How Fraud Is Costs the Telecoms Industry Billions Every Year

The telecoms industry could be losing as much as $17 billion of revenue each year to fraud, according to a recent report.

The study from the ITW Global Leaders Forum is aimed at highlighting the problem and setting out measures that can be used by companies to prevent it.

Types of Fraud

Telecoms fraud comes in a number of different flavours. The simplest is call hijacking. This involves diverting traffic via compromised devices to a high-priced destination in order to generate income for the fraudster. A similar way of generating income is using voicemail to get people to return ‘missed calls’ directing them to premium rate numbers.

The ITW report says such scams are often linked to organised crime or may be used to fund terrorist activity, as it’s an easy way to hide the movement of funds across international boundaries.

While a wholesale VoIP termination provider such as does its best to ensure transactions are genuine, the large volumes of traffic make the telecoms market hard to police effectively. There is a fine distinction to be made between blocking genuinely fraudulent traffic and allowing legitimate calls that might appear to be suspicious for some reason. Stricter privacy laws also make it harder to track down fraudulent users.

Making Progress

In fact, the industry has had some success in reducing fraud. It’s now estimated that only one per cent of telecoms revenue is now lost to fraud, compared to five per cent 12 years ago, but the growing market for these services means that even at one per cent the amount of money involved is significant.

One of the things the ITW Global Leaders Forum has been doing is drawing up a code of conduct for telecoms service providers. This will involve a commitment to monitor and report fraudulent traffic, the blocking of number ranges used to commit fraud, sharing information with other service providers and the adoption of standard contract terms to address the management of fraudulent traffic.

The idea is that once a majority of suppliers are signed up to the code then the industry will take a significant step to being self policing. It’s doubtful that telecoms fraud will ever be completely defeated as criminals will always try to stay one step ahead, but with collective effort the industry can reduce it.