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TERALIGHT	
   NETWORK	
  FRAUD	
  –	
  BYPASS/PREMIUM	
  RATE	
  NUMBER	
  –	
  IRS	
  
	
  
	
   	
  
Author:	
  Tom	
  Wilson	
  
	
  
 
	
  
1	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
Contents  
Executive	
  Summary	
  ..............................................................................................................................................................................	
  	
  
Introduction	
  .......................................................................................................................................................................................	
  2	
  
Bypass	
  ...........................................................................................................................................................................................	
  2	
  
IRSF	
  ...............................................................................................................................................................................................	
  2	
  
Who	
  is	
  affected?	
  ................................................................................................................................................................................	
  5	
  
How	
  bypass	
  fraud	
  works?	
  ..................................................................................................................................................................	
  5	
  
Legal	
  Call	
  Termination	
  ...................................................................................................................................................................	
  5	
  
Illegal	
  Call	
  Termination	
  .................................................................................................................................................................	
  5	
  
On-­‐Net	
  Fraud	
  ...........................................................................................................................................................................	
  6	
  
Off-­‐Net	
  Fraud	
  ...........................................................................................................................................................................	
  6	
  
IRSF	
  -­‐	
  Premium	
  Number	
  Fraud	
  .................................................................................................................................................	
  6	
  
Fraud	
  Prevention	
  ...............................................................................................................................................................................	
  7	
  
Bypass	
  Route	
  Detection	
  ................................................................................................................................................................	
  7	
  
SIM	
  Box	
  Detection	
  using	
  Fraud	
  Management	
  Systems	
  ................................................................................................................	
  7	
  
IRSF	
  -­‐	
  Premium	
  Number	
  Fraud	
  Prevention	
  ...................................................................................................................................	
  9	
  
Conclusion	
  ..........................................................................................................................................................................................	
  9	
  
	
  
	
  
Executive  Summary  
Bypass	
   fraud	
   along	
   with	
   IRSF	
   has	
   proven	
   they	
   are	
   highly	
   costly	
   types	
   of	
   network	
   fraud	
   in	
   the	
   modern	
  
telecommunications	
  environment.	
  The	
  menace	
  of	
  telecom	
  fraud	
  has	
  made	
  the	
  telecom	
  operators	
  and	
  the	
  regulators	
  
face	
  staggering	
  annual	
  revenues	
  losses	
  numbering	
  in	
  the	
  multiple	
  billions	
  in	
  US	
  Dollars.	
  
Bypass	
  fraud	
  is	
  more	
  predominant	
  in	
  countries	
  where	
  the	
  cost	
  of	
  terminating	
  international	
  call	
  is	
  much	
  higher	
  than	
  the	
  
cost	
  of	
  a	
   national	
  call	
  by	
  a	
  substantial	
  margin	
  or	
  the	
  countries	
  where	
  government	
  carriers	
  monopolize	
  international	
  
gateways.	
   These	
   fraud	
   committers	
   (fraudsters),	
   who	
   can	
   be	
   both	
   individuals	
   and	
   organizations,	
   through	
   the	
   use	
   of	
  
various	
  bypass	
  contrivances,	
  sell	
  capacity	
  to	
  terminate	
  calls	
  cheaply	
  in	
  these	
  countries,	
  either	
  on	
  the	
  open	
  market	
  or	
  via	
  
direct	
  connections	
  with	
  interconnect	
  operators.	
  Operators	
  sending	
  outbound	
  international	
  traffic	
  are	
  then	
  attracted	
  by	
  
these	
  interconnect	
  operators	
  with	
  lower	
  interconnect	
  rates,	
  usually	
  with	
  lower	
  quality	
  and	
  no	
  delivery	
  of	
  CLI.	
  This	
  leads	
  
to	
  loss	
  of	
  revenue	
  for	
  terminating	
  network	
  operators	
  as	
  well	
  as	
  causing	
  potential	
  social	
  harm	
  to	
  society.	
  
Premium	
  rate	
  services	
  have	
  been	
  hit	
  with	
  IRSF	
  (international	
  Revenue	
  Share	
  Fraud)	
  that	
  exploits	
  the	
  interconnection	
  of	
  
premium	
  rate	
  services.	
  The	
  major	
  way	
  to	
  commit	
  IRSF	
  is	
  by	
  significantly	
  increasing	
  the	
  number	
  of	
  calls	
  to	
  a	
  premium	
  
number	
  in	
  a	
  variety	
  of	
  ways	
  to	
  increase	
  the	
  revenue.	
  These	
  are	
  two	
  types	
  of	
  international	
  fraud	
  which	
  account	
  for	
  a	
  
major	
  portion	
  of	
  operator’s	
  network	
  fraud	
  losses.	
  
The	
  purpose	
  of	
  this	
  paper	
  is	
  to	
  discuss	
  comprehensive	
  and	
  best	
  in	
  class	
  solutions	
  to	
  combat	
  bypass	
  fraud	
  and	
  premium	
  
number	
  hijacking.	
  	
  
 
	
  
2	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
	
  
	
  
	
  
Introduction  
This	
  paper	
  discusses	
  two	
  distinctly	
  different	
  types	
  of	
  telecom	
  network	
  fraud.	
  One	
  is	
  commonly	
  called	
  
international	
  network	
  bypass	
  fraud	
  (bypass)	
  and	
  the	
  other	
  is	
  called	
  international	
  revenue	
  sharing	
  fraud	
  
(IRSF).	
  Both	
  are	
  considered	
  to	
  be	
  costing	
  operators	
  and	
  governments	
  billions	
  USD	
  in	
  losses.	
  
Bypass  
Bypass	
   fraud	
   is	
   also	
   known	
   as	
   “Grey	
   routing”,	
   ‘SIM	
   Boxing’	
   and	
   ‘Leaky	
   PABX’,	
   is	
   a	
   widespread	
   and	
  
problematic	
  telecom	
  risk.	
  	
  	
  
Bypass	
  Fraud	
  is	
  prevalent	
  in	
  countries	
  where	
  there	
  is	
  a	
  big	
  difference	
  between	
  the	
  national	
  retail	
  calling	
  
rates/national	
  interconnect	
  rates	
  and	
  international	
  terminating	
  rates.	
  This	
  is	
  set	
  either	
  by	
  the	
  regulator	
  
in	
  the	
  country	
  or	
  by	
  individual	
  (or	
  group	
  of)	
  operators	
  (unregulated).	
  It	
  is	
  also	
  popular	
  in	
  countries	
  where	
  
government	
   operators	
   monopolize	
   international	
   gateways.	
   The	
   difference	
   in	
   rates	
   ensures	
   there	
   are	
  
enough	
  profit	
  margins	
  for	
  bypass	
  service	
  providers	
  to	
  construct	
  their	
  networks	
  and	
  even	
  handle	
  certain	
  
amounts	
  of	
  losses	
  due	
  to	
  discovery	
  of	
  their	
  routes	
  and	
  business	
  practices	
  to	
  elude	
  detection.	
  	
  
Countries	
  where	
  the	
  international	
  to	
  national	
  terminating	
  charge	
  margins	
  are	
  low,	
  nil	
  or	
  negative,	
  the	
  
Bypass	
  fraud	
  either	
  doesn’t	
  exist	
  or	
  is	
  conducted	
  on	
  a	
  low	
  scale,	
  or	
  is	
  considered	
  insider	
  billing	
  fraud.	
  
According	
   to	
   surveys	
   of	
   CFCA,	
   ACFE	
   and	
   ETNO	
   the	
   potential	
   commercial	
   loss	
   due	
   to	
   fraud	
   in	
  
telecommunication	
  networks	
  equates	
  to	
  0.5%	
  to	
  5%	
  of	
  operator’s	
  revenue.	
  
Additionally,	
  bypass	
  fraud	
  consumes	
  a	
  substantial	
  amount	
  of	
  signaling	
  and	
  voice	
  bandwidth	
  as	
  well	
  as	
  
the	
   resources	
   of	
   individual	
   network	
   elements	
   (i.e.	
   STPs,	
   switches,	
   databases).	
   In	
   order	
   to	
   properly	
  
identify	
  By-­‐Pass	
  Fraud	
  one	
  needs	
  to	
  understand	
  the	
  issues	
  around	
  this	
  fraud.	
  	
  	
  
IRSF  
Premium-­‐rate	
  numbers	
  provide	
  certain	
  services	
  for	
  prices	
  higher	
  than	
  normal	
  calls.	
  Unlike	
  a	
  normal	
  call,	
  
a	
  part	
  of	
  the	
  call	
  charge	
  is	
  paid	
  to	
  the	
  service	
  provider,	
  enabling	
  businesses	
  to	
  be	
  funded	
  via	
  them.	
  While	
  
the	
  billing	
  is	
  different,	
  calls	
  are	
  usually	
  routed	
  the	
  same	
  way	
  they	
  are	
  for	
  a	
  toll-­‐free	
  telephone	
  number.	
  
These	
  telephone	
  numbers	
  are	
  usually	
  allocated	
  from	
  a	
  national	
  telephone	
  numbering	
  plan	
  in	
  a	
  way	
  that	
  
they	
  are	
  distinguishable	
  from	
  other	
  numbers.	
  In	
  many	
  cases	
  of	
  premium	
  rate	
  calls,	
  the	
  transmission	
  of	
  
the	
  call	
  goes	
  through	
  multiple	
  operator	
  networks.	
  Most	
  involve	
  the	
  use	
  of	
  GSM	
  SIM	
  cards,	
  being	
  taken	
  
across	
   international	
   borders	
   to	
   originate	
   calls	
   on	
   effected	
   originator	
   networks,	
   utilizing	
   the	
   roaming	
  
capability	
   of	
   the	
   SIM	
   cards.	
   IRSF	
   fraud	
   is	
   very	
   difficult	
   to	
   nail	
   down,	
   given	
   the	
   multiple	
   operators	
  
involved,	
   the	
   complexity	
   of	
   networks	
   and	
   BSS	
   systems	
   involved	
   and	
   the	
   lack	
   of	
   total	
   end-­‐to-­‐end	
  
cooperation	
   of	
   all	
   stakeholders	
   to	
   assist	
   in	
   elimination	
   of	
   these	
   types	
   of	
   fraud.	
   Origination	
   operator	
  
networks	
  are	
  left	
  hanging	
  with	
  the	
  invoice	
  for	
  these	
  high	
  cost	
  calls,	
  either	
  on	
  a	
  premium-­‐rate	
  number	
  
call	
  or	
  on	
  a	
  call	
  to	
  a	
  high	
  cost	
  per	
  minute	
  destination	
  country.	
  
	
  
 
	
  
3	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
IRSF	
  has	
  many	
  different	
  types	
  of	
  perpetrators.	
  Normal	
  callers	
  can	
  also	
  become	
  unwitting	
  contributors	
  to	
  
IRSF,	
  where	
  they	
  want	
  specific	
  content	
  that	
  is	
  derived	
  from	
  premium	
  rate	
  number	
  content	
  providers.	
  
However	
  in	
  some	
  cases,	
  the	
  content	
  provider	
  is	
  the	
  same	
  party	
  (individual	
  or	
  group	
  of	
  individuals	
  or	
  
company	
  in	
  some	
  cases)	
  as	
  the	
  fraudsters	
  forcing	
  high	
  volumes	
  of	
  calls	
  to	
  those	
  illicit	
  content	
  premium	
  
number	
  services.	
  	
  
Premium-­‐rate	
   numbers	
   have	
   also	
   been	
   used	
   to	
   defraud	
   unsuspecting	
   users.	
   One	
   scheme	
   involves	
  
inducing	
   users	
   to	
   download	
   a	
   program	
   known	
   as	
   a	
   dialer.	
   This	
   surreptitiously	
   dials	
   a	
   premium-­‐rate	
  
number,	
  accumulating	
  charges	
  on	
  the	
  user's	
  phone	
  bill	
  without	
  their	
  knowledge.	
  Another	
  premium-­‐rate	
  
scam	
  involves	
  television	
  programming.	
  This	
  induces	
  young	
  children	
  to	
  dial	
  the	
  number,	
  banking	
  on	
  the	
  
notion	
  that	
  they	
  will	
  be	
  unaware	
  of	
  the	
  incurred	
  charges.	
  In	
  other	
  cases,	
  newer	
  version	
  of	
  smart	
  phones	
  
have	
   the	
   capacity	
   to	
   make	
   six	
   calls	
   to	
   each	
   conference	
   call	
   they	
   make	
   and	
   thus	
   six	
   calls	
   at	
   a	
   time	
  
increasing	
   call	
   volumes	
   quickly.	
   This	
   is	
   done	
   to	
   elude	
   blockage	
   induced	
   by	
   some	
   of	
   the	
   telecoms	
  
software	
   fraud	
   detection	
   systems,	
   which	
   can	
   detect	
   high	
   volume	
   suspicious	
   call	
   traffic	
   patterns	
   to	
  
premium	
   rate	
   numbers	
   and	
   or	
   long	
   call	
   duration	
   (usually	
   up	
   to	
   59.9	
   minutes)	
   to	
   the	
   same	
   type	
   of	
  
numbers.	
  
Briefly	
  summarizing	
  IRSF	
  -­‐	
  Premium	
  Rate	
  Service	
  fraud;	
  this	
  type	
  of	
  fraud	
  occurs	
  when	
  a	
  person,	
  group	
  
of	
   persons,	
   or	
   a	
   company	
   or	
   group	
   of	
   companies	
   scheme	
   with	
   either	
   the	
   content	
   provider	
   or	
   the	
  
international	
   network	
   providing	
   the	
   content	
   to	
   find	
   different	
   measures	
   to	
   falsely	
   increase	
   the	
   total	
  
number	
  of	
  calls	
  significantly	
  and	
  or	
  enacting	
  methods	
  to	
  increase	
  falsely	
  generate	
  longer	
  call/billing	
  time	
  
to	
  increase	
  the	
  revenue	
  generated	
  by	
  the	
  use	
  of	
  the	
  premium	
  rate	
  number.	
  The	
  various	
  parties	
  to	
  the	
  
call	
   share	
   this	
   revenue;	
   if	
   a	
   part	
   of	
   IRSF,	
   some	
   of	
   the	
   parties	
   are	
   traditional	
   network	
   operators	
  
transmitting	
  the	
  calls	
  and	
  some	
  parties	
  who	
  are	
  a	
  part	
  of	
  the	
  fraud	
  itself.	
  The	
  premium	
  rate	
  numbers	
  are	
  
easy	
  to	
  obtain,	
  and	
  very	
  blatantly,	
  these	
  companies	
  and	
  the	
  content	
  generators	
  advertise	
  publicly	
  for	
  
persons	
  to	
  find	
  ways	
  to	
  earn	
  money	
  by	
  generation	
  of	
  call	
  traffic	
  to	
  these	
  premium	
  rate	
  numbers.	
  Again,	
  
IRSF	
   can	
   be	
   either	
   via	
   the	
   use	
   of	
   Premium	
   Rate	
   Numbers	
   or	
   simply	
   high	
   rate	
   termination	
   country	
  
termination	
  numbers.	
  
	
   	
  
 
	
  
4	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
	
  
Pirated	
  Mobile	
  GSM	
  SIM	
  chips	
  in	
  a	
  Roaming	
  Scenario	
  generating	
  IRSF	
  “Fraud”	
  
	
  
The	
  content	
  provider	
  or	
  the	
  final	
  network	
  providing	
  the	
  internalonal	
  premium	
  number	
  service	
  may	
  be	
  in	
  cahoots	
  with	
  the	
  fraudsters	
  to	
  
generate	
  higher	
  volumes	
  of	
  calls	
  to	
  the	
  premium	
  number	
  or	
  make	
  amempts	
  to	
  lengthen	
  calls	
  to	
  generate	
  higher	
  call	
  revenues.	
  
	
  
*	
  the	
  call	
  costs	
  and	
  rates	
  are	
  merely	
  examples	
  for	
  purpose	
  of	
  this	
  illustralon	
  
The	
  Premium	
  Number	
  owner	
  passes	
  through	
  the	
  revenue	
  to	
  the	
  Internalonal	
  Revenue	
  Share	
  Number	
  provider	
  which	
  is	
  usually	
  (not	
  
always)	
  the	
  same	
  enlty	
  as	
  the	
  content	
  porovider.	
  The	
  revenue	
  of	
  $1.46	
  being	
  passed	
  through	
  to	
  the	
  IRSN	
  
If	
  the	
  final	
  network	
  which	
  owns	
  or	
  leases	
  the	
  Premium	
  number	
  from	
  an	
  
Number	
  range	
  owner,	
  does	
  not	
  own	
  the	
  content,	
  they	
  will	
  keep	
  example	
  of	
  
$1.00	
  and	
  pay	
  to	
  content	
  holder	
  $.46.	
  
The	
  Internalonal	
  Revenue	
  Share	
  Number	
  Network	
  will	
  terminate	
  the	
  call	
  to	
  
the	
  premium	
  number	
  called.	
  
Operator	
  C	
  tansits	
  the	
  call.	
  Receives	
  the	
  call	
  from	
  Operator	
  B	
  
Operator	
  C	
  collects	
  $1.71	
  from	
  Operator	
  B	
  and	
  will	
  keep	
  $.25.	
  
Operator	
  C	
  sends	
  the	
  call	
  to	
  an	
  enlty	
  "owning	
  the	
  Premium	
  Number	
  
Range".	
  Operator	
  C	
  pays	
  the	
  PNRO	
  pass	
  thorugh	
  $1.46.	
  
Operator	
  B	
  transits	
  the	
  call.	
  Receives	
  the	
  call	
  from	
  Operator	
  A	
  	
  
Operator	
  B	
  collects	
  $1.91	
  from	
  Operator	
  A	
  and	
  will	
  keep	
  $.20.	
   Operator	
  B	
  sends	
  the	
  call	
  to	
  Operator	
  C	
  and	
  pays	
  Operator	
  C	
  $1.71.	
  
Operator	
  A	
  transits	
  the	
  call.	
  Receives	
  the	
  call	
  from	
  network	
  where	
  call	
  originates	
  from.	
  
Operator	
  A	
  collects	
  from	
  originalng	
  network	
  operators	
  $2.16,	
  and	
  will	
  keep	
  
$.25.	
  
Operator	
  A	
  sends	
  the	
  call	
  to	
  Operator	
  B	
  and	
  pays	
  the	
  receiving	
  operator	
  
$1.91.	
  
Call	
  is	
  generated	
  in	
  this	
  visled	
  country,	
  where	
  the	
  home	
  of	
  the	
  SIM	
  chip	
  operator	
  wil	
  pay	
  $2.50	
  
The	
  network	
  where	
  the	
  call	
  is	
  made,	
  gets	
  to	
  retain	
  $.34.	
  
This	
  operator,	
  where	
  the	
  call	
  is	
  actually	
  made,	
  pays	
  $2.16	
  to	
  the	
  carrier	
  next	
  
in	
  line	
  to	
  handle	
  the	
  call.	
  
Illegal	
  fraud	
  generated	
  usually	
  by	
  generalon	
  of	
  high	
  volume	
  of	
  calls	
  to	
  a	
  Premium	
  Rate	
  Number	
  vis	
  a	
  vis	
  pirated	
  GSM	
  SIM	
  chips	
  taken	
  to	
  
another	
  country	
  to	
  roam	
  call	
  traffic	
  
Home	
  market	
  for	
  SIM	
  chip	
  
SIM	
  chip(s)	
  taken	
  to	
  another	
  country	
  to	
  roam	
  originalon	
  of	
  call	
  from.	
  The	
  
SIM	
  home	
  country	
  operator	
  is	
  not	
  PAID	
  for	
  cost	
  of	
  Premium	
  Rate	
  Number	
  
Call.	
  Example	
  $2.50.	
  
 
	
  
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Who  is  affected?  
	
  
Bypass	
  fraud	
  or	
  grey	
  telephony	
  is	
  a	
  serious	
  issue	
  for:	
  
Telecom	
  Operators	
  -­‐	
  Telecom	
  Regulators	
  –	
  Subscribers	
  
Bypass	
  fraud	
  can	
  have	
  the	
  following	
  adverse	
  effects:	
  
*	
   Revenue	
  loss	
  to	
  government	
  treasuries.	
  Especially	
  in	
  emerging	
  markets,	
  where	
  the	
  state	
  entity	
  
has	
  equity	
  in	
  the	
  operators.	
  Regulators,	
  both	
  national	
  and	
  regional	
  such	
  as	
  Berec,	
  PTA,	
  STRA,	
  JTRC	
  and	
  
others	
  have	
  taken	
  a	
  real	
  serious	
  look	
  at	
  these	
  types	
  of	
  network	
  fraud.	
  
*	
   Bypass	
  fraud	
  disturbs	
  planned	
  and	
  predicted	
  revenue	
  streams	
  of	
  telecom	
  operators	
  who	
  have	
  
invested	
  millions	
  of	
  dollars.	
  The	
  investment	
  may	
  be	
  in	
  form	
  of	
  license	
  fees,	
  deployment	
  of	
  infrastructure	
  
and	
  other	
  government	
  charges.	
  
*	
   Foreign	
  investment	
  in	
  telecom	
  sector	
  is	
  reduced	
  as	
  a	
  result	
  of	
  lack	
  of	
  investor	
  confidence	
  in	
  the	
  
market,	
  especially	
  in	
  developing	
  countries	
  where	
  a	
  large	
  portion	
  of	
  the	
  national	
  GDP	
  is	
  from	
  telecoms.	
  
*	
   Social	
  anxiety	
  where	
  people	
  do	
  not	
  wish	
  to	
  answer	
  non	
  CLI	
  (generally	
  indicative	
  of	
  a	
  grey	
  route	
  
being	
  used	
  to	
  terminate	
  the	
  call)	
  low	
  quality	
  network	
  calls,	
  due	
  to	
  passage	
  over	
  very	
  low	
  quality,	
  highly	
  
compressed	
  and	
  congested	
  IP	
  routes	
  with	
  no	
  network	
  management	
  whatsoever.	
  	
  
*	
   Social	
  safety	
  where	
  people	
  may	
  only	
  answer	
  those	
  calls	
  where	
  the	
  called	
  party	
  receives	
  CLI	
  and	
  
is	
  able	
  to	
  identify	
  the	
  calling	
  party.	
  It	
  has	
  happened,	
  where	
  a	
  non	
  CLI	
  call	
  is	
  ignored,	
  due	
  to	
  general	
  
knowledge	
  of	
  low	
  quality	
  calls	
  and	
  the	
  called	
  party	
  is	
  unsuspecting	
  of	
  the	
  nature	
  of	
  the	
  call,	
  where	
  it	
  
may	
  be	
  a	
  family	
  emergency	
  but	
  they	
  don’t	
  know	
  it,	
  for	
  the	
  CLI	
  is	
  not	
  passed	
  on	
  most	
  bypass	
  routes.	
  
How  bypass  fraud  works?  
Bypass	
  fraud	
  has	
  different	
  forms	
  –	
  international	
  vs.	
  national,	
  incoming	
  vs.	
  outgoing,	
  border	
  bypass	
  etc.	
  –	
  
but	
  the	
  idea	
  is	
  simple:	
  bypassing	
  interconnect	
  points	
  via	
  cheaper	
  routes	
  such	
  as	
  the	
  Internet.	
  	
  
Legal  Call  Termination  
Call	
   termination,	
   also	
   known	
   as	
   voice	
   termination,	
   refers	
   to	
   the	
   routing	
   of	
   telephone	
   calls	
   from	
   one	
  
Telephone	
  Company	
  to	
  another.	
  The	
  terminating	
  point	
  is	
  the	
  called	
  party	
  or	
  end	
  point.	
  The	
  originating	
  
point	
  is	
  the	
  calling	
  party	
  who	
  initiates	
  the	
  call.	
  
This	
  term	
  often	
  applies	
  to	
  calls	
  while	
  using	
  voice	
  over	
  Internet	
  protocol	
  (VoIP):	
  a	
  call	
  initiated	
  as	
  a	
  VoIP	
  
call	
   is	
   terminated	
   using	
   the	
   public	
   switched	
   telephone	
   network	
   (PSTN).	
   In	
   such	
   cases,	
   termination	
  
services	
  may	
  be	
  sold	
  as	
  a	
  separate	
  commodity.	
  The	
  opposite	
  of	
  call	
  termination	
  is	
  call	
  origination,	
  in	
  
which	
  a	
  call	
  initiated	
  from	
  the	
  PSTN	
  is	
  terminated	
  using	
  VoIP.	
  Thus,	
  in	
  "origination"	
  a	
  call	
  originates	
  from	
  
PSTN	
  and	
  goes	
  to	
  VoIP,	
  while	
  in	
  "termination"	
  a	
  call	
  originates	
  in	
  VoIP	
  and	
  terminates	
  to	
  the	
  PSTN.	
  
Illegal  Call  Termination  
Illegal	
  call	
  termination	
  utilizes	
  least	
  cost	
  call	
  termination	
  techniques	
  such	
  as	
  GSM	
  Gateway	
  SIM	
  Boxes	
  to	
  
bypass	
  the	
  legal	
  call	
  interconnection.	
  This	
  diverts	
  international	
  incoming	
  calls	
  to	
  either	
  on-­‐network	
  or	
  
off-­‐network	
   GSM/CDMA/Fixed	
   calls	
   through	
   the	
   use	
   of	
   VoIP	
   or	
   Satellite	
   gateway.	
   Doing	
   this	
   evades	
  
revenue	
  for	
  international	
  call	
  termination	
  which	
  operators	
  and	
  government	
  regulators	
  are	
  entitled	
  to.	
  
 
	
  
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On-­‐Net  Fraud  
For	
  an	
  operator,	
  if	
  the	
  person	
  committing	
  fraud	
  uses	
  their	
  own	
  network’s	
  connections	
  to	
  terminate	
  the	
  
bypassed	
  calls,	
  it	
  is	
  identified	
  as	
  On-­‐Net	
  Bypass	
  Fraud.	
  On-­‐net	
  calls	
  are	
  expected	
  to	
  provide	
  the	
  least	
  
national	
  calling	
  rates.	
  Lot	
  of	
  modern	
  Bypass	
  equipment	
  (GSM	
  Gateway	
  SIM	
  Boxes,	
  computer	
  programs	
  
etc.)	
   scan	
   the	
   terminating	
   party	
   numbers	
   and	
   re-­‐originate	
   calls	
   only	
   from	
   those	
   connections	
   which	
  
belong	
  to	
  the	
  same	
  operator’s	
  network	
  as	
  the	
  terminating	
  party.	
  	
  
For	
  On-­‐Network	
  terminating	
  calls	
  (connections	
  used	
  for	
  Bypass	
  Fraud	
  belong	
  to	
  the	
  home	
  operator),	
  the	
  
revenue	
   loss	
   per	
   call	
   is	
   directly	
   related	
   to	
   the	
   difference	
   between	
   the	
   international	
   interconnect	
  
termination	
  price	
  and	
  the	
  retail	
  price	
  of	
  on-­‐network	
  call.	
  
Off-­‐Net  Fraud  
If	
  the	
  fraud	
  committer	
  uses	
  competitor’s	
  connections	
  or	
  any	
  other	
  means	
  for	
  termination,	
  it	
  is	
  identified	
  
as	
  Off-­‐Net	
  Bypass	
  Fraud.	
  	
  
In	
   regions,	
   where	
   the	
   off-­‐network	
   call	
   rates	
   are	
   equal	
   to	
   the	
   on-­‐network	
   calls,	
   national	
   calls	
   may	
   be	
  
originated	
  from	
  off-­‐network	
  number	
  to	
  conduct	
  the	
  Bypass	
  fraud	
  which	
  means	
  that	
  numbers	
  can	
  be	
  
from	
  other	
  networks	
  as	
  well.	
  	
  
For	
   Off-­‐Network	
   terminating	
   calls	
   (connections	
   used	
   for	
   Bypass	
   Fraud	
   belong	
   to	
   competitor),	
   the	
  
revenue	
   loss	
   per	
   call	
   is	
   directly	
   related	
   to	
   the	
   difference	
   between	
   the	
   international	
   interconnect	
  
termination	
  price	
  and	
  the	
  local	
  interconnect	
  termination	
  price	
  of	
  off-­‐network	
  calls.	
  
IRSF  -­‐  Premium  Number  Fraud  
Premium	
   rate	
   services	
   have	
   attracted	
   multiple	
   types	
   of	
   fraud	
   that	
   exploit	
   the	
   interconnection	
   of	
  
premium	
   rate	
   services.	
   The	
   basic	
   scheme	
   is	
   that	
   the	
   fraud	
   committer	
   contracts	
   with	
   a	
   terminating	
  
operator	
   to	
   provide	
   a	
   premium	
   rate	
   service	
   and	
   then	
   separately	
   subscribes	
   for	
   several	
   lines	
   with	
   an	
  
originating	
  operator,	
  normally	
  not	
  the	
  same	
  operator	
  as	
  the	
  terminating	
  operator.	
  	
  
 
	
  
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The	
  fraud	
  committer	
  then	
  runs	
  auto	
  dialers	
  on	
  the	
  subscriber	
  lines	
  and	
  calls	
  the	
  premium	
  rate	
  numbers	
  
continually	
  running	
  up	
  very	
  large	
  invoices,	
  where	
  the	
  fraudster	
  is	
  usually	
  able	
  to	
  share	
  a	
  part	
  of	
  this	
  
fraudulent	
  revenue.	
  This	
  is	
  just	
  one	
  example	
  of	
  how	
  the	
  fraud	
  is	
  generated.	
  There	
  are	
  many	
  ways	
  to	
  
falsely	
   generate	
   high	
   volumes	
   of	
   calls	
   from	
   one	
   country	
   to	
   another	
   to	
   the	
   Premium	
   Rate	
   Numbers,	
  
which	
  are	
  commonly;	
  magnets	
  for	
  this	
  type	
  of	
  fraud.	
  Fraudsters	
  generate	
  calls	
  by	
  new	
  technology,	
  by	
  
paying	
  people	
  to	
  make	
  calls	
  upon	
  calls	
  to	
  these	
  termination	
  numbers,	
  which	
  sometimes	
  simply	
  go	
  to	
  an	
  
answering	
   machine,	
   or	
   a	
   constantly	
   cycled	
   message	
   recorder.	
   The	
   fraudsters	
   attempt	
   anyway	
   to	
  
generate	
  the	
  highest	
  number	
  of	
  calls	
  and	
  longest	
  calls	
  possible	
  to	
  create	
  as	
  high	
  of	
  a	
  billing	
  charge	
  to	
  the	
  
originating	
  operator	
  network	
  the	
  calls	
  first	
  arrive	
  on.	
  
Another	
  variant	
  uses	
  the	
  computers	
  of	
  existing	
  subscribers	
  as	
  the	
  callers.	
  The	
  fraud	
  committer	
  contracts	
  
for	
  a	
  premium	
  rate	
  service	
  and	
  then	
  distributes	
  viruses	
  or	
  other	
  types	
  of	
  programs	
  through	
  email	
  or	
  web	
  
sites	
  that	
  become	
  resident	
  in	
  the	
  computers	
  of	
  legitimate	
  subscribers.	
  If	
  the	
  subscribers	
  have	
  a	
  modem	
  
connected	
  to	
  their	
  computer	
  for	
  Internet	
  access,	
  the	
  programs	
  control	
  the	
  modem	
  to	
  dial	
  the	
  premium	
  
rate	
  numbers.	
  Some	
  programs	
  work	
  during	
  or	
  immediately	
  after	
  an	
  Internet	
  dial-­‐up	
  access	
  session.	
  
Fraud  Prevention  
Bypass  Route  Detection  
Bypass	
  route	
  detection	
  can	
  be	
  performed	
  via	
  multiple	
  methods.	
  One	
  measure	
  that	
  is	
  definitive	
  in	
  nature	
  
providing	
   real	
   evidence	
   with	
   regard	
   to	
   Bypass	
   Fraud	
   is	
   the	
   use	
   of	
   non-­‐passive	
   forced	
   network	
   call	
  
generation.	
   In	
   this	
   method	
   third	
   party	
   service	
   providers	
   generate	
   traffic	
   to	
   operator	
   networks	
   from	
  
remote	
  points	
  and	
  then	
  analyze	
  the	
  traffic	
  actually	
  received	
  (non	
  published	
  non	
  active	
  call	
  to	
  numbers,	
  
mobile	
  or	
  fixed)	
  to	
  identify	
  instances	
  where	
  what	
  should	
  be	
  showing	
  as	
  inbound	
  international	
  traffic	
  as	
  
actually	
  showing	
  as	
  on-­‐net	
  traffic	
  or	
  traffic	
  from	
  another	
  local	
  network.	
  	
  
These	
   systems	
   can	
   be	
   very	
   different	
   vendor	
   by	
   vendor.	
   The	
   software	
   developed	
   to	
   operate	
   these	
  
systems	
  needs	
  to	
  be	
  flexible,	
  user	
  definable	
  and	
  automated	
  with	
  regard	
  to	
  “detecting”	
  where	
  bypass	
  
fraud	
  may	
  be	
  most	
  relevant	
  via	
  origination	
  market.	
  This	
  in	
  itself,	
  creates	
  the	
  ability	
  to	
  self	
  manage	
  call	
  
origination,	
  which	
  provides	
  the	
  quickest	
  route	
  to	
  bypass	
  number	
  detection.	
  	
  
In	
   many	
   cases,	
   operators	
   can	
   create	
   an	
   environment	
   that	
   integrates	
   such	
   systems	
   together,	
   via	
   API	
  
software	
  instruction	
  sets	
  which	
  automatically	
  or	
  via	
  a	
  manual	
  selected	
  method,	
  validates	
  the	
  numbers	
  
detected	
  and	
  then	
  “shuts	
  down”	
  or	
  suspends	
  detected	
  numbers.	
  	
  
Reporting	
  is	
  very	
  important	
  to	
  operators;	
  where	
  they	
  are	
  looking	
  to	
  reduce	
  international	
  revenue	
  losses	
  
by	
  the	
  minute	
  with	
  near	
  real	
  time	
  notification	
  systems	
  and	
  other	
  very	
  progressive	
  call	
  management	
  and	
  
monitoring	
  capabilities.	
  
SIM  Box  Detection  using  Fraud  Management  Systems  
Another	
  method	
  to	
  detect	
  harmful	
  inbound	
  international	
  bypass	
  traffic	
  to	
  revenues	
  is	
  through	
  passive	
  
software	
   trending	
   and	
   analysis	
   systems,	
   generally	
   referred	
   to	
   as	
   fraud	
   management	
   systems	
   (FMS).	
  
These	
  systems	
  work	
  by	
  collecting	
  the	
  total	
  CDR	
  activity	
  of	
  the	
  operator	
  and	
  applying	
  analytics	
  against	
  
the	
  CDR	
  data	
  (generally	
  collected	
  via	
  a	
  middle	
  ware	
  software	
  feature)	
  that	
  produce	
  unwarranted	
  call	
  
traffic	
  patterns	
  of	
  multiple	
  types.	
  	
  
 
	
  
8	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
	
  
Operators	
   make	
   use	
   of	
   their	
   fraud	
   management	
   systems	
   (‘FMS’)	
   to	
   identify	
   suspect	
   devices	
   on	
   the	
  
network.	
  Examples	
  of	
  some	
  of	
  the	
  markers	
  monitored	
  include:	
  
! Unusual	
  traffic	
  flows	
  and	
  volumes	
  
! Mobile	
  Origination	
  to	
  Mobile	
  Termination	
  ratio	
  	
  
! Unusual	
  called	
  number	
  spreads	
  	
  
! A-­‐typical	
  traffic	
  peaks	
  for	
  on-­‐net	
  traffic	
  	
  
! Many	
  SIM	
  card	
  identities	
  (IMSIs)	
  to	
  a	
  single	
  equipment	
  identity	
  (IMEI)	
  	
  
! Use	
  of	
  only	
  one	
  cell	
  site	
  	
  
! An	
  absence	
  of	
  SMS,	
  data	
  or	
  roaming	
  service	
  use	
  
Non-­‐passive	
  systems	
  are	
  intelligent	
  and	
  become	
  more	
  effective	
  over	
  time,	
  for	
  trends	
  are	
  detected	
  and	
  
all	
   stakeholders	
   involved	
   in	
   the	
   detection	
   process	
   gain	
   better	
   understanding	
   of	
   where	
   call	
   traffic	
  
originates	
  and	
  terminates	
  that	
  has	
  a	
  higher	
  probability	
  of	
  bypass	
  routes	
  being	
  used.	
  In	
  addition,	
  other	
  
types	
  of	
  fraud	
  can	
  be	
  detected,	
  such	
  as	
  false	
  answer	
  supervision;	
  where	
  billing	
  mechanisms	
  are	
  used	
  to	
  
alter	
  answer	
  supervision	
  traits	
  of	
  calls,	
  such	
  as	
  true	
  call	
  origination	
  times	
  versus	
  billing	
  start	
  times,	
  as	
  
well	
  as	
  the	
  true	
  call	
  termination	
  times	
  versus	
  call	
  cutoff/termination	
  times.	
  Hybrid	
  analysis	
  is	
  effective,	
  
where	
  both	
  passive,	
  non-­‐passive	
  (active)	
  and	
  other	
  fraud	
  management	
  systems	
  collaborate	
  to	
  merge	
  
their	
  alerts	
  in	
  order	
  to	
  more	
  efficiently	
  detect	
  instances	
  of	
  bypass	
  fraud.	
  	
  
	
  
 
	
  
9	
  |	
  P a g e 	
   w w w . t e r a l i g h t . c o m 	
   -­‐ 	
   T L T 	
   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7 	
  
	
  
IRSF  -­‐  Premium  Number  Fraud  Prevention  
	
  
The	
  following	
  steps	
  can	
  be	
  taken	
  to	
  prevent	
  premium	
  number	
  fraud.	
  
• Monitor	
  calls	
  going	
  to	
  suspicious	
  number	
  ranges	
  or	
  premium	
  numbers	
  prefixes	
  or	
  high	
  
termination	
  cost	
  destinations	
  
• Enlisting	
  the	
  services	
  of	
  black	
  listed	
  number	
  databases,	
  which	
  operators	
  can	
  use	
  to	
  help	
  monitor	
  
network	
  termination	
  usage	
  and	
  help	
  block	
  calls	
  to	
  suspicious	
  number	
  ranges	
  or	
  premium	
  
number	
  ranges	
  
• Call	
  trending	
  software	
  management	
  systems	
  which	
  can	
  track	
  calls	
  and	
  monitor	
  the	
  types	
  of	
  
numbers	
  they	
  connect	
  to,	
  limiting	
  length	
  of	
  calls	
  and	
  also	
  velocity	
  of	
  calls	
  to	
  specific	
  numbers	
  
designated	
  by	
  the	
  user	
  defined	
  systems	
  
• Education	
  support	
  to	
  clients,	
  customers	
  and	
  operators	
  on	
  various	
  security	
  procedures	
  related	
  to	
  
these	
  types	
  of	
  fraud	
  and	
  collectively	
  working	
  together	
  operator	
  to	
  operator	
  to	
  help	
  reduce	
  the	
  
money	
  in	
  the	
  system.	
  If	
  the	
  money	
  is	
  removed,	
  the	
  fraud	
  will	
  disappear.	
  
• Reform	
  Policy	
  and	
  Regulation	
  to	
  assist	
  in	
  setting	
  progressive	
  rules	
  helping	
  to	
  create	
  an	
  
environment	
  in	
  which	
  fosters	
  more	
  secure	
  network	
  usage.	
  
• Develop	
  systems	
  that	
  share	
  “billing	
  data”	
  as	
  close	
  to	
  real	
  time	
  as	
  possible	
  in	
  an	
  inter-­‐operator	
  
ecosystem,	
  thus	
  helping	
  reduce	
  risk.	
  
• Monitor	
  calls	
  to	
  hot	
  number	
  lists	
  like	
  	
  
o GSMA	
  Hot	
  B	
  Number	
  list	
  
o CFCA	
  Hot	
  B	
  Number	
  list	
  
o Commercial	
  Suppliers	
  in	
  this	
  space	
  also	
  have	
  blacklist	
  databases	
  
Conclusion  
	
  
There	
  are	
  multiple	
  dimensions	
  and	
  types	
  of	
  telecoms	
  fraud.	
  In	
  this	
  effort,	
  two	
  of	
  these,	
  being	
  IRSF	
  and	
  
Bypass	
  fraud	
  are	
  addressed,	
  due	
  to	
  the	
  propensity	
  for	
  very	
  high	
  losses	
  to	
  revenue	
  of	
  the	
  operators.	
  The	
  
operators	
  are	
  annually	
  investing	
  in	
  infrastructure	
  technology,	
  such	
  as	
  LTE,	
  FTTX	
  and	
  other	
  high	
  speed	
  
broadband	
  enablers	
  and	
  the	
  loss	
  in	
  above	
  the	
  line	
  revenues	
  and	
  profits	
  effect	
  investment	
  capability.	
  
Bypass	
   fraud	
   is	
   an	
   international,	
   multi-­‐billion	
   dollar	
   criminal	
   environment	
   and	
   a	
   major	
   threat	
   to	
  
enterprises,	
  as	
  it	
  can	
  inflict	
  monetary	
  damages	
  of	
  hundreds	
  of	
  thousands	
  of	
  dollars	
  almost	
  overnight.	
  
These	
  frauds	
  are	
  among	
  the	
  top	
  5	
  emerging	
  threats	
  to	
  CSPs	
  worldwide,	
  and	
  cost	
  the	
  industry	
  over	
  USD	
  3	
  
billion	
  per	
  year	
  according	
  to	
  the	
  Communications	
  Fraud	
  Control	
  Association	
  (CFCA	
  report	
  2011).	
  	
  
On-­‐Net,	
   Off-­‐Net	
   and	
   IRSF	
   -­‐	
   Premium	
   hijacking	
   fraud	
   are	
   causing	
   severe	
   losses	
   to	
   telecommunication	
  
network	
  operators	
  worldwide.	
  Advanced	
  well	
  thought	
  out	
  solutions	
  need	
  to	
  be	
  implemented	
  depending	
  
upon	
   requirements	
   of	
   the	
   network	
   and	
   the	
   type	
   of	
   fraud	
   taking	
   place.	
   This	
   paper	
   has	
   discussed	
   the	
  
repercussions	
  of	
  telecom	
  fraud	
  as	
  well	
  as	
  several	
  potential	
  measures	
  that	
  can	
  be	
  taken	
  to	
  reduce	
  the	
  
risk	
  of	
  revenue	
  losses.	
  Most	
  undoubtedly,	
  the	
  best	
  way	
  to	
  truly	
  attack	
  this	
  disease	
  of	
  revenue	
  shifting,	
  is	
  
for	
  the	
  network	
  operators	
  to	
  find	
  the	
  means	
  to	
  momentarily	
  put	
  aside	
  their	
  kindred	
  competitive	
  spirit	
  
and	
  work	
  collectively	
  together	
  sharing	
  data	
  and	
  information,	
  along	
  with	
  contributing	
  to	
  international	
  
databases	
  (as	
  near	
  real	
  time	
  basis	
  as	
  possible)	
  jointly.	
  

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Network Fraud - Bypass/Premium Rate Number - IRS

  • 1.         TERALIGHT   NETWORK  FRAUD  –  BYPASS/PREMIUM  RATE  NUMBER  –  IRS         Author:  Tom  Wilson    
  • 2.     1  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7     Contents   Executive  Summary  ..............................................................................................................................................................................     Introduction  .......................................................................................................................................................................................  2   Bypass  ...........................................................................................................................................................................................  2   IRSF  ...............................................................................................................................................................................................  2   Who  is  affected?  ................................................................................................................................................................................  5   How  bypass  fraud  works?  ..................................................................................................................................................................  5   Legal  Call  Termination  ...................................................................................................................................................................  5   Illegal  Call  Termination  .................................................................................................................................................................  5   On-­‐Net  Fraud  ...........................................................................................................................................................................  6   Off-­‐Net  Fraud  ...........................................................................................................................................................................  6   IRSF  -­‐  Premium  Number  Fraud  .................................................................................................................................................  6   Fraud  Prevention  ...............................................................................................................................................................................  7   Bypass  Route  Detection  ................................................................................................................................................................  7   SIM  Box  Detection  using  Fraud  Management  Systems  ................................................................................................................  7   IRSF  -­‐  Premium  Number  Fraud  Prevention  ...................................................................................................................................  9   Conclusion  ..........................................................................................................................................................................................  9       Executive  Summary   Bypass   fraud   along   with   IRSF   has   proven   they   are   highly   costly   types   of   network   fraud   in   the   modern   telecommunications  environment.  The  menace  of  telecom  fraud  has  made  the  telecom  operators  and  the  regulators   face  staggering  annual  revenues  losses  numbering  in  the  multiple  billions  in  US  Dollars.   Bypass  fraud  is  more  predominant  in  countries  where  the  cost  of  terminating  international  call  is  much  higher  than  the   cost  of  a   national  call  by  a  substantial  margin  or  the  countries  where  government  carriers  monopolize  international   gateways.   These   fraud   committers   (fraudsters),   who   can   be   both   individuals   and   organizations,   through   the   use   of   various  bypass  contrivances,  sell  capacity  to  terminate  calls  cheaply  in  these  countries,  either  on  the  open  market  or  via   direct  connections  with  interconnect  operators.  Operators  sending  outbound  international  traffic  are  then  attracted  by   these  interconnect  operators  with  lower  interconnect  rates,  usually  with  lower  quality  and  no  delivery  of  CLI.  This  leads   to  loss  of  revenue  for  terminating  network  operators  as  well  as  causing  potential  social  harm  to  society.   Premium  rate  services  have  been  hit  with  IRSF  (international  Revenue  Share  Fraud)  that  exploits  the  interconnection  of   premium  rate  services.  The  major  way  to  commit  IRSF  is  by  significantly  increasing  the  number  of  calls  to  a  premium   number  in  a  variety  of  ways  to  increase  the  revenue.  These  are  two  types  of  international  fraud  which  account  for  a   major  portion  of  operator’s  network  fraud  losses.   The  purpose  of  this  paper  is  to  discuss  comprehensive  and  best  in  class  solutions  to  combat  bypass  fraud  and  premium   number  hijacking.    
  • 3.     2  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7           Introduction   This  paper  discusses  two  distinctly  different  types  of  telecom  network  fraud.  One  is  commonly  called   international  network  bypass  fraud  (bypass)  and  the  other  is  called  international  revenue  sharing  fraud   (IRSF).  Both  are  considered  to  be  costing  operators  and  governments  billions  USD  in  losses.   Bypass   Bypass   fraud   is   also   known   as   “Grey   routing”,   ‘SIM   Boxing’   and   ‘Leaky   PABX’,   is   a   widespread   and   problematic  telecom  risk.       Bypass  Fraud  is  prevalent  in  countries  where  there  is  a  big  difference  between  the  national  retail  calling   rates/national  interconnect  rates  and  international  terminating  rates.  This  is  set  either  by  the  regulator   in  the  country  or  by  individual  (or  group  of)  operators  (unregulated).  It  is  also  popular  in  countries  where   government   operators   monopolize   international   gateways.   The   difference   in   rates   ensures   there   are   enough  profit  margins  for  bypass  service  providers  to  construct  their  networks  and  even  handle  certain   amounts  of  losses  due  to  discovery  of  their  routes  and  business  practices  to  elude  detection.     Countries  where  the  international  to  national  terminating  charge  margins  are  low,  nil  or  negative,  the   Bypass  fraud  either  doesn’t  exist  or  is  conducted  on  a  low  scale,  or  is  considered  insider  billing  fraud.   According   to   surveys   of   CFCA,   ACFE   and   ETNO   the   potential   commercial   loss   due   to   fraud   in   telecommunication  networks  equates  to  0.5%  to  5%  of  operator’s  revenue.   Additionally,  bypass  fraud  consumes  a  substantial  amount  of  signaling  and  voice  bandwidth  as  well  as   the   resources   of   individual   network   elements   (i.e.   STPs,   switches,   databases).   In   order   to   properly   identify  By-­‐Pass  Fraud  one  needs  to  understand  the  issues  around  this  fraud.       IRSF   Premium-­‐rate  numbers  provide  certain  services  for  prices  higher  than  normal  calls.  Unlike  a  normal  call,   a  part  of  the  call  charge  is  paid  to  the  service  provider,  enabling  businesses  to  be  funded  via  them.  While   the  billing  is  different,  calls  are  usually  routed  the  same  way  they  are  for  a  toll-­‐free  telephone  number.   These  telephone  numbers  are  usually  allocated  from  a  national  telephone  numbering  plan  in  a  way  that   they  are  distinguishable  from  other  numbers.  In  many  cases  of  premium  rate  calls,  the  transmission  of   the  call  goes  through  multiple  operator  networks.  Most  involve  the  use  of  GSM  SIM  cards,  being  taken   across   international   borders   to   originate   calls   on   effected   originator   networks,   utilizing   the   roaming   capability   of   the   SIM   cards.   IRSF   fraud   is   very   difficult   to   nail   down,   given   the   multiple   operators   involved,   the   complexity   of   networks   and   BSS   systems   involved   and   the   lack   of   total   end-­‐to-­‐end   cooperation   of   all   stakeholders   to   assist   in   elimination   of   these   types   of   fraud.   Origination   operator   networks  are  left  hanging  with  the  invoice  for  these  high  cost  calls,  either  on  a  premium-­‐rate  number   call  or  on  a  call  to  a  high  cost  per  minute  destination  country.    
  • 4.     3  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7     IRSF  has  many  different  types  of  perpetrators.  Normal  callers  can  also  become  unwitting  contributors  to   IRSF,  where  they  want  specific  content  that  is  derived  from  premium  rate  number  content  providers.   However  in  some  cases,  the  content  provider  is  the  same  party  (individual  or  group  of  individuals  or   company  in  some  cases)  as  the  fraudsters  forcing  high  volumes  of  calls  to  those  illicit  content  premium   number  services.     Premium-­‐rate   numbers   have   also   been   used   to   defraud   unsuspecting   users.   One   scheme   involves   inducing   users   to   download   a   program   known   as   a   dialer.   This   surreptitiously   dials   a   premium-­‐rate   number,  accumulating  charges  on  the  user's  phone  bill  without  their  knowledge.  Another  premium-­‐rate   scam  involves  television  programming.  This  induces  young  children  to  dial  the  number,  banking  on  the   notion  that  they  will  be  unaware  of  the  incurred  charges.  In  other  cases,  newer  version  of  smart  phones   have   the   capacity   to   make   six   calls   to   each   conference   call   they   make   and   thus   six   calls   at   a   time   increasing   call   volumes   quickly.   This   is   done   to   elude   blockage   induced   by   some   of   the   telecoms   software   fraud   detection   systems,   which   can   detect   high   volume   suspicious   call   traffic   patterns   to   premium   rate   numbers   and   or   long   call   duration   (usually   up   to   59.9   minutes)   to   the   same   type   of   numbers.   Briefly  summarizing  IRSF  -­‐  Premium  Rate  Service  fraud;  this  type  of  fraud  occurs  when  a  person,  group   of   persons,   or   a   company   or   group   of   companies   scheme   with   either   the   content   provider   or   the   international   network   providing   the   content   to   find   different   measures   to   falsely   increase   the   total   number  of  calls  significantly  and  or  enacting  methods  to  increase  falsely  generate  longer  call/billing  time   to  increase  the  revenue  generated  by  the  use  of  the  premium  rate  number.  The  various  parties  to  the   call   share   this   revenue;   if   a   part   of   IRSF,   some   of   the   parties   are   traditional   network   operators   transmitting  the  calls  and  some  parties  who  are  a  part  of  the  fraud  itself.  The  premium  rate  numbers  are   easy  to  obtain,  and  very  blatantly,  these  companies  and  the  content  generators  advertise  publicly  for   persons  to  find  ways  to  earn  money  by  generation  of  call  traffic  to  these  premium  rate  numbers.  Again,   IRSF   can   be   either   via   the   use   of   Premium   Rate   Numbers   or   simply   high   rate   termination   country   termination  numbers.      
  • 5.     4  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7       Pirated  Mobile  GSM  SIM  chips  in  a  Roaming  Scenario  generating  IRSF  “Fraud”     The  content  provider  or  the  final  network  providing  the  internalonal  premium  number  service  may  be  in  cahoots  with  the  fraudsters  to   generate  higher  volumes  of  calls  to  the  premium  number  or  make  amempts  to  lengthen  calls  to  generate  higher  call  revenues.     *  the  call  costs  and  rates  are  merely  examples  for  purpose  of  this  illustralon   The  Premium  Number  owner  passes  through  the  revenue  to  the  Internalonal  Revenue  Share  Number  provider  which  is  usually  (not   always)  the  same  enlty  as  the  content  porovider.  The  revenue  of  $1.46  being  passed  through  to  the  IRSN   If  the  final  network  which  owns  or  leases  the  Premium  number  from  an   Number  range  owner,  does  not  own  the  content,  they  will  keep  example  of   $1.00  and  pay  to  content  holder  $.46.   The  Internalonal  Revenue  Share  Number  Network  will  terminate  the  call  to   the  premium  number  called.   Operator  C  tansits  the  call.  Receives  the  call  from  Operator  B   Operator  C  collects  $1.71  from  Operator  B  and  will  keep  $.25.   Operator  C  sends  the  call  to  an  enlty  "owning  the  Premium  Number   Range".  Operator  C  pays  the  PNRO  pass  thorugh  $1.46.   Operator  B  transits  the  call.  Receives  the  call  from  Operator  A     Operator  B  collects  $1.91  from  Operator  A  and  will  keep  $.20.   Operator  B  sends  the  call  to  Operator  C  and  pays  Operator  C  $1.71.   Operator  A  transits  the  call.  Receives  the  call  from  network  where  call  originates  from.   Operator  A  collects  from  originalng  network  operators  $2.16,  and  will  keep   $.25.   Operator  A  sends  the  call  to  Operator  B  and  pays  the  receiving  operator   $1.91.   Call  is  generated  in  this  visled  country,  where  the  home  of  the  SIM  chip  operator  wil  pay  $2.50   The  network  where  the  call  is  made,  gets  to  retain  $.34.   This  operator,  where  the  call  is  actually  made,  pays  $2.16  to  the  carrier  next   in  line  to  handle  the  call.   Illegal  fraud  generated  usually  by  generalon  of  high  volume  of  calls  to  a  Premium  Rate  Number  vis  a  vis  pirated  GSM  SIM  chips  taken  to   another  country  to  roam  call  traffic   Home  market  for  SIM  chip   SIM  chip(s)  taken  to  another  country  to  roam  originalon  of  call  from.  The   SIM  home  country  operator  is  not  PAID  for  cost  of  Premium  Rate  Number   Call.  Example  $2.50.  
  • 6.     5  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7     Who  is  affected?     Bypass  fraud  or  grey  telephony  is  a  serious  issue  for:   Telecom  Operators  -­‐  Telecom  Regulators  –  Subscribers   Bypass  fraud  can  have  the  following  adverse  effects:   *   Revenue  loss  to  government  treasuries.  Especially  in  emerging  markets,  where  the  state  entity   has  equity  in  the  operators.  Regulators,  both  national  and  regional  such  as  Berec,  PTA,  STRA,  JTRC  and   others  have  taken  a  real  serious  look  at  these  types  of  network  fraud.   *   Bypass  fraud  disturbs  planned  and  predicted  revenue  streams  of  telecom  operators  who  have   invested  millions  of  dollars.  The  investment  may  be  in  form  of  license  fees,  deployment  of  infrastructure   and  other  government  charges.   *   Foreign  investment  in  telecom  sector  is  reduced  as  a  result  of  lack  of  investor  confidence  in  the   market,  especially  in  developing  countries  where  a  large  portion  of  the  national  GDP  is  from  telecoms.   *   Social  anxiety  where  people  do  not  wish  to  answer  non  CLI  (generally  indicative  of  a  grey  route   being  used  to  terminate  the  call)  low  quality  network  calls,  due  to  passage  over  very  low  quality,  highly   compressed  and  congested  IP  routes  with  no  network  management  whatsoever.     *   Social  safety  where  people  may  only  answer  those  calls  where  the  called  party  receives  CLI  and   is  able  to  identify  the  calling  party.  It  has  happened,  where  a  non  CLI  call  is  ignored,  due  to  general   knowledge  of  low  quality  calls  and  the  called  party  is  unsuspecting  of  the  nature  of  the  call,  where  it   may  be  a  family  emergency  but  they  don’t  know  it,  for  the  CLI  is  not  passed  on  most  bypass  routes.   How  bypass  fraud  works?   Bypass  fraud  has  different  forms  –  international  vs.  national,  incoming  vs.  outgoing,  border  bypass  etc.  –   but  the  idea  is  simple:  bypassing  interconnect  points  via  cheaper  routes  such  as  the  Internet.     Legal  Call  Termination   Call   termination,   also   known   as   voice   termination,   refers   to   the   routing   of   telephone   calls   from   one   Telephone  Company  to  another.  The  terminating  point  is  the  called  party  or  end  point.  The  originating   point  is  the  calling  party  who  initiates  the  call.   This  term  often  applies  to  calls  while  using  voice  over  Internet  protocol  (VoIP):  a  call  initiated  as  a  VoIP   call   is   terminated   using   the   public   switched   telephone   network   (PSTN).   In   such   cases,   termination   services  may  be  sold  as  a  separate  commodity.  The  opposite  of  call  termination  is  call  origination,  in   which  a  call  initiated  from  the  PSTN  is  terminated  using  VoIP.  Thus,  in  "origination"  a  call  originates  from   PSTN  and  goes  to  VoIP,  while  in  "termination"  a  call  originates  in  VoIP  and  terminates  to  the  PSTN.   Illegal  Call  Termination   Illegal  call  termination  utilizes  least  cost  call  termination  techniques  such  as  GSM  Gateway  SIM  Boxes  to   bypass  the  legal  call  interconnection.  This  diverts  international  incoming  calls  to  either  on-­‐network  or   off-­‐network   GSM/CDMA/Fixed   calls   through   the   use   of   VoIP   or   Satellite   gateway.   Doing   this   evades   revenue  for  international  call  termination  which  operators  and  government  regulators  are  entitled  to.  
  • 7.     6  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7           On-­‐Net  Fraud   For  an  operator,  if  the  person  committing  fraud  uses  their  own  network’s  connections  to  terminate  the   bypassed  calls,  it  is  identified  as  On-­‐Net  Bypass  Fraud.  On-­‐net  calls  are  expected  to  provide  the  least   national  calling  rates.  Lot  of  modern  Bypass  equipment  (GSM  Gateway  SIM  Boxes,  computer  programs   etc.)   scan   the   terminating   party   numbers   and   re-­‐originate   calls   only   from   those   connections   which   belong  to  the  same  operator’s  network  as  the  terminating  party.     For  On-­‐Network  terminating  calls  (connections  used  for  Bypass  Fraud  belong  to  the  home  operator),  the   revenue   loss   per   call   is   directly   related   to   the   difference   between   the   international   interconnect   termination  price  and  the  retail  price  of  on-­‐network  call.   Off-­‐Net  Fraud   If  the  fraud  committer  uses  competitor’s  connections  or  any  other  means  for  termination,  it  is  identified   as  Off-­‐Net  Bypass  Fraud.     In   regions,   where   the   off-­‐network   call   rates   are   equal   to   the   on-­‐network   calls,   national   calls   may   be   originated  from  off-­‐network  number  to  conduct  the  Bypass  fraud  which  means  that  numbers  can  be   from  other  networks  as  well.     For   Off-­‐Network   terminating   calls   (connections   used   for   Bypass   Fraud   belong   to   competitor),   the   revenue   loss   per   call   is   directly   related   to   the   difference   between   the   international   interconnect   termination  price  and  the  local  interconnect  termination  price  of  off-­‐network  calls.   IRSF  -­‐  Premium  Number  Fraud   Premium   rate   services   have   attracted   multiple   types   of   fraud   that   exploit   the   interconnection   of   premium   rate   services.   The   basic   scheme   is   that   the   fraud   committer   contracts   with   a   terminating   operator   to   provide   a   premium   rate   service   and   then   separately   subscribes   for   several   lines   with   an   originating  operator,  normally  not  the  same  operator  as  the  terminating  operator.    
  • 8.     7  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7       The  fraud  committer  then  runs  auto  dialers  on  the  subscriber  lines  and  calls  the  premium  rate  numbers   continually  running  up  very  large  invoices,  where  the  fraudster  is  usually  able  to  share  a  part  of  this   fraudulent  revenue.  This  is  just  one  example  of  how  the  fraud  is  generated.  There  are  many  ways  to   falsely   generate   high   volumes   of   calls   from   one   country   to   another   to   the   Premium   Rate   Numbers,   which  are  commonly;  magnets  for  this  type  of  fraud.  Fraudsters  generate  calls  by  new  technology,  by   paying  people  to  make  calls  upon  calls  to  these  termination  numbers,  which  sometimes  simply  go  to  an   answering   machine,   or   a   constantly   cycled   message   recorder.   The   fraudsters   attempt   anyway   to   generate  the  highest  number  of  calls  and  longest  calls  possible  to  create  as  high  of  a  billing  charge  to  the   originating  operator  network  the  calls  first  arrive  on.   Another  variant  uses  the  computers  of  existing  subscribers  as  the  callers.  The  fraud  committer  contracts   for  a  premium  rate  service  and  then  distributes  viruses  or  other  types  of  programs  through  email  or  web   sites  that  become  resident  in  the  computers  of  legitimate  subscribers.  If  the  subscribers  have  a  modem   connected  to  their  computer  for  Internet  access,  the  programs  control  the  modem  to  dial  the  premium   rate  numbers.  Some  programs  work  during  or  immediately  after  an  Internet  dial-­‐up  access  session.   Fraud  Prevention   Bypass  Route  Detection   Bypass  route  detection  can  be  performed  via  multiple  methods.  One  measure  that  is  definitive  in  nature   providing   real   evidence   with   regard   to   Bypass   Fraud   is   the   use   of   non-­‐passive   forced   network   call   generation.   In   this   method   third   party   service   providers   generate   traffic   to   operator   networks   from   remote  points  and  then  analyze  the  traffic  actually  received  (non  published  non  active  call  to  numbers,   mobile  or  fixed)  to  identify  instances  where  what  should  be  showing  as  inbound  international  traffic  as   actually  showing  as  on-­‐net  traffic  or  traffic  from  another  local  network.     These   systems   can   be   very   different   vendor   by   vendor.   The   software   developed   to   operate   these   systems  needs  to  be  flexible,  user  definable  and  automated  with  regard  to  “detecting”  where  bypass   fraud  may  be  most  relevant  via  origination  market.  This  in  itself,  creates  the  ability  to  self  manage  call   origination,  which  provides  the  quickest  route  to  bypass  number  detection.     In   many   cases,   operators   can   create   an   environment   that   integrates   such   systems   together,   via   API   software  instruction  sets  which  automatically  or  via  a  manual  selected  method,  validates  the  numbers   detected  and  then  “shuts  down”  or  suspends  detected  numbers.     Reporting  is  very  important  to  operators;  where  they  are  looking  to  reduce  international  revenue  losses   by  the  minute  with  near  real  time  notification  systems  and  other  very  progressive  call  management  and   monitoring  capabilities.   SIM  Box  Detection  using  Fraud  Management  Systems   Another  method  to  detect  harmful  inbound  international  bypass  traffic  to  revenues  is  through  passive   software   trending   and   analysis   systems,   generally   referred   to   as   fraud   management   systems   (FMS).   These  systems  work  by  collecting  the  total  CDR  activity  of  the  operator  and  applying  analytics  against   the  CDR  data  (generally  collected  via  a  middle  ware  software  feature)  that  produce  unwarranted  call   traffic  patterns  of  multiple  types.    
  • 9.     8  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7       Operators   make   use   of   their   fraud   management   systems   (‘FMS’)   to   identify   suspect   devices   on   the   network.  Examples  of  some  of  the  markers  monitored  include:   ! Unusual  traffic  flows  and  volumes   ! Mobile  Origination  to  Mobile  Termination  ratio     ! Unusual  called  number  spreads     ! A-­‐typical  traffic  peaks  for  on-­‐net  traffic     ! Many  SIM  card  identities  (IMSIs)  to  a  single  equipment  identity  (IMEI)     ! Use  of  only  one  cell  site     ! An  absence  of  SMS,  data  or  roaming  service  use   Non-­‐passive  systems  are  intelligent  and  become  more  effective  over  time,  for  trends  are  detected  and   all   stakeholders   involved   in   the   detection   process   gain   better   understanding   of   where   call   traffic   originates  and  terminates  that  has  a  higher  probability  of  bypass  routes  being  used.  In  addition,  other   types  of  fraud  can  be  detected,  such  as  false  answer  supervision;  where  billing  mechanisms  are  used  to   alter  answer  supervision  traits  of  calls,  such  as  true  call  origination  times  versus  billing  start  times,  as   well  as  the  true  call  termination  times  versus  call  cutoff/termination  times.  Hybrid  analysis  is  effective,   where  both  passive,  non-­‐passive  (active)  and  other  fraud  management  systems  collaborate  to  merge   their  alerts  in  order  to  more  efficiently  detect  instances  of  bypass  fraud.      
  • 10.     9  |  P a g e   w w w . t e r a l i g h t . c o m   -­‐   T L T   + 9 7 1 . 5 0 . 4 5 9 . 7 2 1 7     IRSF  -­‐  Premium  Number  Fraud  Prevention     The  following  steps  can  be  taken  to  prevent  premium  number  fraud.   • Monitor  calls  going  to  suspicious  number  ranges  or  premium  numbers  prefixes  or  high   termination  cost  destinations   • Enlisting  the  services  of  black  listed  number  databases,  which  operators  can  use  to  help  monitor   network  termination  usage  and  help  block  calls  to  suspicious  number  ranges  or  premium   number  ranges   • Call  trending  software  management  systems  which  can  track  calls  and  monitor  the  types  of   numbers  they  connect  to,  limiting  length  of  calls  and  also  velocity  of  calls  to  specific  numbers   designated  by  the  user  defined  systems   • Education  support  to  clients,  customers  and  operators  on  various  security  procedures  related  to   these  types  of  fraud  and  collectively  working  together  operator  to  operator  to  help  reduce  the   money  in  the  system.  If  the  money  is  removed,  the  fraud  will  disappear.   • Reform  Policy  and  Regulation  to  assist  in  setting  progressive  rules  helping  to  create  an   environment  in  which  fosters  more  secure  network  usage.   • Develop  systems  that  share  “billing  data”  as  close  to  real  time  as  possible  in  an  inter-­‐operator   ecosystem,  thus  helping  reduce  risk.   • Monitor  calls  to  hot  number  lists  like     o GSMA  Hot  B  Number  list   o CFCA  Hot  B  Number  list   o Commercial  Suppliers  in  this  space  also  have  blacklist  databases   Conclusion     There  are  multiple  dimensions  and  types  of  telecoms  fraud.  In  this  effort,  two  of  these,  being  IRSF  and   Bypass  fraud  are  addressed,  due  to  the  propensity  for  very  high  losses  to  revenue  of  the  operators.  The   operators  are  annually  investing  in  infrastructure  technology,  such  as  LTE,  FTTX  and  other  high  speed   broadband  enablers  and  the  loss  in  above  the  line  revenues  and  profits  effect  investment  capability.   Bypass   fraud   is   an   international,   multi-­‐billion   dollar   criminal   environment   and   a   major   threat   to   enterprises,  as  it  can  inflict  monetary  damages  of  hundreds  of  thousands  of  dollars  almost  overnight.   These  frauds  are  among  the  top  5  emerging  threats  to  CSPs  worldwide,  and  cost  the  industry  over  USD  3   billion  per  year  according  to  the  Communications  Fraud  Control  Association  (CFCA  report  2011).     On-­‐Net,   Off-­‐Net   and   IRSF   -­‐   Premium   hijacking   fraud   are   causing   severe   losses   to   telecommunication   network  operators  worldwide.  Advanced  well  thought  out  solutions  need  to  be  implemented  depending   upon   requirements   of   the   network   and   the   type   of   fraud   taking   place.   This   paper   has   discussed   the   repercussions  of  telecom  fraud  as  well  as  several  potential  measures  that  can  be  taken  to  reduce  the   risk  of  revenue  losses.  Most  undoubtedly,  the  best  way  to  truly  attack  this  disease  of  revenue  shifting,  is   for  the  network  operators  to  find  the  means  to  momentarily  put  aside  their  kindred  competitive  spirit   and  work  collectively  together  sharing  data  and  information,  along  with  contributing  to  international   databases  (as  near  real  time  basis  as  possible)  jointly.