Tackling fraud: a collective industry effort

Tackling fraud: a collective industry effort

The Delta Perspective


INTRODUCTION
from the Chair of the GLF Anti-Fraud Working Group

When the GLF first published its annual Fraud Report in 2018, the intention was to set a benchmark of where carriers were in terms of their priority and activities in fighting fraud. Repeating our survey each year allows us to consistently track our progress and enables focus on the key issues that are still to be addressed. We have then used the GLF Code of Conduct against fraud to signal commitment from the carriers to adhering to best practice. In discussions with GLF members on publication of the 2019 report it was evident that there is a keenness to move beyond signalling commitment to demonstrating that action is being taken to ensure compliance with the Code of Conduct. As such in 2020, beyond the annual survey, for the first time we have undertaken a process to assess whether carriers are adhering to the six principles set out in the Code of Conduct. Over the past two years, this report has seen the industry realise and raise the importance of fraudulent traffic at a senior executive level, increase the engagement in initiative to fight fraud and, now in 2020, understand the collective responsibility we all have to remove fraud from the industry.

From the data presented in this report it is clear that there is a lot of good work taking place across a wide range of carriers to reduce fraud. The engagement from fraud management teams across the industry this year has been extremely high with carriers keen to share the progress they are making. With regards to the Code of Conduct it is observed that while most carriers have a high level of compliance across the majority of the principles there is still room for improvement as there is a lack of consistently strong compliance across all carriers for all principles. As an industry, this is what we must strive for.

If from reading this year’s report you take away one message, I hope it is this: for the industry to remove fraud, we need to work consistently and collectively. Fraudulent actors continue to gain sophistication and if we leave loop-holes or ‘open doors’ through there being only a small number of carriers that, for example, are not proactively blocking number ranges identified as fraudulent or stopping all payment flows where fraudulent traffic is identified, we continue to allow incentives for fraud. To stop the fraud, we must stop the route to cash.

As the leadership body of the international carrier industry, I seek this consistent commitment from each one of my colleagues around the GLF table to proactively fight fraud and ensure that we set the example for other organisations to follow. I am grateful for their support up to now, and I believe through sharing back our current state of the industry through the 2020 report and Code of Conduct attestation survey results it will re-enforce the criticality of our work on fighting fraud.

I would like to take this opportunity to thank my colleagues in the GLF, all organisations that have contributed to this report including the CFCA and i3 Forum, the GLF management team, and Delta Partners for putting together this report. The GLF annual report has moved beyond being just a benchmark of carriers’ activities to become a benchmark for the industry that demonstrates our on-going commitment to work towards a fraud-free future. It is a possible future, and one that will enhance the value created by the global telecoms industry, but only realisable if we all work together.

Christian Michaud 
Tata Communications
Chair of the GLF Anti-Fraud Working Group

The GLF’s Working Group against Fraud was one of the original Working Groups set up by GLF members in 2017. Members recognised the severity of impact that fraudulent traffic was having and saw the need for further collaborative action at a senior executive level. Seeing the increasing prioritisation of the fraud topic amongst our membership is symptomatic of the further work that needs to be done. 

At the GLF, we will continue to work closely with our membership to identify the optimal course of action to work on reducing fraudulent traffic as well as collaborate with partner organisations. Three organisations to mention in particular are CFCA, i3 Forum and Mobile Ecosystem Forum. The Communications Fraud Control Association (CFCA) are a not-for-profit international association working to reduce fraud in the telecoms industry through education, information sharing and collaboration. Their bi-annual fraud loss survey complements the findings in the GLF report to provide a comprehensive view of the ‘state of the industry’. i3 Forum continues to work to define the best practice policies and approaches for carriers to consistently fight fraud. GLF has previously endorsed much of their work on Fraud through its Code of Conduct. The Mobile Ecosystem Forum (MEF) has a dedicated Fraud Management Workstream within which one focus in A2P – an area of emerging focus in this year’s GLF report. The GLF looks forward to continuing working closely with all these organisations.

We continue to welcome all carriers to commit to the GLF Code of Conduct against fraud, or seek to be attested against its six principles. Following inclusion of the Code of Conduct self-attestation survey results in this year’s report we welcome any carrier who wishes to undergo the attestation process so that they might measure and benchmark their level of compliance. Over time, we hope that being able to demonstrate, or have demonstrated to them by their suppliers and customers, adherence to the six principles of the Code of Conduct will become a pre-requisite for carriers when seeking to do business with their partners.

I would like to thank the 34 organisations that have contributed to the 2020 Fraud Report. Your willingness to provide data and participate in extended discussions is the key enabler of GLF’s ability to provide such a detailed report on an annual basis.

Jussi Makela
GLF
Director


EXECUTIVE SUMMARY

  1. 72% of carriers report fraud to be a “top” or “strategic” priority – the lowest figure since the report was first published in 2018, whilst CFCA reports the majority of carriers believe fraud losses are increasing. As fraud management increasingly becomes “business as usual”, retaining senior executive focus is key – the problem has not gone away.
  2. 45% of carriers reported increases in fraudulent traffic and impact vs. 2019 with IRSF and Wangiri increasing most significantly. Whilst development in fraud management systems can make fraud easier to spot, fraudsters are consistently evolving their tactics looking to find routes to monetisation.
  3. Prevalence of ‘beyond voice’ use-cases such as virtual machines, false identity and man-in-the-middle attacks has grown significantly with 70% of carriers reporting at least some instances up from between 15% and 50% in 2019 depending on use-case. A2P fraud, whilst not a new issue, was highlighted as a use-case of increasing concern.
  4. The COVID-19 event has had a limited direct impact on fraudulent traffic, although a minority of carriers reported specific trends related to the pandemic. The evolution of fraudulent traffic in terms of traffic profiles and the tactics of fraudulent actors has developed regardless.
  5. 39% of carriers have increased the size of their fraud teams in the past 12 months, with focus on adding new skillsets to compete with the technical sophistication of fraudsters; the location of fraud management teams is diversifying from Finance – 65% of fraud teams sit in other functions.
  6. Almost 60% of carriers expect to invest more in fraud monitoring / prevention infrastructure in the next 12 months – given the increasing sophistication of fraudsters, technology investment is key as it can enable greater accuracy in prediction and identification of fraudulent traffic as well as the automation of business processes enabling fraud teams to refocus their resources.
  7. Tackling fraudulent traffic requires consistent action from all carriers; concerns were shared that not all carriers are proactively blocking fraudulent traffic and withholding payments, or creating onerous processes that disincentivise raising of disputes. Such activity enables the incentive for fraudulent actors to remain and undermines the activities of individual carriers.
  8. Carriers see the need to enhance collaboration at an industry level on information sharing, management of payment withholding and simplification of regulation across geographies – for industry action to be effective there has to be a consistent effort across carriers with commitment to self-regulate their actions.
  9. Four areas of potential action for GLF: develop a structured cross-carrier information sharing mechanism; revamp the industry policy and process for withholding payments; facilitate easier engagement for carriers with respective law enforcement agencies in local markets; ensure their members show consistent leadership and action.
  10. Code of Conduct attestation highlights significant individual carrier compliance but more work to be done to ensure that all carriers are consistently compliant across all six principles – it is the consistency of compliance which is the critical factor to stop fraud.
  11. Ensuring the presence of real-time processes to block fraudulent traffic once identified, and ensure that all contracts have i3 Forum anti-fraud clauses are two areas requiring greatest development. Whilst most carriers have processes in place to stop payment flows, some conditions, such as requirement to provide local police reports, make them difficult for customers to implement.


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