Combating Telecommunications Fraud with Artificial Intelligence


Globally, the telecommunications industry is worth quite a lot, with estimates judging the 2021 revenue at about $1.8tn. Today, telecommunications are becoming essential in virtually every industry including for the purpose of communication, advertising and several other corporate activities. Additionally, telecommunications is the backbone to connecting the world globally with regards to information distribution across locations. The already impressive revenue being generated by the telecommunications industry would be even higher were it not for fraudulent activities which cost the industry about $39.89bn or 2.22% of revenue. Unfortunately these losses are steadily on the rise with an increase of about 28% since 2019. It is believed that fraud schemes have become increasingly complex and better at escaping safety nets and other checks designed to prevent them. The increased demand for telecommunications services due to the shifting of several industries and other recreational activities online also contributes to more opportunities for criminals to intercept these services and commit fraud. In 2021, some of the most commonly reported methods for committing fraud included:

Spoofing: This entails the changing of an IP address to give a false impression of a person’s location and/or identity 

Phishing: Similar to email phishing, this results in the theft of personal information via SMS hacking 

Subscription fraud: Carried out when fake accounts are created to access subscriptions without payment

Account takeovers: Which involved the takeover of a legitimate account and the use of that account to access user’s details and services.

Using these methods, criminal activities were committed. 

Traditionally, attempts at preventing fraud have concentrated on reminding users to keep important details regarding identification private and to avoid taking unknown calls and clicking on strange links. In addition, several governments have attempted to mitigate fraud by signing bills into law and creating cybersecurity organizations to deter criminals. Unfortunately, with increasing digitization of the world, online traffic becomes difficult to control using a few traditional methods and this has prompted the need to integrate AI and ML into fraud prevention. These technologies focus on growing with the times to match sophisticated and elaborate designs of schemes and hope to remain one step ahead in the fight against telecommunications fraud.

The role of AI in fighting telecommunications fraud 

Despite massive and costly attempts at controlling fraud in telecommunications with a market value of $20.98 bn in 2020, attacks continue to prevail and cost companies much of their revenue. To combat this, the multiple advanced capabilities of AI are being integrated into fraud prevention and control in telecommunications. It is expected that the AI in telecommunications market will reach $15bn by 2027, leaving plenty of area available for spending on anti-fraud systems. Various applications for preventing and detecting fraud in telecommunications using AI include:

Anomaly detection: Using ML techniques systems can quickly detect anomalies. Based on previous analysis of customer behavior, unusual activity on an account can be flagged and double checked to ensure that the account has not been hacked or compromised in any way. Beyond this, instructions can be laid down that automatically trigger a set of actions to halt any fraudulent activity and alert technical staff. This can easily be built into existing hardware systems and prevent costly, inconvenient changes to the architecture of the network. 

Predictive models: AI systems are capable of predicting the points at which customers are more susceptible to fraud such as subscription confirmations, bulk message alerts, online payments and others. Security checks can be strengthened in these vulnerable areas to prevent theft of identity, misdirection to fraudulent sites, etc.

Accurate analysis: In line with preventing unwanted delays and decreasing the likelihood of false positives, AI systems have an added advantage over conventional systems of more accurately differentiating fraudulent from legitimate activity. Properly scanning attempts to confirm account activity against existing records can be done quickly and easily with less errors.

Real time monitoring: Currently, most telecommunications scams are only discovered when customers and businesses are due to pay their bills or renew subscriptions. By this time, a significant amount of damage has already been done with subsequent loss of revenue to telecommunication costs. Using AI, fraudulent activity can be flagged in real time and quickly reversed successfully.

Ultimately, much of the success of the telecommunications industry will depend on how safe it is to carry out activities online with reduced threat of identity loss, theft and other schemes. To gain the trust and confidence of customers in their services, telecommunications companies must put maximum effort into integrating advanced technologies into their fraud detection systems to ensure safety.


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