In the modern world there has been a lot of emphasis on digital security to prevent fraud, but it’s important to remember that online fraud also includes use of the telephone. According to a new report from Pindrop Security, the volume of consumer complaints about phone fraud in the first six months of 2013 has already equaled the volume for all of 2012.
According to the report, there were 2.3 million consumer complaints of phone fraud in the first half of 2013, which is the same figure for all of 2012. Pindrop estimates that for every call that a financial call center takes, there is a 57-cent loss due to some form of fraud. Going a step further, when fraud does occur in a customer account, the average potential loss from phone fraud per financial account was $42,546, according to Pindrop’s estimates.
Matt Anthony, VP of Marketing at Pindrop Security, explained to eWEEK that the reason why the average potential loss is so high is because the current tactic for phone fraudsters is to clean out an account once they take it over.
From a historical perspective, Pindrop was not able to provide a year-over-year comparison on the average loss from phone fraud. Anthony said that older phone fraud history is anecdotal, with smaller, higher volume amounts being undercounted and big single scores overcounted.
“We believe overall fraudster call volume is higher and see no reason average loss would have changed – so it stands to reason it’s up,” Anthony said. “But we’re speculating.”
Phone fraud activities are also highly organized. Pindrop reported that 57 percent of the phone fraud calls came from organized groups.
There are a number of components that make up a phone fraud attack and typically an attack involves five calls and multiple steps. The reason why five calls are needed is because the attackers use some of the calls to first enumerate the account and gain information, which sets up the call that will lead to financial loss. One such enumeration is a call for an account profile change request that can change the legitimate account holder’s phone number or address information.
Another type of phone fraud call is to report a lost or stolen credit card, which in fact is not yet lost or stolen.
Among the key technologies used by phone fraudsters to perpetrate their crimes is voice over IP (VoIP).
“VoIP is easier to spoof, and is cheap to do from anywhere in the world,” Anthony said. “It’s a phone hacker’s dream.”
Pindrop found that one-third of fraudulent calls came from VoIP, while approximately half came from mobile phone numbers. Only 14 percent of phone fraud calls came from landlines.
Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.