Toll fraud can put SMEs out of business in minutes

Few SMEs could recover from phone bills 10 times bigger than usual

March 14, 2013

Few SMEs could recover from phone bills 10 times bigger than usual

Just when you thought “toll fraud” referred to a government shakedown on motorists already paying obscene amounts in fuel, parking, vehicle and related taxes, along comes another type of toll fraud that poses a significant threat to small business owners using self-installed VoIP switchboards.

Toll fraud targeting telephone systems has, in fact, been around ever since people started devising ways not to pay for phone calls. The difference with toll fraud targeting VoIP switchboards that SMEs have most probably installed themselves, is that this type of telephone fraud is not about making a free long distance call to mom and pop.

“Local and international fraudsters cracking an SME’s poorly-installed VoIP switchboard can put a small business out of business in minutes,” says Greg Massel, Managing Director of VoIP solutions provider, Switch Telecom. Switch Telecom’s flagship VoIP product is a PBX switchboard hosted in the Cloud and which contains built-in fraud safeguards such as pre-specified credit limits, regularly-updated security patches and suspicious activity alarm notifications.

Mr Massel explains that the toll fraud threat to the liquidity of SMEs, in particular, comes from the fact that fraudsters can ring up tens of thousands of rands in phone bills in minutes. “The business owner would be liable for those charges and most SMEs would find it very hard to recover from a phone bill that is perhaps ten times bigger than usual,” said Mr Massel.

So how does it all happen? Firstly, because Voice over Internet Protocol (VoIP) technology uses the Internet to make and receive phone calls, and not infrastructure owned by the traditional telephone networks, it is significantly cheaper and therefore attracts cost-conscious enterprises such as small business owners.

“Toll fraud problems arise when SMEs believe they can magnify the savings afforded by VoIP technology by using an under-qualified person to install their office PBXs. Unfortunately, in the long run, using an internal employee not adequately versed in the installation of VoIP switchboards can be extremely costly for a number of reasons,” explained Mr Massel.

These include the fact that proper user names and passwords are seldom maintained, security patches are not regularly updated, and worst of all, SMEs don’t often consider the scenario when the only person in the business who has any understanding of the VoIP PBX leaves the company. What then, says Mr Massel? “The best option is for companies to engage the services of an experienced VoIP provider that can properly set up a fully managed VoIP PBX solution,” he says.

A specialist VoIP provider will set up credit limits on client accounts, properly maintain security patches and generally ensure that any untoward “toll fraud” activity is speedily identified and combatted.

According to Mr Massel, the most common type of VoIP toll fraud that is being perpetrated against unwitting businesses involves international premium numbers. This is because premium numbers operate on a revenue-sharing basis where the telecom’s operator pays a portion of the call revenue to the company that owns the number. Typically, a VoIP subscriber’s PBX system is hacked and the hacker then uses the system to make multiple calls to a premium number registered by accomplices. The hacker then receives a percentage of that revenue back from the operator and the VoIP business subscriber ultimately foots the bill.

VoIP will increasingly become the future of voice and, recognising this, the Internet Service Providers’ Association of SA (ISPA) is taking proactive steps to limit VoIP toll fraud. For example, the Association for the first time last year held an ISPA Voice Fraud Prevention Workshop aimed at discussing strategies to clamp down on this latest attempt by fraudsters to pilfer money from legitimate businesses.

While industry-wide initiatives to combat voice fraud in general and toll fraud in particular, are to be welcomed, the individual enterprise’s best defence remains remembering to use a specialist when it comes to PBX installations.