The Importance of Developing a Fraud Detection and Prevention System

In most companies, fraud is identified only after it occurs. Measures are then implemented to prevent it from happening again.  Ideally, businesses want to find ways to prevent fraud from taking place, or, if that’s not possible, to detect it before significant damage is done. In the event that they are unable to prevent it in a timely fashion, however, fraud detection is the best bet for eradicating it from the environment and preventing a recurrence.

Here are some ways you can develop an effective system for this purpose.

Conduct a Fraud Risk Assessment

Fraud is one of the biggest challenges for the telecommunications sector, with expected losses in excess of $38 billion according to the 2015 Communications Fraud Control Associations Global Fraud Loss Survey.

Knowing your risk is the first step in prevention, and a thorough assessment can provide the intel you need. This is usually performed using a mixture of techniques, such as interviews, focus groups, surveys and anonymous feedback mechanisms, with call detail record analysis to identify service abusers, traffic pumpers and subscription fraud.

The Association of Certified Fraud Examiners (ACFE) offers a comprehensive guide telcos can follow. Even though this is intended to be a preemptive process, fraud detection is an inevitable byproduct of an intensive risk assessment.

Identify Vulnerabilities

Vulnerabilities to fraud in the telecommunications sector typically take the form of situations such as:

• Records showing a spike in calls at an unrealistic time of day (or night) to an obscure country or known fraud location.
• More calls made in a day than the minutes in a day, which could indicate an account has been shared or hacked.
• Unusual PBX dialing patterns showing one number being called more frequently by external numbers than calling out.

A comprehensive risk assessment should include evaluating whether you provide an anonymous way for employees to report suspected fraud and unethical practices. Past research shows most fraud detection results from tips provided by employees of the victim organization.

After you determine your level of fraud risk, develop and implement detection and prevention methods that address your telco’s needs.

Choosing a Fraud Detection Method

Implementing fraud detection is usually part of an overall solution which is often more reactive than proactive. Options such as the ATS Event Storage and Analytics Platform (ESAP) offers a new approach, however. Using machine learning, companies access data processed and stored on an analytics platform powered by cutting edge technologies. The data engine accepts data in all formats, including CDRs, SMS, billing information, among others. Once processed, a quick query from a user can crunch through tons of data in seconds to deliver results.

Management of a successful telco requires you to be on top of every conceivable development. An important tool for identifying and preventing fraud is availability of reliable data, updated regularly and managed efficiently. Contact us for information about our data analytics services, including preventative identification of fraud.