Official necrologies of the world preferred businessman often overlook the fact that Steve Jobs first gadget was neither an iPhone nor an iPad. Its first product was a "whistle" like device that transmitted a tone down telephone networks to allow him to make free calls over AT&T network in the US. In that sense Steve Jobs was the ancestor of todays interconnect arbitragers.
In those happier times of counterculture, hackers were equipped with whistles and were there for fun and glory. Nowadays they are equipped with SIM servers and SIM boxes and they are here for real money.
WHAT ARE THE NEW TRENDS IN INTERCONNECT BYPASS FRAUDS?
The classical patterns of SIM box operators using retail offerings to terminate calls to mobile networks in mature markets has expanded to a complex set of different techniques of bypass frauds that exploit the specific cracks of each geography.
In mature European markets, regulatory pressure has diminished mobile termination fees charged by operator to terminate calls. However, in parallel, commercial introduction of unlimited offering and technological advances like SIM multiplexing have also brought the costs of SIM boxing close to 0. This means that even at 2 or 3 cents per minute, there remains a tiny margin for well organized arbitragers. Mobile operators still need to continue monitoring so as to make sure their decreasing interconnect revenues do not decrease too fast: a detection call campaign costing several thousands euros can still save a few millions of euros from hungry fraudsters!
In emerging markets in Africa, Middle East and Latin America, mobile network operators still enjoy high termination fees, sometimes above 10 cents per minute. This means that SIM box margins are fat...and attractive. The technological advances of SIM multiplexing enable fraudsters to escape the threshold based schemes implemented in the most advanced Fraud Management Systems: fraudulent SIM cards switch locations, they receive calls, they send SMS, they limit their calls to a limited number of B numbers, etc, letting them escape nearly all detection schemes. The only way to protect a mobile operator for good remains the classical detection calls offered by companies like Araxxe and others. In countries where SIM box is a widespread phenomenon, call campaigns should be large (in the range of 100 000 detection calls per month) to accelerate detections and use scrambling techniques to avoid counter-detection by black list management systems.
BEYOND SIM BOX, NEW FRAUD SCHEMES REGULARLY APPEAR!
Fraudsters are turning their attention to SMS revenues, whose termination fees are still quite high, even in the most heavily regulated markets. SMS are then resold by fraudsters to SMS service providers that resell them to advertising companies squeezing mobile operators from revenues earned using with their network and spamming their subscribers. Araxxe recently discovered a big fraudulent scheme in Italy, several mobile operators had been squeezed from a few millions euros in SMS termination fees.
Other fraudsters target the private PBX installed in small or medium businesses, with limited security protections if any. Once a PBX is hacked, typically through a voice mail remote access or by a simple Internet remote connection, it is easy to use it to generate traffic on demand. This can be used to terminate calls in one country as was recently discovered by Araxxe in Cote d'Ivoire. This can also be used to inflate revenues from a shared revenue number or to inflate transit fees toward special destinations increasing revenues at no costs.
WHAT IS TO BE DONE?
There is no universal solution to protect a mobile network from all types of frauds. As always, the best solution for fraud teams is to listen and to monitor!
