Interview With CSG’s Finn Kornbo on Fraud Prevention
This interview originally appeared in Telecom Review Africa.
The ICT industry has long suffered from fraudulent activities and has aimed to permanently fight them. In order to know more about his opinion on fraud in the industry and how to manage it, Telecom Review conducted an interview with Finn Kornbo, Director of Strategic Product Management for Digital Wholesale, CSG.
Fighting fraud has always been a top priority in the ICT industry. How can CSG help businesses detect and counter fraud?
At CSG, we’ve taken a completely different approach from traditional vendors. First, we saw a problem with how fraud prevention was being done today. If you take a manual approach, there are so many ways that the bad actors can slip under the radar, which means you don’t stop fraud effectively.
We wanted to take automation of fraud prevention to the next level, so we experimented with a new approach in the industry where we combined automated usage of active and passive fraud detection methods in one solution for all the major fraud types. Passive is the monitoring of live traffic data on a real-time basis and active refers to the testing by setting up dedicated test sessions (calls, messaging and other signaling) between any two end points using our extensive global test network.
What’s helpful is that this approach, combined with machine learning and big data techniques, allows service providers and carriers to increase the efficiency of their anti-fraud operations without the corresponding additional headcount. We have seen the amount of fraud being identified and blocked increase by 35 to 50 percent, resulting in the prevention of millions of dollars in losses. In many cases, this also helps increase revenue as more traffic is terminated using the service providers’ and carriers’ legitimate routes into the country.
This new approach is essential for change. In the same way an electric vehicle needs more than a battery put on a combustion engine, so does tackling fraud need a complete redesign. Our early adoptions of this approach with CSG Detect has proven its feasible and highly profitable.
In your opinion what fields within the ICT sector are mostly targeted by fraudsters?
I see the biggest impact of fraud on the wholesale industry—specifically international wholesale fraud. It’s hard to trace traffic across borders, and it becomes much harder for local law enforcement to find the bad actors. Sending fraudulent traffic across borders and getting paid out in smaller or far-flung locations often allows fraudsters to be protected.
SIM boxes and leaky PBXs are another popular target for fraudsters. We’ve seen service providers we work with have trouble with various forms of illegal bypass fraud, including international interconnection bypass fraud, and lately, origin-based rate (OBR) bypass fraud. However, this can effectively be eliminated—one of the early service providers adopting our approach was able to discover that approximately 40 percent of traffic was unknowingly bypassed in their network. They are now able to blocks 200,000 illegal fraud attempts daily.
How does fraud impact customer experience? How can CSG intervene here?
When fraud is being conducted, it has a negative impact on the customer experience, if traffic streams are being intercepted or being rerouted through grey routes. The result of such fraud schemes are typically poor quality of service, white noise, echo and delay, which lead to shorter calls. Another impact of different fraud schemes like hacking that results in IRSF is that customers end up getting presented with enormous bill shocks, amounting to tens of thousands of dollars. Either way, it leads to a bad customer experience.
This problem is compounded when the retail or enterprise service provider that is serving the customers tries to figure out who should foot the bill. I truly believe it’s crucial for the survival of the telco industry that we keep our networks clean and fraudulent traffic well away from our customers, so they can enjoy a high quality and secure line of communication using our networks. It’s all too easy for customers to change alternative communication methods, including OTT offers, if we do not deliver the service our customers are paying for. This goes for both the retail, enterprise and wholesale businesses.
What’s the status of fraud in the African continent? What are the main gaps that fraudsters take advantage of in Africa?
In Africa, typically there is a higher termination charge rate when compared to the rest of the world—typically up to US$0.20-0.30 per minute. That simply means there’s a high incentive to bypass those higher rates into Africa, and in many cases entirely bypass the terminate rate by on-net termination into the network using a SIM box or other methods. International revenue share fraud is also a problem in Africa for traffic streams originating or terminating in Africa.
The revenue that is being incurred by calling or messaging these revenue share numbers is getting paid out to “content providers” that are working with or part of the same fraudsters that originate the sessions. For example, if they can pump artificial (or a percentage of real live traffic calls) to destinations in Africa, they also get a higher payment out, as they are typically enumerated based on a revenue share model with the terminating service provider.
Did COVID-19 accelerate fraud worldwide? Do you think fraud detection and management was neglected during these difficult times?
I think what we saw, and still see, during COVID-19 is much more manipulation of calls and messages into real people’s phones, such as scams where they’re trying to sell you various services. In the United States and Canada, this is particularly bad and is often referred to as robocalling, where you receive an automated call and then get a real person on the phone trying to tell you something. Lately, this has often been related to how to fight or be assured against COVID-19. The way they do this is to manipulate the calling line identifier (the A-number of the session) so that they appear to be from a local number close to where the party is located. This makes the person more likely to pick up the phone. These kinds of scams have accelerated, and we now see this method of fraud escalating in other parts of the world too.
The challenge is that this extraordinary level of fraud (amounting to billions of dollars) is not looking to disappear. A CFCA survey is suggesting we have roughly the same amount of fraud today as we have had the last 3-5 years. Fraud continues to evolve and our current methods in the industry have simply not been good enough. This is why we need the new generation of fraud prevention systems like the one that we have brought to market with CSG Detect.
With telecom fraud, it’s clear that you can’t take your eyes off the ball, because fraudsters will use that and abuse that, as we have seen during COVID-19. You need to use techniques that at least are as advanced, and in fact, go beyond what the fraudsters are using. A solution that automates and blocks fraud automatically with demonstrable ROI will help service providers run their retail, enterprise and wholesale businesses effectively in times of changing market conditions.