Telecoms fraud costs $55 billion a year

Phreaking hell

Phone companies estimate that global telecommunications fraud is running at $55 billion a year.

The estimates comes from a telecoms industry group the International Forum of Irregular Network Access (FIINA), whose members include fraud experts at service providers throughout the world. The figures for fraud, which FIINA admits are not precise because they make assumptions about how much offences against business go unreported, estimate that telcos themselves lose as much as 6 per cent of revenues to fraud.

The figures, reported by the Telegraph, include many different types of fraud including those involving mobile phones, premium line misuse and phreaking, which can be used to obtain free telephone calls at the expense of either telcos or by exploiting corporate phone systems.

Neil Barrett, technical director at security consultants Information Risk Management, explained that phreaking is the process of manipulating the phone system electronically, normally by sending additional control codes down phone lines to obtain free access.

"This is a piece of cake and the emergence of digital technology in exchanges has not really made it that much more difficult," said Barrett.

He explained that once free access to a phone system had been obtained, it might be sold on to people willing to pay criminals for cheap rate phone access overseas. Alternatively phreaking may be used to obtain free net access in European countries or out of "sheer buggeration", he said.

Barrett believes the cost to enterprises from phone misuse is probably only a small fraction of the $55 billion figure quoted in the study but he believes it is still a real and growing problem.

"With badly managed PBX systems it's dead easy to manipulate them to get free calls," said Barrett.

He explained this was normally done by crackers manipulating system so that inbound 0800 calls could be redirected to external lines, using features normally geared to transferring calls from office phone numbers to mobiles.

Attacks on voicemail systems were also a problem for companies because they would give access to audio storage capacity that can be used to host anything from MP3 files to audio porn.

"Voicemail systems are also normally only defended with a four digit PIN so they can be broken into in a night of 'war dialling'," said Barrett.

With telecoms fraud becoming more sophisticated and organised crime entering the arena, the message seems to be that firms need to devote attention to the security of their phone systems as well as their computer networks. Failure to do so can result in a very nasty surprise when the phone bill arrives. ®

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