South Africa's 10 million contract subscribers are being targeted by international syndicates that steal handsets or SIM cards, and then run up massive bills by dialling premium-rated numbers.
The scam, known as International Revenue Share Fraud (IRSF), has recently surged and contract subscribers are being hit with bills as high as R120 000.
Incidents of this type of fraud are reportedly growing steadily across the globe. South African mobile operators are not immune to the scourge, and are implementing early warning systems to block SIM cards when unusually high numbers of calls are made.
According to a recent report, the scam cost global telecoms companies as much as $42.6 billion - or R303 billion - last year. Although there are no figures to indicate how bad the problem is in SA, it is believed to run into millions, and is escalating.
The fraud is perpetrated by organised syndicates that use illegally obtained SIMs to make a large number of calls to high-cost revenue-share service numbers. The income generated from this scam is shared between the perpetrator and the third-party service provider, with mobile operators only making a small percentage.
IRSF hit SA early last year, just before the Soccer World Cup, but incidents have been increasing and at least 20 customers fall victim every month. Sometimes operators have to write off the amounts run up by fraudsters, as subscribers cannot afford to fork out hundreds of thousands of rands on phone bills.
Numbers game
Vodacom says it has seen the number of contract subscribers affected double recently, from 10 customers a month to 20. In response, the network has implemented security measures that will detect abnormal calling patterns and lock SIM cards if there is an unusually high volume of calls and charges.
If a SIM is locked because of suspicious activity, Vodacom will inform subscribers via their alternative contact number. Chief corporate affairs officer Portia Maurice says: “Fraudsters are always looking for new ways of committing fraud.”
Vodacom warns customers to immediately report stolen SIM cards so that they can be blacklisted and blocked. The company explains it has to pay the international networks for any premium calls generated from local cellphones, and cannot guarantee that the customer will have no liability if they do not report stolen or lost handsets.
The operator did not disclose how much money is being lost each month through the fraud.
MTN, SA's second-largest operator, has also implemented an “early warning” system that alerts its fraud department of abnormally high use. The operator says it suspends lines as soon as fraud is confirmed, a process that usually happens within hours.
Customers who have fallen victim to these sorts of scams have been swindled out of exorbitant amounts of airtime - from R75 a minute to 34c an SMS if it is a local carrier, says MTN.
“This growing scam occurs when an unsuspecting customer receives an SMS requesting them to call an unknown number. Upon calling the number, the customer is diverted to an interactive voice response, where they are kept on hold with music playing in the background, while their airtime is being used without their knowledge,” explains MTN SA business risk management GM Lily Zondo.
Zondo says the “scam is growing and many people are being caught unaware”. She adds that customers should immediately delete mysterious and unknown call back messages.
Customers are also falling victim to fraudsters that steal phone or SIM cards and use them to call premium-rated services, says Zondo. This allows the third-party service provider to increase its revenue, she adds.
Jonathan Newman, chief marketing and strategy officer for Virgin Mobile, says the company has always set a limit on cellphone bills, which is based on credit ratings or is self-imposed by customers. As a result, the worst-case situation if a subscriber was the victim of fraud would be that the limit kicks in and the SIM is locked, he explains.
Soft targets
Steven Ambrose, MD of Strategy Worx, says “this is highly organised crime. This is not casual stuff.”
Ambrose expects the issue to become bigger as criminals target less mature markets where consumers are not as aware and crime enforcement officials are not as “on the ball” as they are in developed economies.
Africa is one of the fastest growing mobile markets in the world, but the rate of expansion outpaces the speed at which the market matures, he comments.
Ambrose says this type of fraud is likely to run into hundreds of millions of rands. “Global syndicates will not get involved for Mickey Mouse money.”
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