The Ins and Outs of Call Center Fraud
VoIP users have access to the caller ID field, and it can be set to whatever they want. This is a key advantage to those perpetrating fraud since they don't need many technical skills to make this work. Fraud perpetrators have developed software to reset PINs and access accounts and IVR systems. This is called call center fraud.
Call center fraud has increased 113% from 2015 to 2016, according to the "Pindrop 2017 Call Centre Fraud Report." This report prompted me to contact Pindrop's David Dewey, Director of Research, who replied to a series of questions.
What is call center fraud?
Call centers are a lucrative channel for fraudulent activity. Over 100 billion phone calls happen every month. Fraudsters realize this and have been attacking telephone systems through social engineering to infiltrate customer accounts. There are three main types of call center fraud:
- Account Takeover -- The fraudsters impersonate legitimate customers through socially engineering call center representatives into changing contact information or PIN numbers to accounts.
- Card Not Present Fraud -- Criminals place orders over the phone using stolen credit card information. Often the order is processed and shipped before the fraud is discovered.
- Data Breach -- Criminals use the phone channel for reconnaissance. Attackers have found the phone channel to be the vulnerable underbelly for corporations and consumers.
Has the fraud problem changed over time?
Online and credit card hacks were the most common ways that fraudsters attacked companies. However, as technology has progressed, the online channel has become more secure as credit card companies have turned to chip based EMV (Europay, MasterCard, and Visa) credit cards. In 2015, one in every 2,000 calls was fraudulent. In 2016, that number jumped to 1 in 937, an increase of 113%.
What is the financial impact and how is it measured?
Every year fraudsters steal $10 billion dollars by attacking call centers. This is the fastest growing form of electronic crime. Another $11.3 billion is spent asking customers security questions that are meant to protect them from identity theft.
Discuss mobile vs. VoIP vs. landline use in fraud
VoIP software has remained the most common tool for fraudsters, comprising 45% of fraud calls. In 2014, only 21% of fraud calls were made over mobile. Today, it's 43%. This rise is likely due to the emergence of untraceable cheap burner phones. The Pindrop report suggests that mobile phones are the number one method of attack for fraudsters, with VoIP a distant second.
Fraud calls from landlines have been decreasing steadily, accounting for just 12% of all fraudulent calls in 2016.
Discuss the weaknesses of the call center
On a technical level, fraudsters have the ability to spoof caller ID and use applications such as Skype or Google Voice to hide their identity and location. Caller ID and location data are now no better or reliable than an IP address for authentication. Fraudsters also abuse IVR (Interactive Voice Recognition) systems to reset victims' PINs or find more information about a target.
Organizationally, call centers are designed to efficiently handle huge call volumes and agents are measured on how quickly they resolve each call. Fraudsters use data they've gathered about a target account to pass knowledge-based authentication and socially engineer the agent into giving them account access.
Most prevalently, the real target of call center fraud attacks is the employee on the other end of the line. Taking hundreds or thousands of legitimate calls for every "bad" call, customer service representatives focus on resolving customer issues efficiently and not on filtering out fraudulent calls.
Are there outside influencing factors?
The push into the call center by fraudsters has coincided with several larger trends. Financial institutions, insurance companies, and other frequent fraud targets have invested heavily in securing their online channels, making online fraud much more difficult and risky for criminals. EMV credit cards have produced a huge drop in card-not-present fraud. With fewer defenses and a lower barrier to entry for phone fraud compared to online or in-person attacks, call centers are vulnerable and attackers are succeeding.
Gartner released a report in March 2017, "Don't Let the Contact Center Be Your 'Achilles Heel' of Fraud Prevention," which highlights how contact centers can often be the weak link in omnichannel organizations. Gartner estimates that by 2020, 75% of omnichannel customer-facing organizations will sustain a targeted, cross-channel fraud attack, with the contact center being the entry point.
Fraudsters think long–term and spend a considerable amount of time researching their targets. They gather intelligence from online and offline sources (such as social media profiles), and purchase information stolen during data breaches. They will compile a dossier from many sources and then use that information in multiple interactions with a call center in an account takeover operation.