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© Pure Revenue LTDA. 2005 A Vision for Combating Fraud in the Competitive Environment of Brazil CFCA Conference Rio de Janeiro April 29, 2005.

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Presentation on theme: "© Pure Revenue LTDA. 2005 A Vision for Combating Fraud in the Competitive Environment of Brazil CFCA Conference Rio de Janeiro April 29, 2005."— Presentation transcript:

1 © Pure Revenue LTDA A Vision for Combating Fraud in the Competitive Environment of Brazil CFCA Conference Rio de Janeiro April 29, 2005

2 © Pure Revenue LTDA Telecom Competition Fraudster Advantages A competitive environment provides some very real advantages to the fraudster: 1.Carriers Fighting for New Fraudsters: –The Vulnerability: In a competitive environment competitors are fighting for new subscribers in an effort to gain market share. In order to attract new customers, security controls, such as document and identity validations are relaxed in order to facilitate and speed up the subscription process. –The Exploit: Subscription Fraud with either False or Stolen Identification and/or with False Billing Information. –The Fraudsters: Oftentimes professional fraudsters with the objective of turning free calls into cash. Hardened Criminals with the objective of remaining anonymous. Non-professional fraudsters simply wanting free service.

3 © Pure Revenue LTDA Telecom Competition Fraudster Advantages 2.Non-Cooperation Between Carriers: –The Vulnerability: In order to gain or maintain a competitive edge carriers often do not share individual fraudster information with the intent of allowing the fraudsters to cause losses to the competitor. –The Exploits: Fraudsters will travel from network to network, attacking each one until ALL have suffered the losses and ALL have blocked them. (CSP Surfing) Fraudsters will chain fraudulent calls through networks knowing that will difficult the investigation process even more. –The Fraudsters: Professional fraudsters with the objective of turning free calls into cash. Non-professional fraudsters simply wanting free service.

4 © Pure Revenue LTDA Telecom Competition Fraudster Advantages 3.Regulatory Controls - Spurning Growth and Competition: –The Vulnerability: In order to provide equal access to Telecommunications among the classes of society, Regulatory Controls dictate the non-sharing of critical information needed for the control of Fraud such as detailed information regarding the Bad Debt customers. –The Exploit: Fraudsters will fly under the radar to appear as a Bad Debt customer. And then they will travel from network to network, causing losses, knowing that they cannot be detected. (CSP Surfing) –The Fraudsters: Professional fraudsters with the objective of turning free calls into cash. Non-professional fraudsters simply wanting free service.

5 © Pure Revenue LTDA Telecom Competition Fraudster Advantages t Començo do trafego Fraudador faturadoFraudador bloqueado por inadimplencia 15 a 45 dias 30 dias 45 a 75 dias total CSP ou Carrier Surfing – fraudador surfando um CSP debaixo o radar... t 45 dias 60 dias 55 dias 75 dias 50 dias 62 dias 74dias 49 dias Tel1 Tel2 Tel3 Tel4 Tel5 Tel6 Tel7 Tel ano A Fraudster surfing under the radar can go as long as 2 years without ever paying a long distance bill, mobile, or local bill. If that fraudster has 10 such phones, he could easily re- sell service without ever getting caught.

6 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud How to Fight Back: 1.Sharing of data between carriers globally and locally. Schemes, Exploits, Vulnerabilities, and Fraudster Profiles This is the objective of International and Local Fraud Forums.

7 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud How to Fight Back: 1.Sharing of data between carriers globally and locally. ADVANTAGES: Learn of new fraud schemes and exploits BEFORE they attack. Learn of new ways to fight new and existing schemes and exploits Learn best practices for fraud prevention And much more...

8 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud How to Fight Back: 2.Sharing of specific fraud data between carriers locally. Schemes, Exploits, Vulnerabilities, and Fraudster Profiles Specific data on individual fraudsters. 3.Cooperation between fraud and legal departments of carriers locally. Objectives of performing investigations, gathering evidence, and taking legal action against known fraudsters.

9 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud How to Fight Back: ADVANTAGES: Recognize fraudster before he causes losses. Identify fraudsters hiding under radar. Greater source of legal evidence against fraudster. Greater pressure on legal system. Greater pressure on regulatory agency (Anatel)

10 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud Five Variables to Consider Before Sharing: Company Confidentiality Ethics Short Term Vision vs. Long Term Vision Value of the Fraud Data Methods of Trading Data

11 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud Short Term Vision: Gain as much as possible in the short term by improving my revenue and hurting my competitors. Fraudsters LOVE this vision!

12 © Pure Revenue LTDA Telecom Competition Fighting Back at the Fraud Long Term Vision: Rid the industry of the fraudsters altogether. Fraudsters HATE this vision!

13 © Pure Revenue LTDA Telecom Competition How to Share Discovered Fraud Data 1.Support an Active Brazilian Fraud Forum. –GGRT, FONAT 2.Adopt a Fraud Data Sharing Model: –Peer to Peer Model Advantages: Initially easier to organize in a competitive environment. –Centralized Model Advantages: United Force against fraud, easier to impact the industry, easier to change regulations and laws.

14 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Cada empresa manda para o BD as informações sobre seus inadimplentes que tem uma fatura em aberto maior que X reais e que está aberta a mais de Y dias. Bancos de Dados de Inadimplencia

15 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Suspeitos de Fraude Regras Periódicamente (semanalmente) o Gerente do BD gerará um relatório mostrando os altos suspeitos de fraude baseado em regras que todos os participantes definirão. Exemplos de Regras: 1.Um cliente que é inadimplênte para 3 ou mais empresas. 2.Um cliente Res que tem um dêbito total maior que R$ Um cliente SB que tem um dêbito total maior que R$ Um cliente de Goiás inadimplênte para 2 empresas.

16 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Regras Suspeitos de Fraude Este relatório seria mandado somente para as telcos participantes. Cada telco decide como usar os dados.

17 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Firewall Nenhuma telco terá acesso direto aos dados do BD, por tanto, não poderá ver quem está inadimplente para qual empresa, de forma a cumprir as regras de Anatel.

18 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Firewall Who would manage the Fraud/BadDebt Database? Possible Managers: ABR Credit Bureau New Company formed by Participating Telcos

19 © Pure Revenue LTDA Telecom Competition How to DISCOVER NEW FRAUD in Bad Debt Banco de Dados Want Cost Justification? 1.Run a Trial Program with FONAT. 2.Consulting Firm could be tasked to receive input for 3 – 6 months of Bad Debt from each participant. 3.Consulting Firm would analyze data and return individual reports to each company showing what fraud that company would have discovered and losses prevented. © Pure Revenue LTDA. 2005

20 Telecom Competition A Vision of Controlling Fraud in Brazil 1.100% Participation in Intl Forums such as CFCA % Executive Support of Local Fraud Forum – FONAT 3.All Brazilian Telecoms Preventing MORE FRAUD by: a)All Brazilian Telecoms learning and preventing new types of fraud BEFORE they come to Brazil b)Sharing data between them all regarding ALL local fraudsters c)Collectively detecting CSP Surfer Fraudsters hiding in the Bad Debt 4.Collectively creating a Social and Business case for Anatel to reconsider the regulations in light of alarming amounts of Fraud and Bad Debt. 5.Collectively strengthening anti-fraud legislation. © Pure Revenue LTDA. 2005

21 Contact Information: Clifford M. Jordan, President Av. Genaro de Carvalho 620, Suite 104 Recreio dos Bandeirantes, RJ CEP: Brasil Phone: Website: © Pure Revenue LTDA. 2005


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