies will likely lose more revenue and customer trust in the future.
How Can Telecom Companies Combat These Frauds?
Fraud in telecom industry is not new. However, it has become more sophisticated and widespread in recent times, wiping out unsuspecting customers’ entire savings.
These frauds are not only impacting the revenue of telecom companies, but they are also at risk of losing customers. Trust between customers and telecom companies is eroding due to issues like:
- Poor call quality
- Identity theft
- Overcharging
- Charging for unused services
The only way to prevent such fraud is by using an anti-fraud solution. A traditional fraud detection system for telecom may no longer be able to detect and solve such sophisticated fraud. These systems are more reactive than proactive.
What companies need is a modern solution that:
- Uses AI and ML to detect fraud and anomalies in real-time
- Makes proactive decisions to curb the identified anomalies
At Globe Teleservices, we have built a robust fraud detection solution called Armour Firewall Solution to safeguard customers from fraud like:
- Wangari attacks
- SIM farming
- Robocalling
- IRSF
- International outbound call fraud
The solution uses AI/ML algorithms to detect such emerging threats and empower telecom companies to stop them before they escalate further. To know more about Armour Firewall Solution and other fraud detection systems in the telecom industry, contact us. We will help you prevent fraud, save your reputation, and improve the trust between you and your customers.