Telecom fraud looms large for mobile industry

TELECOM FRAUD presents a major threat to the global mobile industry, a conference in Dublin heard this week.

More than 90 delegates representing approximately 80 companies attended the three-day forum, which took place at the Royal Marine Hotel in Dún Laoghaire.

Representatives of major global operators as well as smaller suppliers from more than 40 countries were at the event. It was organised by the GSM Association, an international industry group representing the mobile communications industry.

The telecoms industry is notoriously guarded about revealing information related to fraud. This week’s events took place in closed session, while those in the international and Irish mobile industry declined to discuss any details of the potential costs of fraud to their businesses.

Industry estimates suggest that fraud constitutes 2-3 per cent of total revenues, a figure that is generally perceived to be lower for larger operators and much higher for smaller companies.

The US-based Communications Fraud Control Association estimates that telecoms fraud costs operators globally some $55 billion (€44 billion) a year.

Mobile fraud can encompass anything from voice subscription fraud and text spam to phishing and identity fraud. According to Matt Norton, chief executive of mobile security company Sentry Wireless, fraud is becoming a major issue for telecoms firms.

“In 2002, 10 per cent of e-mail was spam mail. Now this figure is about 90 per cent. Mobile phone fraud is following the growth trend of e-mail spam. In India, for example, spam now represents about 50 per cent of all texts sent.”

Mr Norton said fraud practices such as phishing and spam texts, which are a major issue in Asia, are beginning to appear here.

One of the attractions of fraud to spammers is the low cost. “With more and more operators offering free text options, spammers can have access to thousands of people at virtually no cost,” he said.

Seán Killeen of Xintec, a Luxembourg-based fraud management company which organised this week’s conference with Vodafone, said increased competition between providers meant that “time- to-market” often took priority over proper internal controls, leaving operators vulnerable to fraud attacks.

As well as the obvious threats to consumers, mobile phone fraud hits the pockets of operators in a variety of ways: increased spending on customer service calls; branding and reputation issues; and, most significantly, a potential clogging-up of inboxes that may deter customers from using the service, a fate that has befallen certain e-mail providers in recent years.

Mobile operators are taking the threat seriously. Meteor head of risk management Edel Smyth said all telecoms companies now had dedicated fraud units.

“The main challenge is keeping up to speed with changing technology,” she said. “It’s about prevention and identifying potential threats before they escalate. This will allow us to keep one step ahead.”