Telecom Fraud Guide

A Guide to Detecting and Preventing Telecom Fraud

Apple-BookAccording to the Federal Trade Commission, telecom fraud accounted for 34% of fraud complaints in 2012, up from 20% in 2010.  These numbers continue to grow, as new technology has led to an onslaught of new telecom fraud tactics.  The latest schemes are difficult to track and investigate because of their frequency, their layers of anonymity, and their global nature.


This guide will help you learn about the different types of telecom fraud and industry best practices for detection and prevention.


Three Major Categories of Telecom Fraud

We will divide the many telecom fraud schemes into three broad categories, based on who the fraudsters are targeting. These categories are:


  1. Schemes to Defraud Telecom Service Providers – These schemes are the most complicated, and exploit telecom service providers using stimulated traffic, SIP trunking, regulatory loopholes, and more.
  2. Schemes to Defraud Subscribers – This is simply any scheme that involves gaining access to someone else’s account to make free phone calls.
  3. Schemes Conducted Over the Telephone – Also known as “Phone Fraud,” this category covers all types of general fraud that are perpetrated over the telephone


Schemes to Defraud Telecom Service Providers

Telecom Service Providers are particularly vulnerable to telecom fraud.  Fraudsters are able to manipulate telecom regulatory systems to their advantage, and to the disadvantage of the service provider, in ways that are difficult to detect, trace, and prosecute.  Fraudsters often take advantage of lax security practices of a service provider’s customers.  A customer whose network has been compromised will often refuse to pay large fraudulent charges, leaving the service provider to cover the bill.  Finally, attacks frequently happen over holidays and weekends, when networks are often monitored less closely.



The industry best practice for detecting and preventing this type of telecom fraud is to monitor Call Detail Records (CDRs) in real time for suspicious traffic or call patterns.  To truly shut down fraud, any fraud prevention system should be combined with call routing technology.  NexOSS and SDReporter from TransNexus are currently the only solutions that combine fraud detection with routing.  This means that when suspicious traffic is identified, the TransNexus programs will automatically change the outgoing calling plans to re-route dangerous traffic, stopping the fraudulent activity before it gets started.



Schemes to Defraud Subscribers

Woman_Phone_3Subscriber fraud can affect any phone owner.  It encompasses any fraud that involves using another person’s account to make free phone calls. Subscriber fraud may be as simple as using a lost or stolen phone or SIM card.  The best way to combat subscriber fraud is to educate subscribers on basic security best practices, including creating and protecting strong passwords, and carefully examining bills for unrecognized calling activity.



Schemes Conducted Over the Telephone

BadgeCriminals of all sorts use telephony as a tool to defraud consumers and businesses.  “Phone fraud” is a huge category, and can cover anything from Nigerian prince style scams to identity theft to extortion.  TransNexus does not offer a solution to protect against these types of fraud, though there are other solutions on the market that can.



TransNexus Telecom Fraud Resources


TransNexus Products

NexOSS Logo

NexOSS is the only solution on the market that combines fraud detection with least cost routing.  NexOSS monitors for fraud in real time.  When it detects fraud, it sends Email and SNMP alerts, and may block the suspicious routes.  View Product Details


Designed to be simple and efficient, SDReporter provides comprehensive fraud reports and alarms.  SDReporter can also send OCI-P commands to BroadWorks to change outgoing call plans for subscribers showing fraudulent traffic.  View Product Details