Last month our team attended the Telecoms Fraud and Revenue Assurance Summit in London. It was a great opportunity to discuss with industry experts the challenges and trends in preventing and reducing fraud and improving customer experience while keeping customer trust.
One of the hot topics this year was subscription fraud. As defined by the GSMA, subscription fraud occurs when a subscriber takes out service and has no intention of ever paying the bill. This is different to bad debt which occurs when a customer is not able to settle a bill but had the intention to do so when signing up for the service. When the identity of a genuine person is used without their consent in an application for an account, this is an identity fraud, also known as bogus identity. Identity theft is widespread, with the CFCA’s Global Fraud Loss Survey 2017 reporting 5 billion USD lost in subscription fraud for the Telecom industry. It could take place in retail stores or via digital channels.
Historically, service providers or other entities have been forced to make tough trade offs when implementing multiple controls to verify identities to reach higher level of assurance, which increases the level of fraud detection and end user friction. However, these controls can take weeks, which means that service providers won’t be able to provide the expected one click customer experience. Some other service providers opt for higher levels of conversion by reducing friction during enrolment which translates in lower level of assurance and increase subscription fraud, as a consequence.
How can service providers strike a balance?
The trend towards using different solutions to reduce subscription fraud is here to stay. Mobile technologies combined with new tools, give us the possibility to onboard customers and verify their identity within minutes leveraging identity verification, biometrics and the device itself.
The objective is to ensure customer trust while increasing value for business and customers. Below are some examples of tools used by carriers to reduce subscription fraud.
- Prevention: techniques for preventing identity theft include predictive fraud scoring, social network analysis, training and identity verification tools such as identity document verification, device finger print technologies, facial recognition, voice biometrics and identity verification by tapping on third party data
- Detection: first missed payment, fast track collections, social network analysis
- Reactions: specialist debt collectors, identification of missed cases and other methods to increase prevention.
The list is not exhaustive but gives us a glimpse of the transformation. Today technology is there to help. It’s about using the right tools, assessing the risk of the transaction, and focusing on the customer experience. Mobile operators are increasing the pallet of services for their customers who are using several and new sophisticated devices and spending more and more time on digital interactions (according to a recent study U.S. Consumers spend more than 5 hours a day on their Mobile Devices).
Subscription fraud is costing a lot to the telecom industry and without collaboration the problem will continue to grow. In order to mitigate its impact, the industry needs to explore new technology and tools.