As the world becomes a global village, people rely on international calls and SMS to connect across borders. In fact, it has become one of the most reliable revenue sources for telecom operators.
According to a Global Market Insights report, the International Voice Carrier market will grow to $120 billion by 2032. To offset carrier costs and maximize revenue, telecom operators worldwide enter an agreement to share revenue from calls, premium numbers, and content services.
While this arrangement ensures transparency, rising incidents of International Revenue Sharing Fraud (IRSF) plague the industry. According to the Communications Fraud Control Association (CFCA), IRSF has led telecom companies to lose nearly $27 billion.
But what is IRSF, and how does it impact the telecom industry? Let’s find out.
What Is International Revenue Sharing Fraud And How Does It Affect The Telecom Industry?
To understand how IRSF works, we must know how it began.
As mentioned, telecom operators have secured arrangements with each other to share the revenue from international calls.
Revenue share varies by location and carrier due to differences in local costs and revenue goals.
Some destinations, for instance, have high call termination rates.
In IRSF, the fraudster routes the calls/messages, often automated and/or fake, to premium services or destinations with high termination rates. The fraudsters receive a higher revenue share by exploiting the revenue-sharing agreement, and telecom operators lose money in the process.
Types Of International Revenue Sharing Fraud
IRSF attacks could happen through compromised devices, bots, stolen SIM cards, etc. Here are some of the common types of IRSF attacks that occur.
1. SIM Box fraud
Fraudsters use a device called a SIM Box that contains multiple SIM cards. They use it to bypass the international call charges and make international calls using the local rates. They also direct the call or SMS to specific destinations or premium rate numbers.
2. Malware
Telecom companies are struggling to protect customer data from rising malware attacks. By some estimates, over 5.5 billion malware attacks occurred in 2022. Typically, malware enters a network and exposes customer data to various cyberthreats.
Telecom operators have always been conscious that they could face financial losses and lose customers due to security breaches, network disruptions, and service outages. To add to that, recently, the computer emergency response team (CERT) of Orange, Poland’s leading mobile operator, discovered that malware can make IRSF calls.
They explained in a communication that the malware would sneak into a mobile phone with an old Android version. It would wait till the phone is inactive for a long time to make paid calls to expensive destinations outside Europe. The “hack” often goes unnoticed until the customer receives a bill for calls they never made.
3. IP-based
IRSF is not restricted to calls or SMS anymore. Fraudsters are now targeting digital-native companies, too. They have started creating synthetic identities (a combination of fake and real customer information) and generating revenue using fake numbers. This impacts the reputation of the digital-native companies and ruins the customer experience.
How To Tackle International Revenue Sharing Fraud?
Despite being prevalent for so many years, detecting IRSF is very complex. That’s because multiple jurisdictions are involved in the process of collecting, routing, terminating, and tracking this traffic. These frauds are so complex that even law enforcement agencies struggle to identify their origin. Sometimes, the scam comes to light only when the customers complain about the exorbitant bill and at others, not at all!
According to the Communications Fraud Control Association (CFCA), telecom companies lost $38.95 billion to frauds like IRSF.
However, the good news is these frauds can be prevented with the help of regulations and technology.
1. Regulations
Given the complexities of detecting such frauds, telecom companies, regulators, and companies must work together to tackle them.
Take New Zealand Telecommunications, for instance. The leading telecom player in New Zealand had established IRSF prevention guidelines to protect customers. The guidelines provided steps to help network operators, service providers, and carriers to combat IRSF. These included guidelines like educating customers about changing PINs, turning off PBX ports, not answering calls from unknown international numbers, etc.
Similarly, Europol established a Cyber Telecom Fraud Working Group in 2017. The group comprised law enforcement officers from 18 countries and more than 35 global telecom companies to combat IRSF. In 2018, the group reported over 250,000 fraudulent transactions, 100 were reported to law enforcement agencies, and 25 new investigations were initiated. The group managed to block payments worth EUR 13.13 million.
2. Technology
Telecom companies and regulators should invest in AI/ML-powered technologies due to the multi-jurisdiction nature of crimes. This will help them detect IRSF more proactively and prevent them. These technologies can detect fraud patterns or suspicious behaviour of a user on any network and take proactive steps to suspend them. They can also use historical data to analyse and predict abnormal patterns and take pre-emptive measures to secure networks.
As IRSF becomes more sophisticated, companies cannot use traditional fraud detection systems. They must use an advanced anti-fraud solution to identify IRSF and other fraud across local and international markets.
Conclusion
The telecom industry plays a pivotal role in economic progress. Telecom bridges the global connectivity gap and uplifts the economy. Voice calls and SMS are the ever-present fabric connecting the different facets of our world today. People and businesses in remote areas can also grow by relying on this essential connectivity.
Thus, it is crucial for telecom companies to keep adopting innovative technologies to prevent telecom fraud and keep the growth engine running.
At Globe Teleservices, we believe in enabling innovation across the telecom spectrum.
Hence, we build innovative technologies, methods, tools, and approaches to help the telecom industry meet challenges and customer demands.
We have developed technologies like Armour X to identify IRSF and other fraud across local and international markets. This helps telecom companies reduce revenue leakage, improve customer experience, and secure their network better than competitors.
To know more about how technology can help you prevent telecom fraud like IRSF, contact us.