Results of the first hemispherical study on Fraud regarding the rendering of telecommunication services

General Impacts of Telecommunication Fraud

1. Impact on companies: when fraud impacts principally on finances, image, and security of the company, additionally the effect of increasing operative costs in general converts this loss into higher prices for the end consumer. 

2. Impact on the states: Normally, in this case the state can be affected economically by not perceiving or perceiving less income than projected, which are normally used to provide communications to the more remote and most impoverished zones in the countries, the aforementioned is due to non-payment of taxes or contributions to redistribution funds to ensure the universality of the service.  Therefore in this case, the population in general will be affected, since the states must use resources that could be assigned to other social works, or in the worst case condemn the less favored population to precarious services or simply none at all.  

3. Impact on the users: When the users of telecommunication services are affected economically or their name is used unscrupulously to obtain telecommunication services and later the deceived users must pay, or when their names are placed in risk. Normally third parties obtain the service with the names of users without their permission, infiltrate their networks processing traffic that afterwards will be invoiced to their names, they use services to commit other types of frauds and continue using their names, and the users’ identities are placed at risk,   and other situations.  Generally, any type of fraud will end up affecting the pockets of the end users, because normally the operational losses result in lower income, and possibly lower quality or higher prices. 

The above mentioned impacts in each of the divisions can be of the following nature:

Economical Impact: When the impact is monetary and the companies, states and users have their finances affected. 

Administrative Impact: When the companies, states and users need to employ their own resources for administrative service such as attention to complaints, rights of petition, loss of time in personal claims among others, in order to be taken out of databases for undesired users, delinquent debtors, and others.

Impact on Image: When the impact contributes to the loss of image or standing, especially for companies whose interests are damaged, when they are perceived by the public as companies that participate in fraudulent activities to obtain income; or in other cases when personal image is damaged because their names are involved in unbudgeted debts, and can be included in credit risk agency databases.

Juridical Impact: This type of impact in many occasions is severe and can have an extremely negative effect on any of the mentioned actors,  but especially on the innocent users in cases of identity theft, who must often go through tedious juridical processes in order to prove their innocence,  other cases such as the Bypass,  in which the identification of a local number as that of a calling subscriber,  have made innocent persons appear implicated in cases about which they had no knowledge, when in truth they were abroad.

IMPACT IN FIGURES

Regarding the impact figures, diverse authors treat them in different manners.

A)   As a percentage of the doubtful collection portfolio:  Depending on the types of control that the companies have, it is calculated that from 10% to 50% of that portfolio is due to situations of fraud.

B)   As a percentage of income: We find that for the companies it can range from 0.5% to 10% in companies have respectively very good controls and practically no control.

C)   There are also global studies on the impact of fraud done by specialized entities such as the Communications Fraud Control Association (CFCA), which mentions figures above 50 billion dollars for 2005, and with a growing tendency.

Additionally we share the main classifications of fraud that occur in the sector, according to the questionnaire results on  “POLICIES AND BEST FRAUD CONTROL PRACTICES FOR THE FIELD OF TELECOMMUNICATIONS” sent by CITEL to the member countries  

According to the responses obtained by 13 organizations among companies, regulating authorities, administrations of the CITEL member countries, the most common type of fraud affecting Telecommunication services is the Bypass, identified by 90.9% of the surveyed companies; other types of fraud are the subscribers (54.54%), internal fraud (36.36%), and third country (36.36%) (also called Re File, Re-origination), automatic call back (27.27%), etc. The following graph illustrates these percentages.

In the cellular telephone networks we find: Cloning of Cellular Telephones (90%), subscriber fraud (50%) and stealing of terminals (10%).

With the objective of giving continuity to this work, during the past PCC.I held in Buenos Aires, Argentina, the holding of 6 regional workshops on the subject, with the participation of experts was approved, with the objective of making the sector in the Americas aware of the subject of Fraud, and that will permit the creation o international mechanisms of cooperation to fight against these scourges.

The workshops to be held are the following:

• Impacts of fraud on the users, states and operators of the region.

• Operator and Supplier joint effort for the prevention of fraud.

• Administrative and Technological tools for the fight against fraud.

• Interstate mechanisms of mutual cooperation to minimize the effects of fraud.

• International organisms to study the subject, scope and manner of participation.

• Toward appropriate legislation, regulations and control for the fight against fraud.

The first workshop will be held using audio teleconference with the Telefónica Telecom platform in Colombia, where the interested parties must dial 57-1-5330909 ext 4055, or the option that we call you, for which the participate party must register the number and the contact who will call him on the conference day.  The regulating authorities, operators and users from each country will participate by gathering one place.

Dora Inés Moreno Castellanos
Intern Universidad Distrital, Colombia.

Claudia Marcela Carrillo Herrera
Intern Universidad Distrital, Colombia

Giovani Mancilla Gaona
Rapporteur of the Rapporteur Group on Fraud Control in Telecommunication Services – Fraud Control Manager, Telefónica Telecom Colombia.