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Phone fraud, or more generally communications fraud, is the use of telecommunications products or services with the intention of illegally acquiring money from, or failing to pay, a telecommunication company or its customers. Many operators have increased measures to minimize fraud and reduce their losses. Communications operators tend to keep their actual loss figures and plans for corrective measures confidential. According to a 2011 survey by CFCA, an industry group created to reduce fraud against carriers, the five top fraud loss categories reported by operators were: * US$4.96 billion – compromised PBX/voicemail systems * $4.32 billion – subscription/identity theft * $3.84 billion – International Revenue Share Fraud * $2.88 billion – by-pass fraud * $2.40 billion – cash fraud


Types of frauds


Fraud against users by phone companies

* '' Cramming'' is the addition of charges to a subscriber's telephone bill for services which were neither ordered nor desired by the client, or for fees for calls or services that were not properly disclosed to the client. These charges are often assessed by dishonest third-party suppliers of data and communication service that phone companies are required, by law, to allow the third-party to place on the bill. * ''
Slamming Slamming is the impact of the bottom structure of a ship onto the sea surface. It is mainly observed while sailing in waves, when the bow raises from the water and subsequently impacts on it. Slamming induces extremely high loads to ship structure ...
'' is any fraudulent, unauthorized change to the default long-distance/local carrier or DSL Internet service selection for a subscriber's line, most often made by dishonest vendors desiring to steal business from competing service providers. * '' False Answer Supervision'' is a misconfiguration of telephone company equipment, by negligence or design, which causes billing to start as soon as the distant telephone begins ringing, even if a call is busy or there is no answer. The cost is typically subtle but recurring as subscribers repeatedly pay some small amount for calls which were never completed.


Fraud against customers by third parties

* PBX dial-through can be used fraudulently by placing a call to a business then requesting to be transferred to "9-0" or some other outside toll number. (9 is normally an outside line and 0 then connects to the utility's operator.) The call appears to originate from the business (instead of the original fraudulent caller) and appears on the company's phone bill. Trickery (such as
impersonation An impersonator is someone who imitates or copies the behavior or actions of another. There are many reasons for impersonating someone: *Entertainment: An entertainer impersonates a celebrity, generally for entertainment, and makes fun of ...
of installer and telecommunications company personnel "testing the system") or bribery and collusion with dishonest employees inside the firm may be used to gain access. * A variant is a call forwarding scam, where a fraudster tricks a subscriber into
call forwarding Call forwarding, or call diversion, is a telephony feature of all telephone switching systems which redirects a telephone call to another destination, which may be, for example, a mobile or another telephone number where the desired called party ...
their number to either a long-distance number or a number at which the fraudster or an accomplice is accepting
collect call A collect call in Canada and the United States, known as a reverse charge call in other parts of the English-speaking world, is a telephone call in which the calling party wants to place a call at the called party's expense. In the past, collec ...
s. The unsuspecting subscriber then gets a huge long-distance bill for all of these calls. * A similar scheme involves forwarding an individual PBX extension to a long-distance or overseas number; the PBX owner must pay tolls for all of these calls.
Voice over IP Voice over Internet Protocol (VoIP), also called IP telephony, is a method and group of technologies for the delivery of voice communications and multimedia sessions over Internet Protocol (IP) networks, such as the Internet. The terms Internet t ...
servers are often flooded with brute-force attempts to register bogus off-premises extensions (which may then be forwarded or used to make calls) or to directly call
SIP address The SIP URI scheme is a Uniform Resource Identifier (URI) scheme for the Session Initiation Protocol (SIP) multimedia communications protocol. A SIP address is a URI that addresses a specific telephone extension on a voice over IP system. Such a ...
es which request outside numbers on a gateway; as they are computers, they are targets for Internet system crackers. * Autodialers may be used for a number of dishonest purposes, including telemarketing fraud or even as
War dialing Wardialing (or war dialing) is a technique to automatically scan a list of telephone numbers, usually dialing every number in a local area code to search for modems, computers, bulletin board systems ( computer servers) and fax machines. Hac ...
. War dialers take their name from a scene in the 1983 movie
WarGames ''WarGames'' is a 1983 American science fiction techno-thriller film written by Lawrence Lasker and Walter F. Parkes and directed by John Badham. The film, which stars Matthew Broderick, Dabney Coleman, John Wood, and Ally Sheedy, follow ...
in which a 'cracker' programs a home computer to dial every number in an exchange, searching for lines with auto-answer data
modem A modulator-demodulator or modem is a computer hardware device that converts data from a digital format into a format suitable for an analog transmission medium such as telephone or radio. A modem transmits data by modulating one or more c ...
s. Sequential dialing is easy to detect, pseudo-random dialing is not. * In the US, owners of customer-owned coin-operated telephones (COCOTs) are paid sixty cents for every call their users make to a
toll-free telephone number A toll-free telephone number or freephone number is a telephone number that is billed for all arriving calls. For the calling party, a call to a toll-free number from a landline is free of charge. A toll-free number is identified by a dialing pre ...
, with the charges billed to the called number. A fraudulent COCOT provider could potentially auto-dial 1-800 wrong numbers and get paid for these as "calls received from a payphone" with charges reversed. * Autodialers are also used to make many short-duration calls, mainly to mobile devices, leaving a missed call number which is either premium rate or contains advertising messages, in the hope that the victim will call back. This is known as Wangiri (literally, "One (ring) and cut") from Japan where it originated. * 809 scams take their name from the former +1-809 area code which used to cover most of the
Caribbean The Caribbean (, ) ( es, El Caribe; french: la Caraïbe; ht, Karayib; nl, De Caraïben) is a region of the Americas that consists of the Caribbean Sea, its islands (some surrounded by the Caribbean Sea and some bordering both the Caribbean ...
nations (it has since been split into multiple new area codes, adding to the confusion). The numbers look like Canadian or US telephone numbers but turn out to be costly, overpriced international calls that bypass consumer-protection laws which govern premium numbers based in the victim's home country. Some advertise
phone sex Phone sex is a conversation between two or more people by means of the telephone which is sexually explicit and is intended to provoke sexual arousal in one or more participants. All parties participate voluntarily; it is typically accompanied ...
or other typically premium content. Other variants on this scheme involve leaving unsolicited messages on
pagers A pager (also known as a beeper or bleeper) is a wireless telecommunications device that receives and displays alphanumeric or voice messages. One-way pagers can only receive messages, while response pagers and two-way pagers can also acknow ...
or making bogus claims of being a relative in a family emergency to trick users into calling the foreign numbers, then attempting to keep the victim on the line as long as possible in order to incur the cost of an expensive foreign call. * A more recent version of the 809 scam involves calling cellular telephones then hanging up, in hopes of the curious (or annoyed) victim calling them back. Effectively, this is Wangiri but using former +1-809 countries such as 1-473 (
Grenada Grenada ( ; Grenadian Creole French: ) is an island country in the West Indies in the Caribbean Sea at the southern end of the Grenadines island chain. Grenada consists of the island of Grenada itself, two smaller islands, Carriacou and Pet ...
) which look like North American domestic calls but are Caribbean island nations. * Pre-pay
telephone card A telephone card, calling card or phonecard for short, is a credit card-size plastic or paper card, used to pay for telephone services (often international or long-distance calling). It is not necessary to have the physical card except with a st ...
s or "calling cards" are also very vulnerable to fraudulent use; these cards contain a number or passcode which can be dialed in order to bill worldwide toll calls to the card. Anyone who obtains the passcode can dishonestly misuse it to make or to resell toll calls. * Carrier access codes were widely misused by phone-sex
scam A confidence trick is an attempt to defraud a person or group after first gaining their trust. Confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, confidence, irresponsibility, and greed. Researchers hav ...
mers in the early days of competitive long distance; the phone-sex operations would misrepresent themselves as alternate long-distance carriers to evade
consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...
measures which prevent US phone subscribers from losing local or long-distance service due to calls to +1-900 or 976 premium numbers. This loophole is now closed. * In the US,
area code 500 In telecommunication, a personal communications service is defined by the Alliance for Telecommunications Industry Solutions (ATIS) as "a set of capabilities that allows some combination of personal mobility, terminal mobility, and service profil ...
and its overlays permit a "follow-me routing" in which, if the number has been forwarded to some expensive and arbitrary destination, the caller is billed for the call to that location. Similar issues existed with
area code 700 Area code 700 of the North American Numbering Plan is a service access code (SAC) implemented by interexchange carriers. It is reserved for carrier-specific number assignments to special services or destinations. It was introduced in 1983 for prov ...
as the numbers are long-distance carrier specific (except 1-700-555-4141, which identifies the carrier). Because of the unpredictable and potentially costly rate for such a call, these services never gained widespread use. * Telemarketing fraud takes a number of forms; much like
mail fraud Mail fraud and wire fraud are terms used in the United States to describe the use of a physical or electronic mail system to defraud another, and are federal crimes there. Jurisdiction is claimed by the federal government if the illegal activity ...
, solicitations for the sale of goods or investments which are worthless or never delivered and requests for donations to unregistered charities are not uncommon. Callers often prey upon sick,
disabled Disability is the experience of any condition that makes it more difficult for a person to do certain activities or have equitable access within a given society. Disabilities may be cognitive, developmental, intellectual, mental, physical, ...
and
elderly Old age refers to ages nearing or surpassing the life expectancy of human beings, and is thus the end of the human life cycle. Terms and euphemisms for people at this age include old people, the elderly (worldwide usage), OAPs (British usage ...
persons; scams in which a caller attempts to obtain
banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
or
credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the ...
information also frequently occur. One other variant involves calling a number of business offices, asking for model numbers of various pieces of
office equipment Office supplies are consumables and equipment regularly used in offices by businesses and other organizations, by individuals engaged in written communications, recordkeeping or bookkeeping, janitorial and cleaning, and for storage of supplies o ...
in use (such as photocopiers) and sending unsolicited shipments of supplies for the machines, and then billing the victims at artificially inflated prices. *
Caller ID spoofing Caller ID spoofing is the practice of causing the telephone network to indicate to the receiver of a call that the originator of the call is a station other than the true originating station. This can lead to a caller ID display showing a phone ...
can be used to fraudulently impersonate a trusted vendor (such as a bank or credit union), a law enforcement agency or another subscriber. These calls may be used for
vishing Voice phishing, or vishing, is the use of telephony (often Voice over IP telephony) to conduct phishing attacks. Landline telephone services have traditionally been trustworthy; terminated in physical locations known to the telephone company, and ...
, where a scammer impersonates a trusted counterparty in order to fraudulently obtain financial or personal information. * ''Call clearing delays'' in some
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
exchanges may be abused to defraud. For obscure historical reasons, the system was designed so that a called party could hang up a call and immediately pick it up from another extension without it being disconnected. A fraudster would call a household and impersonate a bank or police; when the householder hung up and then attempted to call police or contact the impersonated party, the fraudster would still be on the line because the original call never properly ended. *
Cordless phones A cordless telephone or portable telephone has a portable telephone handset that connects by radio to a base station connected to the public telephone network. The operational range is limited, usually to the same building or within some short ...
are often even less secure than cell phones; with some models a scanner radio may intercept analogue conversations in progress or a handset of the same or a similar model as the target system may be usable to make toll calls through a cordless base station which lacks authentication capability. Obsolete analogue mobile telephones have stopped working in areas where the AMPS service has been shut down, but obsolete cordless phone systems may remain in service indefinitely. * A recent
scam A confidence trick is an attempt to defraud a person or group after first gaining their trust. Confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, confidence, irresponsibility, and greed. Researchers hav ...
involved Indian call centers targeting American or Canadian customers demanding "unpaid taxes" by impersonating government officials. Similar government impersonation scams include the SSA impersonation scam. * Every day, hundreds of scam calls are received on the US mainland which offer the recipients grant money from the Federal Government, but requesting a "small administration fee", even though there are no fees associated with applying for or receiving a Government Grant. * During the 1980s, a common form of premium-rate fraud involved manipulating children (often through
television commercial A television advertisement (also called a television commercial, TV commercial, commercial, spot, television spot, TV spot, advert, television advert, TV advert, television ad, TV ad or simply an ad) is a span of television programming produce ...
s, such as during
Saturday morning cartoon "Saturday-morning cartoon" is a colloquial term for the original animated series programming that was typically scheduled on Saturday and Sunday mornings in the United States on the "Big Three" television networks. The genre's popularity had a br ...
s) to call a premium-rate number without their parents' knowledge or permission, sometimes going so far as to ask a child to hold the phone receiver up to the television set as it played DTMF tones to automatically trigger the dialing of a premium number. Such practices are now illegal in the United States. * The Can You Hear Me? telephone scam was an alleged scam reported in the United States and Canada in 2017.


Fraud by phone companies against one another

* Interconnect fraud involves the falsification of records by telephone carriers in order to deliberately miscalculate the money owed by one telephone network to another. This affects calls originating on one network but carried by another at some point between source and destination. * Refiling is a form of interconnect fraud in which one carrier tampers with CID (caller-ID) or ANI data to falsify the number from which a call originated before handing the call off to a competitor. Refiling and interconnect fraud briefly made headlines in the aftermath of the
Worldcom MCI, Inc. (subsequently Worldcom and MCI WorldCom) was a telecommunications company. For a time, it was the second largest long-distance telephone company in the United States, after AT&T. Worldcom grew largely by acquiring other telecommunic ...
financial troubles; the refiling scheme is based on a quirk in the system by which telecommunications companies bill each othertwo calls to the same place may incur different costs because of differing displayed origin. A common calculation of payments between telecommunications companies calculates the percentage of the total distance over which each telecommunications company has carried one call to determine division of toll revenues for that call; refiling distorts data required to make these calculations. * Grey routes are
voice over IP Voice over Internet Protocol (VoIP), also called IP telephony, is a method and group of technologies for the delivery of voice communications and multimedia sessions over Internet Protocol (IP) networks, such as the Internet. The terms Internet t ...
gateways which deliver international calls to countries by mislabeling them as inbound local
mobile telephone A mobile phone, cellular phone, cell phone, cellphone, handphone, hand phone or pocket phone, sometimes shortened to simply mobile, cell, or just phone, is a portable telephone that can make and receive calls over a radio frequency link while ...
calls at destination. These "SIM box" operations are common in third world nations with exorbitant official international rates, usually due to some combination of tight control by one state-supported monopoly and/or excessive taxation of inbound overseas calls. Governments who believe themselves entitled to charge any arbitrary inflated price for inbound international calls, even far above the cost of domestic calls to the same destinations, will legislate against any privately owned, independent, competitive VoIP gateway, labeling the operations as "bypass fraud" and driving them underground or out of business. As a VoIP gateway in such a regulatory environment typically does not have access to
T-carrier The T-carrier is a member of the series of carrier systems developed by AT&T Bell Laboratories for digital transmission of multiplexed telephone calls. The first version, the Transmission System 1 (T1), was introduced in 1962 in the Bell ...
primary rate interface or PBX-style trunks, its operator is forced to rely on a hardware configuration with Internet telephony on one side and a large number of mobile
SIM card A typical SIM card (mini-SIM with micro-SIM cutout) A GSM mobile phone file:Simkarte NFC SecureElement.jpg, T-Mobile nano-SIM card with NFC capabilities in the SIM tray of an iPhone 6s file:Tf sim both sides.png, A TracFone Wireless SIM card ha ...
s and handsets on the other to place the calls as if they were from individual local mobile subscribers.


Fraud against phone companies by users

* Subscription fraud: for example, signing up with a false name, or no intention to pay. *
Collect call A collect call in Canada and the United States, known as a reverse charge call in other parts of the English-speaking world, is a telephone call in which the calling party wants to place a call at the called party's expense. In the past, collec ...
fraud: most automated collect call systems allow the caller to record a short audio snippet, intended to identify the caller so that the recipient can decide whether or not to accept the charges. With the system being automated, the caller could insert any message they want, free of charge, as long as it fit within the short allotted time, and the recipient could refuse charges. A variant is to refuse a collect call at the higher operator-assisted rate, then call the person back at a lower price. * Person-to-person call fraud: Under archaic operator assistance systems, a person-to-person call only charged a caller if they could reach a specific person at the other end of the line. Thus, if coordinated beforehand, a caller could use a false name as a code word, with the recipient rejecting the call, and no one would be charged. * Intentional non-return of rental equipment (such as extension telephones) when relocating to a new address. The equipment would then be used at the new location without paying a monthly equipment rental fee. This has become rare as most telephones are now owned outright, not rented.


Frauds against phone companies by third parties

*
Phreaking Phreaking is a slang term coined to describe the activity of a culture of people who study, experiment with, or explore telecommunication systems, such as equipment and systems connected to public telephone networks. The term ''phreak'' is a ...
involves obtaining knowledge of how the telephone network operates, which can be (but is not always) used to place unauthorized calls. The history of phone phreaking shows that many 'phreaks' used their vast knowledge of the network to help telephone companies. There are, however, many phreaks who use their knowledge to exploit the network for personal gain, even today. In some cases, social engineering has been used to trick telecommunications company
employees Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any ot ...
into releasing technical information. Early examples of phreaking involved generation of various control tones, such as a
2600 hertz 2600 hertz (2600 Hz) is a frequency in hertz (cycles per second) that was used by AT&T as a steady signal to mark currently unused long-distance telephone lines. During the 1960s, in-band signaling was used, so the same line for both vo ...
blue box A blue box is an electronic device that produces tones used to generate the in-band signaling tones formerly used within the North American long-distance telephone network to send line status and called number information over voice circuits. ...
tone to release a long-distance trunk for immediate re-use or the red box tones which simulate coins being inserted into a
payphone A payphone (alternative spelling: pay phone) is typically a coin-operated public telephone, often located in a telephone booth or in high-traffic outdoor areas, with prepayment by inserting money (usually coins) or by billing a credit or debi ...
. These exploits no longer work in many areas of the telephone network due to widespread use of digital switching systems and out-of-band signaling. There are, however, many areas of the world where these control tones are still used and this kind of fraud still continues to happen. * A more high-tech version of the above is switch reprogramming, where unauthorized "back door" access to the phone company's network or billing system is used to allow free telephony. This is then sometimes resold by the 'crackers' to other customers. * Caller name display (CNAM) is vulnerable to data mining, where a dishonest user obtains a line (fixed or mobile) with caller name display and then calls that number repeatedly from an autodialer which uses
caller ID spoofing Caller ID spoofing is the practice of causing the telephone network to indicate to the receiver of a call that the originator of the call is a station other than the true originating station. This can lead to a caller ID display showing a phone ...
to send a different presentation number on each call. None of the calls are actually answered, but the telephone company has to look up every number (a CNAM database "dip") to display the corresponding subscriber name from its records. The list of displayed names and numbers (which may be landline or wireless) is then sold to telemarketers. *
Payphone A payphone (alternative spelling: pay phone) is typically a coin-operated public telephone, often located in a telephone booth or in high-traffic outdoor areas, with prepayment by inserting money (usually coins) or by billing a credit or debi ...
s have also been misused to receive fraudulent collect calls; most carriers have turned off the feature of accepting incoming calls or have muted the payphones internal ringing mechanism for this very reason. *
Cloning Cloning is the process of producing individual organisms with identical or virtually identical DNA, either by natural or artificial means. In nature, some organisms produce clones through asexual reproduction. In the field of biotechnology, c ...
has been used as a means of copying both the electronic serial number and the telephone number of another subscriber's phone to a second (cloned) phone. Airtime charges for outbound calls are then mis-billed to the victim's cellular phone account instead of the perpetrator's.


See also

*
Caller ID spoofing Caller ID spoofing is the practice of causing the telephone network to indicate to the receiver of a call that the originator of the call is a station other than the true originating station. This can lead to a caller ID display showing a phone ...
* Scams *
Credit card fraud Credit card fraud is an inclusive term for fraud committed using a payment card, such as a credit card or debit card. The purpose may be to obtain goods or services or to make payment to another account, which is controlled by a criminal. The ...
* Dial tapping *
Internet fraud Internet fraud is a type of cybercrime fraud or deception which makes use of the Internet and could involve hiding of information or providing incorrect information for the purpose of tricking victims out of money, property, and inheritance. In ...
*
Mobile phone spam Mobile phone spam is a form of spam (unsolicited messages, especially advertising), directed at the text messaging or other communications services of mobile phones or smartphones. As the popularity of mobile phones surged in the early 2000s, fr ...
*
Phreaking Phreaking is a slang term coined to describe the activity of a culture of people who study, experiment with, or explore telecommunication systems, such as equipment and systems connected to public telephone networks. The term ''phreak'' is a ...
* Traffic pumping *
Vishing Voice phishing, or vishing, is the use of telephony (often Voice over IP telephony) to conduct phishing attacks. Landline telephone services have traditionally been trustworthy; terminated in physical locations known to the telephone company, and ...
*
Wire fraud Mail fraud and wire fraud are terms used in the United States to describe the use of a physical or electronic mail system to defraud another, and are federal crimes there. Jurisdiction is claimed by the federal government if the illegal activity ...
*
Technical support scam A technical support scam, or tech support scam, is a type of fraud in which a scammer claims to offer a legitimate technical support service. Victims contact scammers in a variety of ways, often through fake pop-ups resembling error messages or ...


References


External links

* OFCOM
Problems with your landline phone: slamming
- advice from the British communications regulator *
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers '' The Observer'' and '' The Guardian Weekly'', ''The Guardian'' is part of the ...

When slamming the phone prompts a row
* The Guardian

- concerns over data protection by British mobile telecom suppliers
Bell Canada Fraud Control Centre


(
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a List of cities in China, city and Special administrative regions of China, special ...
) {{DEFAULTSORT:Phone Fraud Fraud
Fraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compen ...