GTE Wireless has taken an aggressive approach to combating fraud in its markets, an initiative that has resulted in an 83-percent reduction in fraud losses during the last two years.
The company has a highly integrated, four-pronged approach to dealing with fraud that takes the company from the streets where fraudsters are committing crimes to the inside of devices that facilitate fraud.
The approach has led to several success stories, including a case two years ago in which the company investigated a wireless fraud ring in California and aided in the arrest of several suspects and the recovery of 1,900 wireless telephone numbers. The company estimated it stood to lose up to $500,000 in revenues in connection with the fraud ring.
In another case in the East, GTE aided in an investigation that resulted in the recovery of 4,500 compromised cellular telephone numbers and 50 cloned phones.
GTE Wireless Operations
“We consider wireless fraud to be stealing, plain and simple,” said Sara Baxter, manager of roaming operations at GTE Wireless Operations, one of four business units actively involved in combating fraud for GTE Wireless. Baxter said the company deals with wireless fraud through detection practices, advanced fraud-prevention technologies and aggressive investigation and prosecution policies.
“A strength that we really like to play on at GTE is that we work closely with our other GTE business units,” said Baxter.
For example, she said, GTE Wireless’ fraud centers will analyze particular fraud patterns that emerge and turn them over to a security investigator to track and potentially apprehend fraudsters in cooperation with law enforcement. If any fraud equipment is confiscated, the group turns it over to GTE Laboratories, which studies the equipment and reports on it to the industry. The company’s fraud products group then might become involved in developing new systems to detect and prevent wireless fraud.
“Detection can really be a deterrent or a point of frustration for cloners,” said Jim Bolzenius, director of product marketing for GTE Wireless Operations. “If we keep tearing them down as we find the fraud, we can help put them out of business.”
Bolzenius said as a result of its work with the company’s other business units to develop new products to deter wireless fraudsters, the company has seen virtually no increase in the last three years in subscription fraud losses.
Security
Part of GTE’s hands-on approach to combating fraud is its Network Fraud Suppression organization, which is made up of more than a dozen professional criminal investigators with backgrounds in law enforcement scattered throughout GTE Wireless’ operating area.
Linc Barnett, director of Network Fraud Suppression at GTE, said the organization has four primary objectives, including its fraud control operation, under which its criminal investigators work with police intelligence organizations to identify people and organized groups targeting GTE Wireless for fraud.
The second objective is law-enforcement training, which includes classes to teach law enforcement the different aspects of wireless fraud, how it is committed and how it impacts other types of crime, like narcotics distribution, gambling and prostitution.
“When I started in 1996 … one of the issues that we had was law enforcement really didn’t have a good understanding of what wireless fraud was all about, and why it should matter to them in the first place,” said Barnett. “We were explaining to them that cellular telephones had become the communications device of choice for organized criminal groups.
“I would say in about 75 percent of the arrests that we cause, we find that the individual is involved in one or more types of other criminal activities-either narcotics, credit-card fraud, sale of stolen identity information or other areas of organized crime, such as gambling or illegal sale of weapons,” said Barnett.
The organization’s third objective is counterfraud legislation. In the last three years, the company has introduced 45 or more different counterfraud legislative initiatives in its operating territories, aiming to stiffen the penalties dealt to wireless fraudsters. The company also is involved in an initiative to get legislation passed that would allow victims of identity fraud to file criminal charges against fraudsters.
The final area of concentration is root-cause analysis, or analyzing how fraudsters are attacking the company’s networks in an effort to find ways to stem the activity in the future.
The security group is getting results. Barnett said the group is tracking for 154 felony arrests this year, compared with 126 felony arrests last year and 84 arrests the year before. In addition, Barnett said the group has recovered about $400,000 in equipment and other items associated with its investigations through June, and it also expects to prevent about $5.8 million in fraud revenue losses this year.
Labs
GTE Laboratories, the research and development arm of GTE, also is heavily involved in combating wireless fraud, both for GTE and the wireless industry as a whole. GTE Labs includes the Secure Systems department, which works on a project specifically geared toward providing fraud and security solutions to GTE Wireless and GTE TSI.
GTE Labs also is the Cellular Telecommunications Industry Association’s technical analysis lab for fraud prevention under a contract that has been renewed six times, said Christopher Carroll, principal member of the technical staff of the Secure Systems department and principal investigator for the CTIA Technical Analysis Laboratory.
GTE Labs often gets fraud equipment from law enforcement or wireless carriers that has been recovered during investigations and arrests. It analyzes the equipment to figure out how it works and how it interacts with wireless networks, physically dismantles the equipment to find out whether and how it has been modified and then studies the software it contains.
“Once we do that, then we have to translate that into something the industry, law enforcement and service providers can use,” said Carroll. “So we’ll provide a report or we’ll provide training to the industry … and we’ll go another step and think about what the industry can do to prevent this particular type of equipment from committing fraud in future.
“The philosophy from GTE’s perspective is that our security is very much reliant upon the security of other service providers around us,” said Carroll. “It’s just a fact that bad guys can break into our neighbors’ networks, and they can usually use that to get into ours.
“The stronger we make the industry as a whole, and the more secure we make our partners’ networks, that translates into better security for us,” he said.
GTE TSI
With input from GTE’s wireless fraud group and other wireless carriers, the company’s security group and GTE Labs, GTE Telecommunications Services Inc. develops products to identify and prevent wireless fraud.
The group has developed several products, including a pre-call validation system and a profiler product to deal with technical fraud. Its second-generation profiler, called FraudX, includes enhancements that address subscription fraud.
GTE TSI also developed a roamer verification and reinstatement product that challenges customers to enter a personal identification number when roaming in high-fraud markets.
“What had happened in the past was a lot of wireless operators decided they were losing too much money (in certain high fraud markets), and their only alternative was to pull their numbers out of the market and basically brown out the market,” said Osborne.
In addition, GTE TSI has developed its own authentication center, which it offers to wireless operators whose home network is not authentication capable. The company
also provides A-key management services.
Another product the company offers is its SmartChallenge platform that interac
ts with its authentication and roaming verification and reinstatment systems to provide authentication where it is available and PIN challenges in markets where authentication is not available.
“The concept to understand here is that as technology evolves, the criminals evolve along with it,” said Billy Osborne, product manager at GTE TSI. “As our protection and prevention get better, the criminals get smarter, and that’s a trend that we’ve been seeing.”
