Fraud is multi-billion dollar world-wide industry, which affects every public telephone network. Fraud on next generation network is significantly increased due to subscriber access to Mcommerce services and premium multimedia content. An average 3G user is expected to generate 10 times more transactions then the 2G subscriber. Typically, the more advance the service more susceptible it is to fraud. Fraud counter measures need to be the subject of definite corporate policy supported by a suitable implementation strategy.

Categories of Fraud:

i- Revenue Fraud in which the motive is to make money. There are two main kinds:
– Call Selling in which service is sold at a discount and the Telco bills are not paid.
– Premium Rate Service (PRS) frauds, where calls are illicitly stimulated to a PRS line to generate revenue.

ii- Non-Revenue Fraud, which is motivated by personal objectives, may include providing a no-cost voice or data service to friends or by the sheer thrill of outmaneuvering the defenses.

Typically an operator’s fraud may be expected to split approximately 50% - 50% between the two types.

Bypass Fraud
Bypass Fraud is one of the latest and most severe threats to a telecom operator’s revenue. Bypass Fraud is an unauthorized manipulation or exploitation of an operator’s network. Bypassing interconnect points via cheaper routes such as the Internet.

Problem has been evidenced in two areas:
i- Interconnect Fraud
ii-GSM Gateway Fraud

i- Interconnect Fraud
Revenue loss occurring when interconnect between the different carriers occurs and the interconnect agreement is not honored. This is happening due to the reason that there are hundreds of carriers exchanging traffic under varieties of taxation and rating combinations. The fraud is easy to commit since each carrier has contracts with hundreds of other carriers, making it difficult to track who's honoring whose contract.
It requires
– Legal entity to have interconnect agreements.
– High investment in equipment.

But the return is high too. Your company can lose millions of Dollars through one fraudulent partner.

ii-GSM Gateway Fraud
It requires very small investment. Private or corporate subscribers can do it with inexpensive and easy-to use devices. Occurs when call resellers use GSM Gateway devices to transform, “fixed-to-mobile” calls to “mobile-to-mobile” calls.The traffic is then treated as internal rather than international.GSM operators only receive the value of on-net calls and do not receive the interconnect fee for call termination, which results in revenue loss.

Gateway bypass has different forms
– International bypass scenario
– National bypass scenario

Typical GSM Bypass Access Fraud:

GSM Bypass is very popular for it is very hard to locate the actual Network Bypass link with the origination country or market. Equipment is protected better and the main risk is the actual mobile
Number lines when caught, if the ownership of lines is anonymous.

Typical GSM Bypass Fraud Example