India, China mobile networks face fraud threats

India, China mobile networks face fraud threats
REUTERS

JULY 6: Mobile phone service operators in China and India face large scale fraud problems because of their surging user base, an industry expert said.

"The vulnerability as far as Chinese networks and Indian networks are concerned is due to the fact that they are new operations," David McSweeney, chairman of the Asia-Pacific Fraud Forum for GSM mobile networks, told Reuters on Wednesday.

Common methods of fraud include impersonation of subscribers, creation of false identities to avoid payments, misuse of prepaid roaming facilities on other networks and collusion between dealers and fraudulent customers.

Besides being the world's most populous nations, China and India also have fast growing economies. China is already seeing dizzy growth, while India's mobile phone industry is heading for a round of consolidation which could hot up business.

"China alone is signing up a million customers a month and takes the problem very seriously. India faces just as big a threat," said McSweeney, who was in Bangalore for a conference on fraud in mobile phone services.

China is estimated to have nearly 50 million mobile phone users and is expected to have 70 million by the end of the year. India is well behind and has only about two million mobile phones and is adding about 100,000 new users monthly.

McSweeney, who is also the fraud manager at Vodafone AirTouch Plc's New Zealand operations, said that the global mobile phone industry estimates put annual losses from fraud at $11 billion, largely in the United States, Europe and South Africa.

SUBSCRIBERS BIGGEST FIENDS: He said subscriber fraud topped the list of malpractises in the Asia-Pacific region as elsewhere in the world. Mobile phone companies are reluctant to disclose the actual extent of losses, but a survey by the consultancy firm PricewaterhouseCoopers in the Asia-Pacific region found that 60 pct of mobile companies surveyed reported one to five percent revenue loss due to fraud.

"The major fraud associated with the subscriber is changing identities and obtaining airtime and hardware and using it without any intention of paying the bill to the operator," McSweeney said.

Fraud prevention measures include foolproof identity verification measures, tracking of network usage to stop service rule violations, monitoring of dealer systems and steps to prevent computer hacking.

Mobile Internet could add to the problems in future. "Already there are instances about people connecting to the (mobile) network via the Internet and not showing any identification,...and that type of scenario is very, very fraught for fraudulent attack," McSweeney said.

McSweeney said law enforcement agencies needed solid training to prevent and stop mobile phone frauds. Hong Kong, Singapore, Malaysia and Australia had put in place excellent systems to prevent fraud while newer operators in other countries are hoping to learn from their experience, he said.