© pure revenue ltda. 2005 a vision for combating fraud in the competitive environment of brazil...

© Pure Revenue LTDA. 2005

A Vision for Combating Fraud in the Competitive

Environment of Brazil

CFCA Conference

Rio de Janeiro

April 29, 2005


Telecom CompetitionFraudster Advantages

A competitive environment provides some very real advantages to the fraudster:

1. Carriers Fighting for New Fraudsters: – The Vulnerability: In a competitive environment competitors are

fighting for new subscribers in an effort to gain market share. In order to attract new customers, security controls, such as document and identity validations are relaxed in order to facilitate and speed up the subscription process.

– The Exploit: Subscription Fraud with either False or Stolen Identification and/or with False Billing Information.

– The Fraudsters: • Oftentimes professional fraudsters with the objective of turning free

calls into cash.• Hardened Criminals with the objective of remaining anonymous.• Non-professional fraudsters simply wanting free service.



2. Non-Cooperation Between Carriers:– The Vulnerability: In order to gain or maintain a competitive

edge carriers often do not share individual fraudster information with the intent of allowing the fraudsters to cause losses to the competitor.

– The Exploits: • Fraudsters will travel from network to network, attacking each one

until ALL have suffered the losses and ALL have blocked them. (CSP Surfing)

• Fraudsters will chain fraudulent calls through networks knowing that will difficult the investigation process even more.

– The Fraudsters: • Professional fraudsters with the objective of turning free calls into

cash.• Non-professional fraudsters simply wanting free service.



3. Regulatory Controls - Spurning Growth and Competition:

– The Vulnerability: In order to provide equal access to Telecommunications among the classes of society, Regulatory Controls dictate the non-sharing of critical information needed for the control of Fraud such as detailed information regarding the Bad Debt customers.

– The Exploit: • Fraudsters will fly “under the radar” to appear as a Bad Debt

customer. And then they will travel from network to network, causing losses, knowing that they cannot be detected. (CSP Surfing)

– The Fraudsters: • Professional fraudsters with the objective of turning free calls into

cash.• Non-professional fraudsters simply wanting free service.



t

Començo do trafego Fraudador faturado Fraudador bloqueado por inadimplencia

15 a 45 dias 30 dias

45 a 75 dias total

CSP ou Carrier Surfing – fraudador surfando um CSP “debaixo o radar”...

t45 dias 60 dias 55 dias 75 dias 50 dias 62 dias 74dias 49 dias

Tel1 Tel2 Tel3 Tel4 Tel5 Tel6 Tel7 Tel8...

1 ano

• A Fraudster surfing “under the radar” can go as long as 2 years without ever paying a long distance bill, mobile, or local bill.

• If that fraudster has 10 such phones, he could easily re-sell service without ever getting caught.


Telecom CompetitionFighting Back at the Fraud

How to Fight Back:

1. Sharing of data between carriers globally and locally.• Schemes, Exploits, Vulnerabilities, and Fraudster Profiles• This is the objective of International and Local Fraud Forums.

http://www.cfca.org/

http://www.fiina.org/

http://www.gsmworld.com



How to Fight Back:

1. Sharing of data between carriers globally and locally.ADVANTAGES: • Learn of new fraud schemes and exploits BEFORE they

attack.• Learn of new ways to fight new and existing schemes and

exploits• Learn best practices for fraud prevention• And much more...

http://www.cfca.org/http://www.fiina.org/

http://www.gsmworld.com



How to Fight Back:

2. Sharing of specific fraud data between carriers locally.

• Schemes, Exploits, Vulnerabilities, and Fraudster Profiles

• Specific data on individual fraudsters.

3. Cooperation between fraud and legal departments of carriers locally.

• Objectives of performing investigations, gathering evidence, and taking legal action against known fraudsters.



How to Fight Back:

ADVANTAGES:• Recognize fraudster before he causes

losses.• Identify fraudsters hiding under radar.• Greater source of legal evidence against

fraudster.• Greater pressure on legal system.• Greater pressure on regulatory agency

(Anatel)



Five Variables to Consider Before Sharing:

• Company Confidentiality• Ethics• Short Term Vision vs. Long Term

Vision• Value of the Fraud Data• Methods of Trading Data



Short Term Vision: Gain as much as possible in the

short term by improving my revenue and hurting my competitor‘s.

Fraudster’s LOVE this vision!



Long Term Vision: Rid the industry of the fraudsters

altogether.

Fraudster’s HATE this vision!


Telecom CompetitionHow to Share Discovered Fraud Data

1. Support an Active Brazilian Fraud Forum.

– GGRT, FONAT

2. Adopt a Fraud Data Sharing Model:– Peer to Peer Model

• Advantages: Initially easier to organize in a competitive environment.

– Centralized Model• Advantages: United Force against fraud,

easier to impact the industry, easier to change regulations and laws.


Telecom CompetitionHow to DISCOVER NEW FRAUD in Bad Debt

Banco de Dados

Cada empresa manda para o BD as informações sobre seus inadimplentes que

tem uma fatura em aberto maior que X reais e que está aberta a mais de Y dias.

Ban

cos

de

Dad

os

de

Inad

imp

len

cia



Banco de Dados

Suspeitosde

Fraude

Regras

Periódicamente (semanalmente) o Gerente do BD gerará um relatório

mostrando os altos suspeitos de fraude baseado em regras que todos os

participantes definirão.

Exemplos de Regras:

1. Um cliente que é inadimplênte para 3 ou mais empresas.

2. Um cliente Res que tem um dêbito total maior que R$1000

3. Um cliente SB que tem um dêbito total maior que R$2000

4. Um cliente de Goiás inadimplênte para 2 empresas.



Banco de Dados

RegrasSuspeitos

deFraude

Este relatório seria mandado somente para as telcos participantes. Cada telco

decide como usar os dados.



Banco de Dados

Fir

ewal

l

Nenhuma telco terá acesso direto aos dados

do BD, por tanto, não poderá ver quem está inadimplente para qual empresa, de forma a cumprir as regras de

Anatel.



Banco de Dados

Fir

ewal

l

Who would manage the Fraud/BadDebt Database?

Possible Managers:• ABR• Credit Bureau• New Company formed

by Participating Telcos



Banco de Dados

Want Cost Justification?

1. Run a Trial Program with FONAT.

2. Consulting Firm could be tasked to receive input for 3 – 6 months of Bad Debt from each participant.

3. Consulting Firm would analyze data and return individual reports to each company showing what fraud that company would have discovered and losses prevented.



Telecom CompetitionA Vision of Controlling Fraud in Brazil

1. 100% Participation in Intl Forums such as CFCA.

2. 100% Executive Support of Local Fraud Forum – FONAT

3. All Brazilian Telecoms Preventing MORE FRAUD by:a) All Brazilian Telecoms learning and

preventing new types of fraud BEFORE they come to Brazil

b) Sharing data between them all regarding ALL local fraudsters

c) Collectively detecting CSP Surfer Fraudsters hiding in the Bad Debt

4. Collectively creating a Social and Business case for Anatel to reconsider the regulations in light of alarming amounts of Fraud and Bad Debt.

5. Collectively strengthening anti-fraud legislation.



Contact Information:

Clifford M. Jordan, PresidentAv. Genaro de Carvalho 620, Suite 104Recreio dos Bandeirantes, RJCEP: 22790-070Brasil

Phone: 55-21-8105-0325Email: [email protected]: www.purerevenue.net


© pure revenue ltda. 2005 a vision for combating fraud in the competitive environment of brazil...

Documents

pure revenue

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individual fraudsters

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subscription fraud

csp surfing fraudsters

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