Want to cheat your mobile firm?

Y Rajeshekhar (not his real name) thought that he could rip off his mobile service provider by running up huge bills and not paying them.

He had listed a false address when he applied for a post-paid connection. Rajeshekhar then called friends in the US and Europe, talked to them for hours and even handed his mobile phone to others to talk and charged them for the privilege.

But when the huge bill arrived at what was supposed to be his residence, Rajeshekhar had decamped. He didn't even live there, as his mobile service company later discovered.

This four-year-old story may be apocryphal, but such tales abounded in India's then fledgling mobile service industry "� syndicates would be formed, they'd take post-paid cellphone connections, offer their mobile phones to others to use and charge them for the calls, run up bills of Rs 3-5 lakh in two or three days, throw away their SIM cards and vanish.

"Many of them were resellers," recalls a Hutchison Max Telecom executive.

Things have changed a bit since then "� mobile service companies have installed fraud detection systems and internal checks. Even so, fraud is fairly rampant in the cellular services industry.

According to Subash Menon, CEO of the Bangalore-based Subex Systems, India's dominant anti-fraud software company, India's cellular services industry lost an estimated Rs 200 crore two years ago because of frauds.

Mobile service companies think that the current figure is in the region of Rs 150 crore, including both global system for mobile (GSM) and code division multiple access (CDMA) service companies.

Says a BPL Mobile spokesperson: "With falling tariffs and the cost of making an STD and ISD call substantially cheaper, the incentive for frauds has reduced drastically."

But most cellular service companies don't acknowledge that they've been taken for a ride "� it makes them look foolish. The problem hasn't entirely disappeared.

To be sure, fraud has been common in the fixed line telecom services industry.

For years, when India's STD and ISD rates were among the highest in the world, the unscrupulous (telecom company employees or the public in connivance with them) used to tap into the telephone lines of those who had STD or ISD facilities.

The subscriber came to know that he'd been a victim of a clip-on fraud, as this is called, when he got the bill at the end of the month.

Such frauds can't be committed on the digital networks of cellular service companies. They are susceptible to two other broad categories of fraud, though "� those which are specific to the type of equipment used (network fraud) and those which are service based (service fraud).

Cloning falls in the first category. All cellphones register with the network by transmitting their MIN (Mobile Identification Number) and ESN (Electronic Security Number).

A radio scanner can be used to capture these identification numbers. This is typically done in places where a lot of cellphones are switched on (at airports, for example).

The captured MIN and ESN are put on a new chip, which is then used in other cellphones. Any calls made on the newly programmed phones are billed to the original phone's owner. "No one has yet reported cloning," says a Hutchison Max Telecom executive.

In the second category are subscription frauds, of the kind committed by Rajeshekhar. Post-paid card subscribers run up hefty bills and suddenly vanish.

Efforts to trace them meet a dead end since their addresses are bogus and identities not genuine. While service providers do insist on details like identification and residence proof, forging these documents is not difficult.

Says a Hutchison Max Telecom spokesperson: " There have been instances of documents having been forged. Either the same photograph of a subscriber is submitted or the same proof of residence is given."

How do cellular service companies combat fraud?

First, when a would-be subscriber applies for a connection, the mobile services company verifies the applicant's credit worthiness.

Secondly, it sends out a "physical verification" team, which visits the applicant's residential locality, captures "the demography" as one senior cellular services company executive puts it, and submits a report in two or three days.

Thirdly, nearly all cellular services companies have installed fraud management software (the latest to have announced that it is doing so is Tata Teleservices), spending nearly four per cent of their revenue on this.

Thanks to the software, the mobile service company is alerted if a new subscriber makes an ISD call for more than 20-25 minutes, or if deviations from normal calling patterns are noticed.

Says a Bharti Enterprise executive: "There is a system in place to detect subscription and usage based fraud. Users of the fraud management system are able to detect duping on demographic details, unauthorised usage of network services, calling pattern abnormalities and so on."

So if abnormal calling patterns are detected, the company can deactivate a SIM card, though most cellular service companies confess that it's difficult to deny any subscriber a subscription as at the end of the day as it is very subjective."

For all this, however, fraudsters will continue to try their hand at ripping off mobile service companies "� something that Subex's Menon and his rivals are no doubt banking on.

Fraud comes in different shapes

• Cloning. The MIN and ESN are captured by a radio scanner, put on a chip which then is inserted in another mobile phone.
• Subscription frauds. A subscriber who's submitted a false address and forged documents runs up huge bills and decamps
• Forged receipts frauds. A subscriber pays his bill in, say, September, gets a receipt, erases September on it and inserts, say November, and then faxes the receipt to the mobile services company