On a global basis, 2022 was a tempestuous year for the fraud management space. The year saw an increase in fraudulent activities with scams such as account takeover attacks, social engineering, identity fraud, SIM-swap fraud, subscription fraud, International Revenue Share Fraud (IRSF), bypass fraud, PBX hacking, etc., resulting in security breaches and significant monetary loss.
CSPs continue to battle the ever-present fraud landscape
As communications service providers (CSPs) continue to battle the ever-present fraud landscape, they are also faced with trying to meet rising customer demands for digital products and services. With the introduction of new technologies such as metaverse, which combines augmented, virtual, and mixed realities with the real world, and 5G, where its low latency capabilities allow edge computing, communications service providers (CSPs) are in the envious position to unlock a variety of new business opportunities. However, this ever-changing telecommunications landscape is fast becoming an increasingly fertile and lucrative playing field for fraudsters.
Winning the battle to reduce emerging threats
In meeting customer expectations for innovative digital products and services, CSPs are in a unique position to exploit new and profitable opportunities; however, introducing new technologies also provides bad actors with access to new exploitation channels.
Here are some fraud trends that CSPs need to be on the lookout for in 2023.
New social engineering techniques: Deepfake and phishing will continue to be used in sophisticated assaults compromising a victim’s personal or professional security. Deepfake attacks use artificial intelligence (AI) to create fake films and/or pictures virtually indistinguishable from real ones. They are then used to proliferate and compromise an individual’s or an organization’s security.
5G technology deployment: In addition to the opportunities provided by the low latency of 5G, this technology will more than likely lead to an increase in the number of Internet of Things (IoT) devices, enabling hackers to conduct more extensive and sophisticated assaults. With 5G network slicing capabilities, fraudsters will find it relatively easy to target particular types of traffic, such as IoT devices. Further, due to the unique design of 5G networks, consumers will be at an increased risk of experiencing security problems, including denial of service assaults, botnet attacks, and man-in-the-middle attacks.
Rise of synthetic ID: Estimated to reach $5 billion by 2024, synthetic identity fraud involves the creation of an identity using both real and false information. The new identity (synthetic ID) contains enough verifiable information to appear legitimate and can be used to open accounts, make fraudulent transactions, and con CSPs.
Scam calls: Typically part of a broader scam plan, bad actors attempt to obtain sensitive personal data from their prey in order to carry out additional telecom scams. As scammers become more inventive in attracting their victims, for example, by playing on fears, making false promises, and appearing amiable while threatening the victim with grave repercussions, such fraudulent schemes may cause customers to experience everything from identity theft to financial loss, while harming the CSPs’ reputation and causing revenue loss.
Robocalls: Even with regulations in place to control the threat of illegal robocalls, scammers quickly adapt to obstacles and constantly find innovative ways to bypass security protocols. With no immediate end in sight, robocalls will continue to be a menace in 2023, affecting CSPs and their customers’ experience.
Device fraud: While device sales provide significant revenue opportunities for CSPs, they also come with substantial risks. Over the last few years, there has been a steep increase in the number of device fraud cases, where organized fraud-rings play a considerable role in these crimes. Due to factors such as the introduction of 5G, a shift in consumer behaviour towards online channels, etc., the device fraud trend will continue to grow.
Flash calls: Considered to be more affordable than SMS, as well as quick, secure, and contributing to a better customer experience, flash calls are increasingly gaining in popularity among fraudsters. Juniper reports that flash call volume will increase 25 times between 2022 and 2026, and while lucrative for CSPs, scammers can and will exploit gaps in these channels.
Stemming the tide of fraudulent activity is not eas, making it imperative for CSPs to take proactive steps. Additionally, it has never been more important to combat fraudulent activity using automated procedures that can cancel/ halt transactions or suspend a subscription in real-time. Incorporating AI and machine learning (ML) algorithms in their fraud management systems will provide the ability to monitor networks for suspicious behaviours.
While technology is critical in combatting fraud, CSPs also need to protect their customers from becoming victims by educating them on the new fraud tactics that are now in play. By incorporating advanced fraud management systems that are readily deployable, 2023 can prove to be the year fraud identification and mitigation provides CSPs with a light at the end of the tunnel.
By Suresh Chintada, CTO at Subex