Fraud and Subscription Fraud in particular, can be just like Pandora's box. And here's why.
Subscription fraud is the triple threat of telco fraud. Firstly, you have people accessing services that they have no intention of paying for. This inevitable leads to revenue losses.
Secondly, once they’re on your network under false pretenses, it’s a small step to committing even more types of fraud (like IRSF for example). These fraud losses can be huge if undetected for long.
And finally, with incidences of false positives reaching as high as 95% there’s a real worry that you’re going to be alienating a lot of your genuine subscribers trying to fix it.
Subscription fraud in its own right accounts for almost $6.8 billion in fraud losses worldwide. When you add on the amount lost through premium rate fraud or IRSF, as well as the amount miscalculated as bad debt, it’s clear that you need a dedicated strategy in place. Whether you’re a seasoned operator with decades of experience, or a young MVNO on the lookout for your first dedicated solution, here are a few things to keep in mind when choosing a vendor.
1) Start from the beginning
For many fraud types, it’s only realistically possible to monitor for events after the fact. With subscription fraud very much being the gateway to other crimes, it’s essential to use this an opportunity to boost your entire fraud strategy. Make sure you are able to validate all new subscriptions and services, as well as multiple validations, against potential fraudsters. This way, you won’t be playing catch-up.
2) Be alert. Always!
Organised fraudsters don’t act like genuine users as they’ve long since learned to adapt to new rule-based fraud fighting techniques. They prefer to use high-volume low-impact calls at a rate that remains under your thresholds, and then make big plays when the time is right. You need to make sure you have a system in place that can send you alerts and notifications when alarms are raised without constant review.
3) Remain positive in the face of false negatives
Did you know that up to 95% of alerts are likely to be false positives? The dangers of acting rashly could mean stopping services to your loyal subscriber base which in turn could seriously harm your revenues and reputation. On the other hand, too lax an approach means subscriber fraud spreading and turning into PRF or IRSF. The key here is to keep working, but work smarter. Don’t rely purely on static rules-based analysis. Try to implement a system that can quickly and accurately analyse and review the social networks of the users instead. This method of social finger-printing is highly effective in identifying fraudsters, and gives you concrete connections to other fraudsters.
4) Focus!
No one wants to be chained in front of a screen manually checking details. With the amount of data that operator’s process, it’s just not reasonable. Most tier 1 companies will already have systems in place, but for an MVNO it’s just not possible sometimes to implement the same solutions. Be smart and try and get something that focuses exclusively on the things you need. Namely, something that allows you to easily or automatically store fraudster blacklists, monitor multiple activities from similar subscribers, review the incoming and outgoing social networks of suspect users, check IMEIs and raise alerts to significant cells used by fraudsters.
Left alone you could be looking at revenue leakages from non-paid for services, fraud losses from criminals taking advantage of your open network and a range of customer service problems from existing customers. It just doesn’t make sense to wait! 
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(2) Photo by rawpixel.com from Pexels
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