Fraud - An unwanted $6B headache for operators

First article in a series covering the challenges of fraud in the IP world

By Steve Heap
March 2013

In the first of a series of articles about the growing issue of fraud in telecoms, Steve Heap, our IP Guru, gives an overview of the different types of fraud that afflict carriers and service providers, and how they have evolved over the years.

Fraud has always been a part of telecoms - both domestic and international - from the early days of the blue box tone generators that tried to mimic the frequencies used in some international signaling systems. However, the migration of networks to IP has opened up new opportunities for people determined to make money at the expense of others, so much so that a recent survey estimated the losses due to fraud in international telecoms to be over $6B a year.

Why - not because of any basic insecurity in VoIP calls or the protocols involved! The underpinning reason is that it was almost impossible to change the operating software system of a large TDM switch - it was delivered with the switch and solidly under the control of the vendor. A VoIP switch - especially the smaller PBX and wholesale switches with open source software - can easily be manipulated to add or change basic functions. As they are also accessible from the public internet (in many cases), the opportunities to simply hack the password are ever present.

So, in this first article, lets consider the basic categories of fraud.

At the top level, there are probably only two - those committed against the consumer, and those aimed at getting money from the carriers directly. Of course, some can cross from one category to the other if the end user is significantly defrauded but refuses to pay. At the end of the day, that loss can remain with the service provider that has almost certainly already paid for the service delivered.

The fraud with the broadest impact today is probably "False Answer Supervision" or FAS. The slightly unusual name comes from the name of a signal that is passed from the distant operator back through the chain of intermediate carriers - the answer supervision signal generated when the called customer answers the phone. As its name suggests, this fraud falsely generates this answer signal resulting in early billing and charging for calls that don't complete. All customers calling that particular destination via that carrier pay more for each call than they should.

At the opposite end of the spectrum, cloned SIM cards used to generate calls to a distant premium rate service is a fraud just against the carrier community - end users are not involved or impacted directly by such attempts.

The next article will focus on False Answer Supervision and dig deeper into how it is done, what the signs are, and how carriers can manage this growing problem.

For more information on the challenges of fraud in the telecom environment or any other project in this segment, please contact Isabelle Paradis at: or +1 514 270 1636