As we near
the holiday season, its the time of year that online and retail establishments
love. I personally dont like the idea of surviving on 4 hours of sleep to wait
in line with a crowd at 4 AM, but apparently many people enjoy it or at least
tolerate it for the sake of a good deal.
Black Friday is by far the busiest shopping day of the year, but with the
hustle and bustle comes a rise in fraud.
It seems that one industry often overlooked in regards to fraudulent
activity is telecommunications.
Im very
familiar with the wireless industry as I worked in and around telecom for
several years. With the
development of smart phones and the increasing dollar value of the devices,
fraud has become very common. Many
consumers, especially in the U.S., dont realize the high cost of their cell
phone because they are accustomed to paying a subsidized price with a
contract. Although the $199 you
pay for your iPhone or latest Droid may seem steep, it becomes very minimal
when you learn that the company that sold it to you has around triple that
amount into the device. This puts a lot of risk onto the store.
So if the
wireless dealer is only charging you $199, how do they make money? The dealer gets reimbursed when the
first bill is paid. Beyond that
reimbursement they also receive additional commission as you continue to pay
your cell phone bill.
The problem
occurs when an individual comes into a store or goes online using someone
elses identity to purchase a phone.
They may steal
someones identity or pay an individual, known as a credit mule, to use
their SSN and personally identifiable information. The wireless agent provides the individual with a discounted
phone, under the assumption theyll receive a full reimbursement once their first
bill is paid. The individual leaves
the store, never pays the first bill, gets the phone unlocked to work on other
carriers and sells the phone for a profit. In this scenario, the dealer is left
to take a $400 loss.
This could
have been avoided had the proper fraud prevention system been in place on the front end. The loss occurs because of a lack of
authentication. Sure you can have
someone ask for a drivers license, but it doesnt always help to mitigate the
fraud. The goal is to know that
youre really doing business with John Doe. Many wireless companies have found that by implementing EVS
identity verification and authentication services they have been able to
drastically reduce and in some cases eliminate this type of wireless
fraud.
[Contributed
by Shea Allen, Account Specialist]
