1. PBX hacking

A private branch exchange (PBX) is useful for consolidating multiple phone lines for internal and external calls. It saves you money and streamlines call routing. At the same time, a PBX presents scammers with an opportunity to infiltrate your network. However, hacking on-premises solutions requires someone to physically access your telecoms equipment, making it harder — but not impossible.

This means IP-based and virtual PBX solutions are even easier targets for hackers. They can brute force or acquire credentials through other means to gain access to the system. Once inside, they can use the service to dial premium numbers or divert calls to overpriced local carriers.

2. SMS phishing

SMS phishing, also known as smishing, involves sending deceptive text messages to trick recipients into giving out personal information. Scammers can use these details for a variety of purposes, including withdrawing money, changing account details to their own, or accessing telecom networks.

Sophisticated smishers use modern software to help them avoid fraud detection in telecom businesses. For example, they can avoid flagging a detection system by only targeting mobile phone numbers when sending scam texts.

SMS phishing is one of many social engineering tactics and is often used alongside similar attacks on other channels, such as email and social media platforms. Tools like Vonage Number Insight API detect fraud, block unverified numbers, and help prevent phishing activities. 

3. Wangiri fraud

The word Wangiri is Japanese for “one ring and cut.” Wangiri fraud involves someone receiving a call that hangs up before they can answer (usually after one ring). The recipient quickly calls back the number to find out who was calling. Unbeknownst to the caller, they are dialing a premium rate number.

If someone from your organization returns a missed call without caution, you’ll be stuck with the inflated connection fees. Monitoring call origins helps you avoid falling victim to Wangiri fraud.

4. IRSF scams

IRSF stands for International Revenue Share Fraud. With IRSF, fraudsters exploit billing agreements between carriers to artificially inflate service bills. Malicious actors use various techniques to intercept and redirect outbound calls to premium numbers or local carriers with extortionate rates. The partner numbers are paid for providing unnecessary service while scammers take a slice of the inflated pie.

Here’s a typical example of an IRSF scam:

1. A scammer or proxy signs up for a premium phone number.

2. They intercept a call and direct the consumer or business phone system to dial and connect with the leased premium number.

3. The dialer is hit with the premium rates and the scammer takes their cut.

IRSF often results in billing shock when charges are far above and beyond the expected. Keeping an eye on your telecom bills and flagging suspicious fees is a simple way to nip IRSF scams in the bud.

5. SIM swapping

Despite the name, SIM swapping, also called SIM jacking, isn’t changing the physical card in a mobile device. Instead, fraudsters use a customer’s personal identifying information to access a telecom account.

With this information, scammers convince customer service to switch the phone number to a SIM card they control. These cybercriminals can now access text messages, emails, bank accounts, and other sensitive information. SIM jacking provides scammers with one-time passwords (OTP) and multifactor verification (MFA) codes.

How can you prevent SIM swapping for your team? Train your employees never to give out personal or password details. You can also set up internal 2FA with Vonage Verify API or a similar communications solution to ensure swaps are legitimate. 

6. SIM box fraud

SIM box fraud, or interconnect bypass fraud, are when termination rates are used to make international calls appear as local calls. When the call finishes, the termination rate becomes the final cost rate. Using a SIM box, fraudsters reroute long-distance calls to appear as local calls. These calls have cheaper rates, stealing revenue from carriers and telco companies.

SIM box scammers aren’t the Robin Hood of telecommunications, however. The customer still pays the full price, while the fraudster pockets the savings from illegally rerouting the call. Plus, due to the technology involved in SIM box fraud, the call quality will be low — leaving your customers frustrated with poor service and likely to take their business elsewhere.

7. Traffic pumping

With traffic pumping, a local carrier inflates the number of calls that connect from a primary operator. It is also known as access stimulation. By manipulating call numbers, the carrier is compensated according to regulatory agreements such as those enforced by the Federal Communications Commission (FCC).

Access stimulation artificially inflates your operational costs. Overloading networks can also cause network congestion and drops in call quality. Individual customers may see overcharges from calls of undetermined origin.

8. Deposit fraud

Deposit fraud starts with tactics like social engineering and phishing scams. Cybercriminals use stolen information to transfer money to a new bank account or acquire personal information to trick the victim into transferring the money into an unknown bank account themselves. Before the victim realizes what they’ve done, the money has already been withdrawn.

However, cybercriminals might also use this money to purchase things like prepaid SIMs, mobile devices, and carrier contracts. This results in customer chargebacks for false purchases, which can result in lost revenue for providers and extra headaches for your payment processing department.

9. Subscription fraud

Subscription fraud occurs when someone uses fake or stolen IDs and bank card information to sign up for carrier contracts. They can bypass Know Your Customer (KYC) verification by using someone else’s personal identifying information.

One main target of this type of fraud is mobile phone contracts that include a device. Of course, there is no intent to pay for the phone. Instead, fraudsters unlock the device and flip it.

There are two common types of subscription fraud:

• Application fraud is the use of fraudulent or stolen identification to sign up for telecom services. Accounts that are flagged for fraud after the fact result in lost revenue for the business, while victims of impersonation will likely have issues with their credit ratings and/or financial losses to recoup from the bank.

• Credit mule scams involve more informed individuals, where scammers enlist people to successfully pass KYC verification. Credit mules are compensated for their efforts, though they may not knowingly be deceiving the mobile providers.

10. Account takeover

Account takeover (ATO) fraud is a form of identity theft where a hacker gains access to a user account. Unfortunately, online convenience provides cybercriminals with plenty of opportunities to gain entry into user accounts.

Like much of telecom fraud, ATO is driven by social engineering efforts. Fraudsters may pose as representatives from your company to gain user account credentials. They can phish with sophisticated means, such as intercepting web traffic with fake sites made to look legitimate.

Once inside the account, the hacker has access to all account information, including credit card or bank account details. 

11. Call forwarding fraud

Call forwarding is a useful feature of personal and business phone services. Unfortunately, like every bit of evolving telecom technology, its purpose has been flipped on its head by scammers. Malicious actors fool users into enabling call forwarding to phone numbers they control. In this way, the user has directed calls or texts to the fraudster, where they can steal sensitive information.

Call forwarding fraud is often a small part of a bigger picture. One common use is having verification calls forwarded to a fraudster who can then access bank accounts or make large online transactions.

12. Mobile malware hacking

Statista reports that the first quarter of 2024 saw users download about 34 billion apps in total from Google Play and the Apple App Store. While many of the apps will be legitimate, some will also act as a cover for malware. For example, BioCatch reports that malware fraud increased by 113% in 2024 in Latin America.

Mobile malware fraud occurs when users unknowingly download malicious software. Once installed, the software operates in the background. Malware sends personal details and login credentials for other apps such as banking software to hackers. It may also cause performance issues on the affected device.

What is telecommunications fraud detection and prevention?

Telecommunications fraud detection and prevention is a framework to reduce malicious activities. Detection tactics rely on monitoring call logs, traffic, and customer bills. Telecom fraud prevention tactics block cybercriminals from abusing your network and customer information.

How can telecom fraud be detected and prevented by the customer?

Detection and prevention require coordinated efforts between your team and your customers. Modern cybersecurity solutions can monitor traffic, block threats, and send fraud alerts. While much of this is automated, users must also understand what telecom fraud is and be trained to identify and prevent it.

Let’s examine some of the common ways users can help in the fight against fraud.

Monitor and understand bills

The first sign of compromised telecommunications often manifests in the customer’s monthly bill. Encourage customers to regularly examine their charges and flag anything unusual. Checking bills regularly also ensures customers are up to date with their account balance. They won't fall victim to impersonators posing as company reps seeking additional payment.

Be alert when dealing with unknown numbers

While it can’t always be helped, customers or employees should avoid answering unfamiliar phone calls. The same goes for unsolicited text messages from unrecognized phone numbers. Users can let unfamiliar calls go to voicemail as a quick filter. Scammers will be unlikely to leave a message and move on to the next potential victim, while legitimate callers will leave details for a callback.

As a general rule, organizations will never ask for personal identification and bank details over the phone. Make sure customers are aware you will never text or call out of the blue to ask for this information. You can also encourage them to call the details listed on your website directly if they’re unsure about a call they receive from you — it’s better to be over-cautious than get caught in a scam.

Protect personal information

Customers should protect their personal information at all times. This includes over live chat, emails, and phone calls. If someone calls them out of the blue with partial details, customers must question the source of that information — and not provide any more.

They should also protect their online account information by following password management best practices, such as:

• Creating strong, unique passwords using a mix of uppercase letters, lowercase letters, numbers, and special characters

• Avoiding common passwords, such as birthdays, pet names, sports teams, and company names

• Using passwords once, rather than using the same password for multiple accounts

• Turning on multi-factor authentication

• Using password managers to generate and store login credentials

Use the Do Not Call Registry

It can be difficult to identify which telemarketers are legit or truly malicious. Your customers can save sweat and tears by signing up for the Do Not Call Registry. Once registered, there’s a high likelihood that calls from unknown phone numbers are scammers. In other words, once registered, your customers can safely ignore calls and texts from people they don’t know or when caller ID shows “unknown number.”

Four top telecom fraud trends to look out for in 2025

Cybercriminals are constantly changing their techniques to scam you and your customers out of money. As technology progresses, it will always be possible for digital pirates to plunder those resources. The best way to combat the risks is to stay up-to-date with the newest scammer tactics. 

Here are some of the top telecom fraud trends to look for in 2025.

1. Subscription fraud: As more organizations go digital, subscription fraud will likely increase. Credit bureau Experian reports that identify theft and fraudulent new account openings made up 31% of all fraud in 2023.

2. Social engineering: As users continue to flock to social media platforms, hackers will continue to pose as legitimate businesses while attempting to gain sensitive information. DataReportal found 5.04 billion social media users' identities in 2024, equaling over 62% of the total global population. That’s plenty of targets for criminals to choose from.

3. AI-driven fraud: Unfortunately, advances in machine learning and artificial intelligence will improve scammer tactics. GenAI can create scripts to sound professional and impersonate customer service reps. Deepfake AI can help scammers pass sophisticated KYC verifications such as facial recognition. And, with the field developing so quickly, there are likely more AI risks to come.

4. Virtual SIM Cards: Also known as eSIMs, many mobile users are now turning to virtual cards to access regional phone networks. Statista reports there were more than 600 million eSIM smartphone connections in 2024. Like with mobile apps, virtual SIMs provide hackers with an opportunity to gain access and control of customers’ phones.

Why is telecom fraud a growing problem?

Telecom fraud is a growing problem because the more connected the world is, the more potential access cybercriminals have to sensitive information. People aren’t just moving online to shop or communicate. We’re also shifting our work online, with the U.S. Bureau of Labor Statistics reporting that nearly one in five workers is working remotely.

Black-hat individuals are co-opting new tech to find new vulnerabilities to exploit. While going virtual has many benefits, such as greater flexibility and increased productivity, it also requires greater security measures to protect personal information.

What are the consequences of inadequate fraud management in telecom industries?

Fraud management is necessary in an era where attacks and deception are constantly changing. Cybersecurity threats aren’t going away, and those who fail to keep up with fraud trends and techniques are likely to find more and more leaks in their organizational flagship.

Let’s examine some of the consequences of poor telecom fraud management.

Loss of revenue

At the end of the day, it’s all about having a healthy bottom line. Losing a significant percentage of potential revenue to scams means your business has less to invest. You'll have less funds for product innovation and development; less money for marketing campaigns and expansion into new markets; and insufficient capital to recruit and retain the best people.

Loss of consumer trust

Failing to prevent fraud hurts your reputation with existing and potential customers. Victims are likely to switch to a different provider. Sure, they might have got their money back, but how do they know it won’t happen again? Some customers may leave because their bills are too expensive, or because they’re experiencing poor service thanks to undiscovered fraud.

Social proof and word of mouth will also damage your company's reputation, hurting your ability to acquire new customers. 

Damaged employer brand

Customers don’t want to spend money with an organization that can’t prevent fraud. Likewise, telco professionals don’t want to work for a company that fails to secure its operations. Once word gets out about fraud prevention oversights, top talent will avoid your company like the plague.

Legal consequences

Failing to detect fraud in a timely manner may even result in legal action. Class action lawsuits and negligence claims will only increase your losses. Settlements and legal fees take more money out of the business, while negative press surrounding lawsuits further damages your brand image.

How can telecom fraud solutions help?

A telecom fraud protection solution streamlines the detection and prevention of fraudulent activity. Some tools might specialize in one or two key areas while others provide a comprehensive fraud management system in telecom situations.

Here are some ways a telecommunications fraud tool can help your business.

1. Detect and prevent fraud in real time. The best fraud prevention tools monitor network traffic, call logs, and user behavior in real time, allowing you to immediately identify and respond to fraudulent activities. Instant notifications mean your manager will be alerted to anomalies as soon as possible and be able to take action to prevent losses to the customer and the business.

2. Save money. By preventing activities such as subscription fraud and premium-rate service fraud, you can reduce revenue losses from unpaid bills and chargebacks. With an optimized fraud detection program, you should be able to budget better and increase spending in other areas, such as marketing or innovation.

3. Improve customer trust. Unsurprisingly, preventing data breaches and identity theft builds consumer trust. By stopping fraudulent charges before they appear on customer bills, you reduce billing shock and customer frustration. Better protection and accurate billing mean more positive customer experiences and an increased chance they’ll stay with you as well as recommend you to people they know.

4. Enhance compliance. Having strong fraud prevention strategies in place can streamline compliance with data protection laws, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), as well as other requirements. This helps avoid legal penalties, sanctions, and reputational damage.

5. Gain insights. Algorithms for fraud detection in telecoms can analyze patterns and trends over time. Predictive analytics help you better prepare for future fraud activity. By gaining insights into user behavior, you can better distinguish between legitimate and fraudulent activities, meaning the longer you have the tools in place, the better they become.

Shield your business against telecom fraud in 2025

Vonage Protection Suite shields your business from fraud attacks so you can retain revenue and maintain continuity. We provide a comprehensive set of tools for easy end-to-end protection of all communications, with fraud prevention controls that can be applied across all our telecommunication offerings.

Fraud Defender stops malicious activity in its tracks with real-time monitoring that alerts you to suspicious activity. You can combine this with Vonage Number Insight API, which uses fraud detection algorithms to identify and evaluate global phone numbers for validity. In addition, there’s Verify API, which allows you to add two-factor authentication and lower the risk of account takeovers.

What about compliance? Our platform meets industry standards, such as SOC 2 Type II compliance, for improved data security and anomaly detection. Vonage Management APIs also streamline audits and billing to enhance business compliance with regulatory requirements.

Vonage also supports customer and user education, providing live customer training that ensures your team knows how to use our products safely and effectively. Tools like Reports API improve information-sharing and collaboration, making it easier to align your fraud detection and prevention efforts.

In short, Vonage makes it a breeze to enhance your fraud prevention strategy. Find out more about Vonage Protection Suite now.