Wholesale carriers face different fraud risks than traditional carriers. They see transit traffic but lack customer details. A main risk is false answer supervision fraud, where calls appear connected to generate charges though the call was not actually connected. Wholesale carriers could benefit from fraud but also face risks from established carriers. However, wholesale carriers are well positioned to provide fraud management as a service to other carriers due to their global traffic view and routing insights across multiple operators. This could help detect fraud scenarios and provide value-added intelligence to wholesale customers.

1. Wholesale Fraud – an
Overview OPERATIONAL
RISK MANAGEMENT
& COMPLIANCE
Jason Lane-Sellers
Fraud & RA Expert, Cvidya
© 2012 – PROPRIETARY AND CONFIDENTIAL INFORMATION OF CVIDYA

2. Introduction
2

3. Agenda
What is a Fraud in
wholesale? Wholesale
wholesale
Fraud
carrier?
Management
Strategy
How does The role of
it work wholesale in
Fraud
management
3

4. What is Wholesale?
 Wholesale providers provide transit capabilities to other operators and networks
 So these organizations have no consumer customers only provide services to other
carriers
– This mean that normal service providers do not need to have interconnection points
with every destination around the world
 The wholesale networks provide the backbone for international calling services
 The wholesale carrier can only see transit traffic; Typically, no local traffic of
carriers, no customer details, partial call data records are available to them
4

5. The Wholesale Scenario
Operator
A
Wholesale Carrier
Wholesale carrier
transits calls to
Operator
other networks
B around the world
and maintains
these
relationships
Operator
C
5

6. Fraud Against Wholesale providers
6

7. The Fraud Question for Wholesale
For wholesale carriers many of the traditional fraud risks do not apply – so do
they have an interest in fraud?
– In actuality the whole sale community benefits from fraud traffic as
revenue is generated for them from such traffic
– WS carriers have no view of originating entity or end entity, and do not
have any reason to monitor for traditional type frauds
– Different departments are usually involved
– No Fraud teams in many WS operators
– Different types of fraud/Different incentives
– The fraud against WS providers may be from established international carriers
– Handling fraud/disputes is a complex issue due to the nature of
commercial agreements
7

8. Wholesale Fraud
 So what are the risks to wholesale carriers?
 One of the main risks:
– FAS Fraud (false answer supervision)
– False Answer Supervision (FAS) is when a call that is
placed to a network appears to have connected and
therefore starts charging, whereas in actuality the call
has not actually been connected properly and
therefore should not be charged.
8

9. FAS Increase
 FAS has increased in volume over the last few years as a result of
several issues,
– Technology
– The shift to IP based technology systems, introducing complexity and issues into
connections between operators
– Mobile network interconnectivity via simboxes and GSM gateways
– Competition
– Competitive home markets and increases in wholesale options
– High termination rates impacting margins in competitive market places
– Cost reduction – the need to reduce costs to improve profits
– Profit – encouraging the introduction of FAS to service revenue
9

10. FAS – how it works
 Deliberate FAS is a service that simulates a call answer “connected status”
without the knowledge of the calling party and that provides false billable
airtime to the calling party.
 The service pretends to be a real connection and may play back real carrier
service messages
– e.g. "the number you are calling is not reachable at the moment, please, call back
later“ - while charging for this
 In certain circumstances, they may even connect the call whilst playing a
ringing tone (even if number is unavailable) in order to have the customer
remain on the call for a chargeable period.
10

11. False Answer Supervision Types
 FAS may be delivered for one or more of the following cases:
– FAS answer after a time-out before the terminating side goes off-hook
– FAS answer immediately
– FAS answer with a message (e.g. dialing, please wait, etc.)
– Any of the above FAS answers for certain Ingresses (PSTN or VoIP)
– Any of the above FAS answers for certain Egresses (PSTN or VoIP)
– Any of the above FAS answers for certain destinations (i.e. B- Number prefixes)
– Any of the above FAS answers for certain destination carriers (i.e. B- Number prefixes or egresses)

12. False Answer Supervision example
 In this graph, we have sampled the answer time
Country X - number of Calls by T(answer)
of calls in a western European wholesale provider No. of calls
8000
05:00-0600 06:00-07:00 07:00-08:00 08:00-09:00
to a specific destination (Country X) 7000
 The graph shows a clear spike at the value 16 6000
5000
 This raises the suspicion that we are dealing with 4000
Series1
FAS where a machine answers most of the calls 3000
2000
on the 16th second
1000
0
Call duration
Here we suspect an automated FAS at 16 seconds after Alert

13. Why would a operator commit FAS
• Operators can gain from introducing FAS services, as FAS can increase their revenues by deliberately
introducing FAS services into their network.
• This is achieved by introducing a FAS control server on the gateway connection point. This server controls
the “connect” status of the calls received. The server is controlled to introduce a percentage of FAS into the
calls received, thus increasing the average success rate (ASR) of calls therefore enabling a higher charge to
be applied, and usually it will mean an increase of calls, from call reattempts. Although there will be a slight
decrease in average call duration (ACD) due to the short calls impacted by FAS.
Example
• A route processing 10,000 calls per day – introducing 10% FAS - destination cost 0.10$ transit markup 0.05$ -
Thus in such an example profit on a single route can be increased by 21%.
ASR (%) ACD (min) Day Turnover ($) Profit ($)
Without Fake FAS 38% 4 1520 76
With Fake FAS 48% 3.5 1536 92
13

14. Other Wholesale Issues
 Due to the complex nature of a wholesalers
business and the commercial agreements, there
are other issues, often referred to as fraud that
can also impact a wholesale operator including:
– Arbitrage & tromboning
– Refiling (Re-origination)
– Number Manipulation
– Hijacking
14

15. The Wholesale Role in Fraud
Management
15

16. The Wholesale role in Fraud Management
 Wholesale providers are in a unique position
– They have a view of all the traffic they carry from multiple
operators
– They have an understanding of the routing and termination
– They can identify patterns across operators and relate activity
across different operations
– Can monitor and understand route profiling and behavior as it
occurs
– Issues such as IRSF, PRS, traffic pumping, AIT could be easily
visible in real time, even if spread across multiple originating
sources
 However do they have the incentive to help?
16

17. Fraud Management Approach for
wholesale
17

18. Strategic approach to Wholesale Fraud Management
 Fraud management as a service – enabling wholesale
operators to offer FMS services to their end-customers
– Monitoring of the applicable transit traffic in context with all
traffic
– Analysis & Detection of fraud scenarios such as PRS &
IRSF, Bypass, Arbitrage & Interconnect fraud, Artificial Traffic
Inflation, etc.
– Analysis of route and destination profiles, highlighting growing
risk situations or suspect activity based on a global view
– Implement numbering plans to highlight unallocated and high
risk activity
– Notifications to customers of possible threats
– Dedicated reports & dashboards, for there customers
highlighting issues and trends
18

19. Strategic approach to wholesale fraud management - 2
 The possibility of providing deeper level analysis
– Monitoring of ASR, ACD per route and destination in
conjunction with origination (identify targeted attacks)
– Provide contextual and trending information on all traffic
being carried, alerting on new potential issues
– Real time analysis with a global view
– Possible call control on agreement with customers to
prevent further losses –stop fraud in progress before the
originating operator is aware
19

20. OPERATIONAL
RISK MANAGEMENT
& COMPLIANCE
© 2012 – PROPRIETARY AND CONFIDENTIAL INFORMATION OF CVIDYA

21. Benefits
 For the wholesaler
– Provide the wholesale carrier with an understanding of their traffic
with a fraud prospective
– Potential to have a great impact on major worldwide issues and assist
standard operators
– This Enables wholesale carriers to offer value add services to their
clients
– Enables wholesale carrier to be involved in fraud management on a
world level
 For individual operators
– Gaining such a service from their wholesale carrier would give them
greater intelligence and capability to detect and control usage based
issues that happen via such routes (IRSF, etc), which would not be
possible in their own environment
21

22.  Wholesalers can view all the traditional frauds that
impact normal operators, however they do not
suffer from any losses and actually gain revenue
from this traffic
 The main fraud issue for wholesalers is actually
fraud by established carriers
 The wholesale providers though are in a unique
position to aid fraud management for the standard
carriers
 The view of traffic and routing that wholesale
providers have means that it could be possible for
them to provide a service to carriers (their
customers) and provide a value add via FMAAS

23. THANK YOU!
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