In today’s rapidly evolving telecommunications landscape, telecom fraud has become a growing concern for carriers worldwide. The Global Telecoms Fraud (GLF) report sheds light on the increasing trend of fraud in the telecom industry and the measures carriers are taking to protect their clients and safeguard their reputation.
As per the report, in 2023, the share of carriers treating fraudulent traffic as a “top” or “strategic” priority reached an all-time high of 92%, a significant increase from 77% in 2022.
Key reasons why carriers are prioritizing telecom fraud
- Evolving Fraud Landscape
Rising instances of International Revenue Share Fraud (IRSF), Caller Line Identity (CLI) spoofing, and Artificially Intelligent Traffic (AIT), coupled with the emergence of new fraud schemes, have thrust fraud into the spotlight. Carriers are now heavily investing in anti-fraud infrastructure, including robust firewalls and cutting-edge AI/ML tools.
- Dynamic Regulatory Environment
The regulatory framework governing telecommunications is undergoing dynamic changes to shield users from malicious attacks. This evolution necessitates additional requirements for telecom operators, compelling them to ramp up their anti-fraud efforts.
- Integration of Anti-Fraud Measures in Strategic Planning
Embedding anti-fraud measures into long-term planning has become an integral component of top management strategy. This shift is particularly crucial given the low-margin nature of the voice environment in which carriers operate.
Over 60% of carriers report an increase in the significance of fraudulent traffic management, a substantial rise from 51% in 2022. None of the surveyed carriers indicated a reduction in its importance, a stark contrast to the 11% recorded in the previous year. Moreover, carriers are gearing up for substantial investments in anti-fraud tools, with over 70% projecting increased spending in the next 12 months. Almost all carriers planning additional investments intend to leverage the power of AI/ML. These investments will primarily target:
- Real-time fraud detection
- Predictive analytics
- Speech analytics
To combat fraud, carriers are taking proactive steps to enhance employee skills through expanded training programs. The key drivers for providing additional training include:
- Addressing AI/ML shortcomings, particularly the challenge of “false positives” that occur when legitimate traffic is inadvertently blocked.
- Recognizing the critical importance of educating teams on maximizing the utility of AI/ML tools.
- Empowering sales teams with the knowledge to identify and prevent fraud at the outset.
The commitment to fighting fraud is underscored by the fact that 97% of carriers have intentions to either maintain or expand their anti-fraud full-time equivalent (FTE) workforce over the next year. Among the favored candidate profiles are individuals with a PhD in Mathematics or seasoned AI/ML professionals who can assist in the seamless integration of big data or AI/ML into the current system.
Top voice fraud threats
Among the various voice fraud threats, IRSF, CLI Spoofing, and Call Hijacking emerge as the most formidable threats in terms of both volume and financial impact. IRSF remains a persistent challenge due to the sheer intensity of attacks, challenging even the most robust anti-fraud systems. CLI Spoofing has seen a surge, attributed in part to the proliferation of Voice over Internet Protocol (VoIP) technology. Furthermore, technological advancements have provided fertile ground for call hijackers, keeping it entrenched among the top three most problematic voice fraud types.
Top messaging fraud threats
The number of operators witnessing an increase in messaging fraud has nearly doubled since 2022. Messaging fraud is on the rise due to regulatory restrictions and technology limitations that fraudsters exploit to their advantage.
Smishing, AIT, and SMS Originator Spoofing are the most significant threats in messaging fraud, both in terms of volume and financial impact. Smishing remains a challenge due to the sheer number of attacks. AIT is a concern due to its high volume and financial impact, primarily stemming from the lack of industry-wide collaboration. Although improvements have reduced SMS originator spoofing, it still has a relatively high financial impact on customers. End-user education plays a crucial role in mitigating these threats.
Fighting against telecom fraud
Industry-wide collaboration is indispensable in the battle against fraud in the telecom sector. Carriers are increasingly recognizing the need for unified action. Improving dispute resolution rates has also become paramount, yet 47% of carriers report success in only 40% or fewer cases.
Two-thirds of carriers indicate that a peer’s compliance with the Code of Conduct (CoC) impacts their likelihood of trading with them. The CoC is emerging as a trust mark for the carrier industry, highlighting the significance of adherence to industry standards. Moreover, over 75% of carriers reported a higher likelihood of trading with a peer based on a positive peer review, underscoring the industry’s commitment to achieving a fraud-free future.
The telecom industry is on high alert as fraud continues to evolve and threaten both operators and consumers. With the implementation of advanced technologies, training programs, and industry-wide collaboration, carriers are poised to combat the rising tide of telecom fraud and ensure a safer and more reliable telecommunications environment for all.
Source: 2023 GLF Fraud Report