Direct carrier billing - Frauds & scams

Is fraud a problem?  

According to the UK National Crime agency’s Crime Survey of England and Wales, there were 3.4 million incidents of fraud in 2016-17. However, it's estimated that only 20 per cent of fraud incidents are reported so the true figure may be much higher.

In a ukfinance.org.uk report called ‘Fraud the Facts 2019’, it is stated “Fraud poses a major threat to the UK. It’s a crime that the finance industry is committed to tackling, but it’s one that requires the combined efforts of every sector, both public and private, to overcome.”

What does fraud look like in the Direct Carrier Billing (DCB) industry?

DCB is a payment technology that enables users to directly add charges to their mobile phone bill. In 2017, Guillermo Escofet from Ovum estimated that the global mobile carrier billing (including PSMS) market would grow to $24.7bn by 2019. This prediction was an underestimate. The market grew to an astonishing $29.8 billion by the end of 2019. 

Today analysts are forecasting that the market will grow at a CAGR of 8.88%. During the period 2018-2022 and now with Covid-19 fuelling a rising demand (you can read more about Covid-19 and payments in an article we wrote here) these figures are looking to be underestimated too. The market has huge potential and is expanding rapidly. 

Fraud in the DCB industry is split into two parts – The merchant side and the consumer side.

Consumer-orienting fraud is trickier to combat, due to the Carriers being exposed to risk from two different sides. One side is the individual consumers, who may detect loopholes in the payment system, or consume services and then not pay for the experience. The other side is more macro in nature, criminals who attempt to commit large-scale fraud.

Shwetank Tamer from OnMobile Global commented in an article published by the telemedia.co.uk magazine called Fraud: No longer a dirty word. He said “Fraud is happening at an alarmingly fast pace and that back in the day it used to take hackers two or three weeks to create a new hack and for it to spread. Now it is more like two to three days and so we are constantly catching up. Add in that all these new things like Alexa and smart TV are also getting hit and the problem is huge.”

It is also mentioned in the article that recent research by digital security management experts RSA Security finds that the fraud risk from fake mobile apps is on the rise.

What steps is the market taking to address the threat of fraud?

A merchant should seek reputable payment intermediaries, those who actively engage with specialist anti-fraud monitoring and compliance bodies and are associated to leading sector trade bodies to remain focused and proactive in providing a secure payments environment.

As a Tier 1 payment intermediary, Dynamic Mobile Billing is annually assessed by the leading mobile network operators and specifically around the hosting and provision of DCB services, DMB’s billing and support infrastructure is also independently tested annually to achieve Crest accredited status.

Dynamic Mobile Billing is a member of the Association of Interactive Media and Micro-Payments, whilst I serve as a long-standing board member at the trade association. We also work with sector-specific bodies like the British Parking Association and The Lotteries Council when working within established and growth sectors. 

A good example of fraud prevention solution providers (with a mobile-centric focus) can be found by leading security and fraud management houses such as Empello and MPC insight.  

These compliance houses already contract with leading UK MNO’s to provide in-house, expert consultancy and support in a rapidly growing area of revenue for the operators.

MPC shield provides real-time fraud detection and blocking tool with an analytics portal. This detects unexpected changes and actions on service landing or payment pages to determine whether a payment request is legitimate or fraudulent, assessing whether the transaction was attempted by a bot or a human.

Empello’s FraudStop solution can be deployed on merchant payment pages to then make real-time, algorithm and artificial-intelligence-based assessments to validate or reject fraudulent payment requests.

To conclude, in an industry where financial transactions are conducted, there is a chance of fraud. The DCB industry is no different from this rule.  

Nonetheless, DCB is as safe as any other mainstream payment method available today and this is due to the Fraud prevention methods being implemented. These methods are evolving constantly and Dynamic Mobile Billing, with the help of security providers like MCP Insight and Empello, is working in collaboration with the wider value chain on keeping mobile payments secure and relevant within the mobile payments landscape.