Why fraud evolves, and how to address it

Why fraud evolves, and how to address it

Fraudsters are business people. When one route to generate revenue is closed, they will open another. Equally, when one issue for a network operator disappears, it is commonplace for that revenue loss to move to another method of fraud, rather than disappearing entirely.

For the network, it does not matter if they are experiencing SIM Box fraud or OTT hijack- each type of fraud will impact their revenue negatively. Operators are under increasing pressure to invest in the networks that we have all come to rely on, with many telecommunications operators needing to double their data capacity annually to ensure high customer service. As we move towards a 5G world, this requirement will only increase. Every dollar lost to fraud can potentially impact future levels of investment.

Whilst it is important that networks understand the various frauds being carried out against them at a functional level, anti-fraud management needs to address every single threat to margin and revenue.

Three phases of fraud management

At its most basic, there are three different phases to fraud management.

  1. Investigation
    This should be more than just a technical evaluation into the threats and issues that a network faces. It should also analyse marketing activities, such as offering free SIM cards for local calls or partnerships with OTT providers, as these could offer a loophole for fraudsters.
  1. Detection
    Still a critical phase, this has traditionally been the focus of fraud departments. However, the fluid nature of revenue loss means that this is more than a static activity.
  1. Prevention
    The most important phase in anti-fraud management. Ongoing protection against potential revenue and margin loss means that networks can ensure they are generating all the revenues they are entitled to on an ongoing basis. This phase needs to encompass all issues, new and old to ensure maximum revenue and margin.

Fraud management needs to address the bigger picture. With the ever-changing nature of fraud, using ongoing protection will drive maximisation of revenues.  When this takes place, the network can not only ensure that it has done its duty to shareholders and the wider community; but that it has maximised the investment it can offer to deliver future networks, driving customer retention and satisfaction.

Why fraud evolves, and how to address it