ORLANDO, Fla.-Wake up prepaid department, meet fraud.
While cloning was the most urgent wireless fraud issue a few years ago, today the focus has shifted to subscription fraud, which can impact the prepaid business, said Konnie Sheen, manager of fraud and security of Southwestco Wireless.
When Southwestco launched prepaid wireless service in 1996, “we couldn’t think of any fraud issues. The fraudsters were pretty busy picking the low-hanging fruit,” Sheen told the audience last week at the Wireless Fraud and Security ’99 conference held here. Eventually the “low-hanging fruit was plucked,” and fraud started appearing in the prepaid arena because “allowing anonymous customers has its own set of problems,” she said.
Prepaid fraud is not news to prepaid vendors, some of which have developed fraud protection solutions, Sheen said. “Your prepaid provider may be your ally,” because it may already have fraud solutions, she said.
Kevin Thigpen, vice president and general manager of the prepaid services division of Boston Communications Group, gave some examples of prepaid fraud. In the first example, a customer uses a prepaid account obtained from a West Coast provider on an East Coast phone, and vice versa, hoping to have to pay for only one of the phones.
But fraud may be an inside job. “If you see a distribution channel that has a really good sales record but zero usage, you might have a problem,” Thigpen said.
Illegally calling long-distance numbers can really hurt a carrier because payments have to be made to interexchange carriers.
“This is cash, this is money, this is airtime and you don’t want to give it away … there is a hard dollar cost” to long-distance calls, Thigpen commented.
The best way to combat fraud is by tracking everything and listening to everyone who has an idea on how to track fraud, said Kimberly Eubank, manager of fraud prevention for BellSouth Mobility DCS. Eubank said fraudulent uses can be caught faster by tracking credit-card charge backs and then cross-checking to see what other accounts have used that bad credit card. Fraudsters often will refresh multiple phones with one stolen credit card, but until it is listed as a fraud-which can take up to 60 days-there is no way to stop it even as other phones are being refreshed.
Another type of fraud protection for prepaid is verifying credit-card information. BellSouth knew this was a potential problem but didn’t solve it until damage had been done.
“Within six months, credit-card charge backs increased 12-fold,” Eubank said. This experience led Thomas W. McClure, assistant vice president for wireless security for the Cellular Telecommunications Industry Association, to remark, “If you think there is a hole in your system, the fraudster will figure it out.”
