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International Revenue Share Fraud webinar


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Recently in telecommunications, several industry-wide measures have been introduced to detect and mitigate losses, yet International Revenue Share Fraud (IRSF) is increasing on a global scale.

This webinar by Colin Yates, independent consultant and advisor to multiple industry bodies and ex-Vodafone Head of Group Risk, discussed best practices for executing a strategy for the prevention of IRSF fraud.

Covered in the webinar:

- About IRSF and the extent of global fraud losses today
- What measures can be taken to mitigate fraud losses
- What controls can be put in place to predict and detect IRSF attacks
- Industry guidelines and best practice used to address IRSF
- How technology can help a CSPs Fraud detection and prevention capability

Published in: Technology, Business

International Revenue Share Fraud webinar

  1. 1. International Revenue Share Fraud Webinar Colin Yates Yates Fraud Consulting Ltd. Roaming and IRSF Webinar – 3 December 2013
  2. 2. Webinar Agenda • Introduction to IRSF • Recent case studies • Law Enforcement action re IRSF • Introduction to IRSF – 5 Stages • IPR Number Resellers • Number Misappropriation (Hijacking) • Industry initiatives to reduce IRSF losses • Industry’s contributing factors to IRSF • Risk mitigation & recommendations • Q & A
  3. 3. Introduction to IRSF • There are a number of definitions available to describe IRSF A simple description would be: ‘Using fraudulent access to an Operators network to artificially inflate traffic to numbers obtained from an International Premium Rate Number Provider, for which payment will be received by the Fraudster (on a revenue share basis with the number provider) for every minute of traffic generated into those numbers.’
  4. 4. IRSF What is our view of the fraudster?
  5. 5. Recent Case Studies USA & Barcelona
  6. 6. Case Study No. 1 USA • Small USA network operator providing service to SME’s – 2 PBX’s hacked with IRSF losses of $US160,000 suffered over a 30 hour period – Their carrier discovered fraud and served immediate notice that they required full payment within 48 hours • Carrier unable to pay and only option was to close down • Asked for my assistance and was able to provide sufficient information to get debt reduced with time to pay • Confirmation that IRSF will impact any operator, irrespective of size, location or services offered, and losses could have been significantly reduced by effective Risk Mgt
  7. 7. Case Study No. 2 Handset Theft - Barcelona • Major issue impacting many operators who have customers roaming in Spain – Barcelona well known as the ‘Pickpocket’ capital – Since Jan 2013, an average of 260 mobiles per month have been stolen and the Simcards used for IRSF – All 4 Spanish networks being used, losses per Simcard are averaging €10,000 per hour • Fraudsters using combination of International Call Forward, multi party calling, and associated PBX Fraud • Also discovered that some roamers are selling their mobiles for €500 and then reporting them stolen later!
  8. 8. Law Enforcement action for IRSF • We cannot rely of Law Enforcement to investigate IRSF, prosecute fraudsters and seek reparation for operators • Investigating IRSF is complex, typically extending across 3 or 4 international borders • Simply determining jurisdiction will be a challenge • A recent USA IRSF investigation took almost 3 years to complete by an operator and federal agency task force • Principals were arrested in Malaysia for IRSF involving tens of millions of dollars • Before extradition could be arranged, fraudsters were bailed and fled to Pakistan.
  9. 9. The 5 Basic steps to IRSF 1 Access a Network 2 Obtain IRSF numbers 3 Generate the calls 4 Receive payment 5 Determine loss
  10. 10. 1. Access to a Network • Fraudster must obtain the means to make these calls • To maximise income, preferably at no cost to Fraudster • Common ‘Primary Frauds’ to gain access are; – Subscription Fraud – SIM Cloning – Theft of handsets or SIM cards – PBX Hacking – Wangiri Fraud – Arbitrage (Requires the exploitation of a bundled or discounted tariff offering calls at less cost than any IRS pay-out offered)
  11. 11. 2. Obtain IRSF Numbers • Fraudster may have existing relationship with IPRN Provider • If not, will search Internet to find one • Obtains a ‘Test Number’ from Reseller website • Will chose a destination with good pay-out (Latvia €0.17c) • Calls Test Number to confirm a call will connect • Once confirmed, will request numbers from IPRN Provider • Request will include an estimate of minutes to be generated • Will include his bank account details so that funds based on minutes generated can be credited every 7 to 30 days
  12. 12. 3. Generate traffic • Once IRS numbers issued, Fraudster starts generating calls • To maximise revenues, Fraudster will utilise network services to generate overlapping, simultaneous calls • Such services will include International Call Forwarding, Multi-Party calling, combining PBX with C/Fwd mobile Sim • Fraudster will continue this activity until originating number range owner becomes aware of fraud and blocks access • Typically the Fraudster will then move to another fraudulent access and continue calling additional numbers providing by the IPR Number Provider
  13. 13. 4. Receive payment • In most circumstances the originating number range holder is required to make payment for this fraudulent traffic – Existing Roaming or Interconnect agreement requirement • Initial payment made to roaming or interconnect partner • Payment continues down value chain to reach the terminating number range owner • Terminating operator retains his share and pays IPRN Provider • IPRN Provider shares this balance by paying the Fraudster (e.g. €0.17c per minute for calls to Latvia) and retaining the balance.
  14. 14. 5. Determining loss • Originating Number range holder has made full payment • In case of Subscription or other SIM based fraud, little or no chance of recovering this from the fraudster. • In case of PBX Fraud, typically the network provider will attempt to recover cost of fraud from the PBX user • In many cases this will result in a dispute, unwanted publicity and customer churn unless network provider accepts all or part of this loss • PBX user will typically argue that their network provider should have discovered such a huge increase in calling activity • All other transit operators, IRS Number owner, number reseller and fraudster have benefited from this fraud
  15. 15. IPR Number Resellers • Number of Resellers continues to increase: – 17 in 2009 – 47 in 2012 – 85 in October 2013 • 400% increase in 4 years • Most of this increase results in those wanting to exploit IRSF revenues • Many now acting as Number Wholesalers
  16. 16. Number Misappropriation (Hijacking) • Usually involves Country numbers with high termination rates – e.g Small Island nation at $US0.65c • Fraudsters will act in collusion with a dishonest carrier • Advertise ‘below cost’ rates into country to attract operators looking for Least Cost Routing (LCR) • Calls will be routed in a certain direction to ensure that they hit the ‘dishonest operators’ network • Once there, they will be filtered out and ‘short-stopped’ outside the • Payment follows the same value chain as the call routing
  17. 17. Industry initiatives to reduce IRSF losses • Very little industry progress to stop IRSF/Hijacking • ITU misuse reporting is not being supported • I3 Forum has published guidelines, but again, these are not being supported by all of their membership • BEREC have issued guidelines re with-holding payment however these apply only to European operators and are complex • Continued lack of cooperation within the operator community • Regretfully, the Fraudsters appear to be better organised to take full advantage of industry weaknesses
  18. 18. Industry’s ability to implement initiatives for steps 1 – 5 of IRSF 1 Access a Network 2 Obtain IRSF numbers 3 Generate the calls 4 Receive payment 5 Determine loss
  19. 19. 1 – Access to a network  Subscription Fraud and it’s variations can be reduced with effective Fraud Management Systems  SIM cloning can be eliminated by upgrading algorithm  PBX Fraud can be reduced by implementing fraud awareness programs and audits for business customers  Arbitrage can be avoided by ensuring that risk reviews are completed on all new products, services and tariffs  Invest in a fraud management solution However controls must be relative to preventing fraud while minimising customer impact.
  20. 20. 2 – Obtaining IPR Numbers  IPR Number Resellers have increased by 400% since 2009  85+ are now competing to attract fraudsters to them  Up to 75% of fraudsters embarking on an IRS Fraud will call a Test Number, provided by the Reseller first.  Most of these Test Numbers are now available in a database as an IRSF detection tool Implement a cost effective Fraud Management System which uses a Test Number Database as a hotlist. This alerts a CSP to a potential IRSF incident and has already shown benefits.
  21. 21. 3 – Generate traffic  Reduce the opportunity for fraudsters to maximise revenues by; – Removing International Call Forwarding and Multi Party calling from roaming customer SIM’s – Ensure that automated systems are in place to analyse NRTRDE records 24x7 and refer alerts to analysts – Ensure automated systems are in place to notify analysts 24x7 of calls to known IRSF destinations Up to 87% of all reported IRSF occurs between 8.00pm Friday and 8.00am Monday. If the fraud function does not operate during this period, alternatives must be identified.
  22. 22. 4 – Receive Payment  Early identification of IRSF does provide opportunities to negotiate payment withholding by partners  Position is strengthened if impacted operator is able to confirm that IRSF losses relate to a hijacked number range The earlier an incident is identified, the less the fraud loss will be, so early detection is critical.
  23. 23. 5 – Determining Loss  In most situations, it will be the originating number owner who will suffer the loss for IRSF, and it is their responsibility to ensure that they have systems and processes in place to minimise these losses.  Accurate reporting with evidential information is essential to identifying true losses, enabling future accurate detection/prevention through knowledge transfer. Fraud management solutions have good reporting capabilities and will support the creation of future intelligence in the fight against IRSF.
  24. 24. IRS Test Number Database (PRISM)
  25. 25. IRS Test Number Database (PRISM) • YFCL are monitoring the IPR Number Reseller websites and developed an IRS Test Number Database (PRISM) • This database currently contains over 25,500 test numbers – PRISM has been made available on a subscription basis to operators since the 21 August 2013 – It is used as a ‘hot-list’ within an FMS to alert operators when a Test Number has been called – It has proved to be very effective at identifying IRSF • Xintec are the only FMS Provider licenced to offer PRISM free as a hot list within their FMSevolution product.
  26. 26. Example of IRSF Test Numbers Date Time A Number B Number Call Duration 30/03/2013 05:17:33 XXX977860XX 23221104397 7 30/03/2013 05:32:14 XXX977860XX 23221104397 5 30/03/2013 05:57:22 XXX977860XX 23221104397 5 30/03/2013 06:03:41 XXX977860XX 23221300284 19 30/03/2013 06:13:55 XXX977860XX 23221300284 601 30/03/2013 06:13:57 XXX977860XX 23221300284 581 30/03/2013 06:13:58 XXX977860XX 23221300284 538 30/03/2013 06:13:58 XXX977860XX 23221300284 551 30/03/2013 06:14:01 XXX977860XX 23221300284 576 30/03/2013 06:14:01 XXX977860XX 23221300284 592 30/03/2013 06:14:02 XXX977860XX 23221300284 543 30/03/2013 06:14:03 XXX977860XX 23221300284 575 30/03/2013 06:14:05 XXX977860XX 23221300284 530 30/03/2013 06:14:06 XXX977860XX 23221300284 593 30/03/2013 06:14:07 XXX977860XX 23221300284 498 30/03/2013 06:14:07 XXX977860XX 23221300284 588 30/03/2013 06:14:08 XXX977860XX 23221300284 545 Sierra Leone 23221341844 Sierra Leone 23221104397 Sierra Leone 23221201721 Sierra Leone 23221341838 Sierra Leone 23221104344 Sierra Leone 23221201740 Calls to a Test Number in Sierra Leone. 3 Calls all short duration. (Duration in seconds). IRSF commences 46 minutes after calls to Test Number. This fraud continued for 4 hours with a loss to the carrier of over $US 52,000. Could this have been avoided or reduced if an alert had been generated once the Test Number was called? Sierra Leone Test Numbers available on number reseller’s website in March 2013. Sierra Leone Test Numbers from the same website in July 2013. Note changes.
  27. 27. Risk Mitigation and Recommendations
  28. 28. Risk Mitigation and recommendations Considerations • IRSF and associated fraud will be around for foreseeable future • The lack of Industry progress means operators to implement strong prevention and detection • Law Enforcement action is no deterrent • Operators who have experienced IRSF are strengthening their controls, fraudsters are constantly searching for soft targets. • What you spend now to implement controls will be significantly less than you will lose in an IRSF attack • IRS Fraudsters do not differentiate between Prepaid or Post-paid, both are at risk.
  29. 29. Risk Mitigation and recommendations Advice • Question whether you have strong or sufficient controls in place to prevent or detect an IRSF attack? • Remove International Call Forwarding and multi-party calling capability from roaming SIM cards • Encourage mobile users to implement SIM pin-lock • Ensure all Business customers have been advised to check their PBX security – change default Passwords, remove DISA facility if not required etc
  30. 30. Risk Mitigation and recommendations Tools • Early detection of likely IRSF activity is essential losses are likely to increase at €10,000 per hour • Install an automated Fraud Management System capable of providing you with 24x7 monitoring and correlation to a Test Number database. • Consider expansion in FM coverage to look at the primary frauds • Subscription Fraud • SIM Cloning • Theft of handsets or SIM cards • PBX Hacking • Wangiri Fraud