May 9, 1996
NYNEX CONTACT: Media Relations, (212) 395-0500
First Anniversary Of Alliance To Outfox Phone Fraud Is Celebrated With Addition Of `Power Trio'
NYNEX, Bellcore and HP Join Worldwide Telephone Fraud Awareness Campaign
PHILADELPHIA, PA -- The telephone industry's effort to enlist
consumers in the battle against the $3.7 billion a year telecommunications fraud
problem gained a major boost with the addition of three leading organizations
representing key areas of fraud detection, awareness and prevention.
The new members joining the Alliance to Outfox Phone Fraud on its first
anniversary are NYNEX, a global communications and media company that provides a
full range of services in the northeastern United States; Hewlett-Packard
Company, a worldwide provider of network test and management systems, and
Bellcore, a provider of telecommunications software, engineering and consulting
services. This trio joins nine other organizations, bringing the alliance
membership to twelve -- doubling since its formation a year ago (see following
for complete list).
"Telephone fraud is a worldwide problem that affects everyone in the
telecommunications industry," said Mary Chacanias, chairperson of the alliance
and director of fraud prevention for Bell Atlantic. "The addition of these
three companies -- each leaders in their respective fields -- indicates the
depth of the fraud problem and the commitment across the entire industry to work
together to stop it."
Telecommunications fraud victimizes millions of consumers and businesses every
year. Losses related to the crime are expected to reach $3.7 billion in 1996 --
an increase of 12 percent over the previous year, according to a survey by
Telecom & Network Security Review (March 1996).
From a consumer perspective, telecommunications fraud takes many forms --
"shoulder surfers" watch or listen as customers enter their calling card numbers
on pay phones; criminals posing as police officers or telephone company
representatives try to bill calls to homes; and cellular bandits use cloning
devices to steal cellular phone serial numbers out of thin air.
"Shoulder surfing' is a major problem in busy metropolitan areas," noted Paul
Glover, NYNEX staff director, toll fraud management. "NYNEX is proactive in
protecting our customers from telecommunications fraud. For example, we've
placed protective shields around the keypads of payphones in major traffic areas
such as New York City's Penn Station to keep these shoulder surfers in check."
To combat subscription fraud, NYNEX has established centers and implemented
systems to monitor the network for fraudulent calling patterns. This enables
NYNEX to identify and disable so called "call-sell" operations just hours after
they are established. In addition, NYNEX was the first local exchange company
in the nation to implement a toll credit limits program for long distance.
Spearheading the public awareness campaign is "Freddie the Phone Fraud Fox."
Through informational brochures, public appearances by Freddie, and public
service announcements (due to begin airing this summer), the alliance will offer
consumers education on how they can help "Outfox Phone Fraud."
Businesses, meanwhile, will realize losses of $1.5 billion in 1996 through
customer premise equipment (CPE) fraud. A common route for criminals is to tap
into a private branch exchange (PBX) through a remote access feature, steal the
code, and then set up a "call-sell" operation. Scam artists also tap into voice
mail systems to "crack a code" and then proceed to transfer toll calls through
the public switched network.
Both Bellcore and HP have developed state-of-the-art technology to help
telecommunications service providers prevent and detect fraud with the help of
Signaling System 7 (SS7) networks. (SS7 is a digital switching network utilized
by many local exchange carriers and regional Bell operating companies.) The SS7
network enables near real-time fraud monitoring, reducing the time it takes to
identify fraud from days and weeks to a matter of seconds.
The Palo Alto, CA-based Hewlett-Packard has developed the HP acceSS7 fraud
management toolkit to help phone companies detect fraudulent calls as they
occur. HP's solution, which is being implemented by telephone service providers
around the world, monitors SS7 links in real-time, looking for fraud scenarios
such as length of call, calls to high-fraud destinations and suspicious use of
"We are providing phone companies with a powerful weapon to combat the growing
problem of phone fraud," said Tom White, general manager for HP's
telecommunications systems division. "Our network-management technology helps
companies reduce costs by catching fraud as it takes place. And given that this
problem victimizes millions of consumers each year, we also recognize the
importance of taking an active role in helping educate telephone customers on
how to prevent fraud."
Bellcore has drawn on its wide and deep knowledge of telecommunications
networks to offer the NetMavin family of SS7 link-monitoring software solutions.
NetMavin applications include fraud reduction, SS7 network surveillance, and
ongoing SS7 network analysis.
"With NetMavin, we estimate that our customers can detect more than 80 percent
of the direct dial fraud in typical networks, and typically address 50 to 70
percent of fraud cases as they happen," said Vinay Chandhok, director-field
marketing for Bellcore.
Systems such as these have helped regional Bell operating companies (RBOC's)
and interexchange carriers (IXC's) reduce CPE (customer premise equipment) fraud
by seven percent in the past year. Additionally, the loss "per incident"
continues to "trend down" -- from $20,000 in 1995 to an expected $17,000 in 1996
(Telecom & Network Security Review, March 1996). However, according to the
industry trade publication, the number of users victimized continues to
Membership in the Alliance to Outfox Phone Fraud is available to any company
or organization that is concerned about -- or affected by -- telecommunications
fraud. For more information on the Alliance to Outfox Phone Fraud, call
MEMBER COMPANY INFORMATION
Bell Atlantic Corporation is at the forefront of the new communications,
entertainment and information industry. The Philadelphia-based company provides
a full array of local telecommunications services throughout the mid-Atlantic
region and is one of the nation's largest cellular carriers. Bell Atlantic is a
partner in national alliances that will offer wireless communications, as well
as video and interactive programming. Bell Atlantic also has substantial
holdings and operations in international markets and provides services for
customer-based information technology. INTERNET USERS: Bell Atlantic news
releases, executive speeches, news media contacts, and other useful information
are available on Bell Atlantic's media relations World Wide Web site
(http://www.ba.com), by gopher (gopher://ba.com) or by ftp (ftp://ba.com/pub).
Pacific Bell is a subsidiary of Pacific Telesis Group (NYSE: PAC), a
diversified telecommunications corporation based in San Francisco, California.
Pacific Bell continues to build California's advanced communications network --
an integrated telecommunications, information and entertainment network that
will be capable of providing advanced voice, data and video services, including
interactive services. The company plans to connect approximately 5 million
homes by the end of the decade and all of California by 2010.
Southwestern Bell Telephone Company, a provider of innovative products and
services, is a wholly owned subsidiary of SBC Communications, Inc. (NYSE: SBC),
one of the world's leading diversified communications companies. Other
businesses include wireless services and equipment in the United States, Europe,
Latin America and Asia; messaging services; business and consumer
telecommunications equipment; cable television interests in both domestic and
international markets; and directory advertising and publishing. SBC
Communications, Inc. reported 1994 revenues of $11.6 billion.
Hewlett-Packard Company is a leading global manufacturer of computing,
communications and measurement products and services recognized for excellence
in quality and support. HP has 105,200employees and had revenue of $31.5
billion in its 1995 fiscal year. Information about HP and its products can be
found on the World Wide Web at http://www/hp.com .
NYNEX is a global communications and media company that provides a full range
of services in the northeastern United States and high-growth markets around the
world, including the United Kingdom, Thailand, Greece, Indonesia, the
Philippines, Poland, Slovakia and the Czech Republic. The company has expertise
in telecommunications, wireless communications, video, directory publishing and
entertainment and information services.
Bellcore is a leading provider of telecommunications software, engineering and
consulting services, based on world-class research. Bellcore makes information
technology work for telecommunications carriers, businesses and governments
worldwide. More information about Bellcore is available at its website,
Illinois Consolidated Telephone Company (ICTC) is a wholly owned and the
largest subsidiary of Consolidated Communications, Inc., a highly diversified
telecommunications holding company which employs some 1,400 people in Illinois,
Missouri and Indiana. ICTC, now in its 100th year, serves some 84,000 customers
in east central Illinois. Other CCI subsidiaries provide directory publishing,
telemarketing, mobile/cellular communications, competitor operator and long
distance services, and inmate services in over 20 State of Illinois facilities,
fiberoptic-based network facilities and software/data management services.
American Telecommunication Enterprises, Inc., based in Syracuse, NY, was
founded in 1992. ATE provides long distance assisted services to local exchange
carriers, coin-operated telephone and customer-owned operated telephone
customers as well as the condominium, hotel and health care industries. The
company serves more than 60,000 customers throughout the United States and has
recently expanded to include calling card services.
Public Service Telephone Company (PSTC) of Reynolds, Georgia is one of the
oldest companies of its type in the south, serving Georgia's telecommunications
needs since 1911. PSTC serves 1,050 square miles of Middle Georgia between
Macon and Columbus. PSTC also offers call answering in three of their seven
Park Region Mutual Telephone Company, a local exchange cooperative
headquartered in Underwood, MN, serves six exchanges in the Heart of the Lakes
area of West Central Minnesota and also has an office and video conference
center located in Fergus Falls, MN. In addition to state-of-the-art, digital,
fiberoptic local service, Park Region provides many wireless services such as
cellular, television and alarm systems along with Internet access.
Communications Fraud Control Association is an international association based
in Washington, D.C., whose objective is to foster and promote cooperation within
the industry with respect to telecommunications fraud control. CFCA's mission
statement is "Addressing today's fraud issues with a vision of tomorrow's."
American Public Communications Council, headquartered in Fairfax, VA, is a
national trade association dedicated to protecting the interests of the public
communications industry, while promoting quality service to customers at
competitive prices. APCC represents over 1,400 owners, operators, suppliers and
manufacturers of public communications equipment and services.
FREDDIE'S FRAUD FACTS
-- Telecommunications fraud is expected to reach $3.375 billion in 1995 -- an
increase of $70 million over the previous year.
-- A survey of over 90 businesses who were victims of toll fraud found that
losses ranged from a few thousand dollars to $4 million. The "average" loss for
all reported business cases is estimated at $168,000.
-- The amount of long distance charges stolen through customer premise
equipment in the U.S. is around $1.3 billion.
-- Average losses caused by customer premise equipment (CPE) toll fraud have
dropped to about $20,000 per incident. The average loss per incident was
$24,000 in 1994.
-- The cost to users in "800" line charges -- run up by thieves and attempted
thieves -- is estimated to reach a minimum of $235 million in 1995. "Hackers"
unsuccessful, random calls constitute about 1% of the 2 billion annual calls to
CUSTOMER PREMISE EQUIPMENT (CPE)
TOLL FRAUD COSTS (1995 estimates)
-- Management and staff time lost incurred by victims of toll fraud: $30
-- Consultant and attorney fees and costs incurred by toll fraud victims: $15
-- Cost of management and staff time incurred by interexchange carriers
(IXCs), local exchange carriers (LECs) and other vendors: $35 million
-- Consultant and attorney fees and costs incurred by IXCs, LECs and vendors:
Total Annual Direct Cost of CPE Fraud: $1.625 Billion
TELECOM INDUSTRY TOLL FRAUD LOSSES (1995 estimates)
-- Cellular toll fraud: $450 million
-- Calling card toll fraud: $450 million
-- Pay phone toll fraud: $90 million
-- Subscription fraud: $450 million
-- Call forwarding fraud: $70 million
-- Hits to Carrier Switches & Networks $190 million
-- Prisoner toll fraud: $100 million
Total Annual Direct Cost of Industry Toll Fraud: $1.75 billion
Source: Telecom & Network Security Review
FREDDIE'S TIPS TO OUTFOX PHONE FRAUD
When using your calling card...
-- Make sure no one sees you key-in your calling card number or overhears you
stating it to the operator. Block the view of the keypad and speak directly
into the phone. When possible, use a phone that reads your card automatically.
-- Do not use your calling card as an identification card. Use your drivers
license or some other form of ID when dealing with merchants, telemarketers and
-- Report a lost or stolen card immediately. The moment you suspect your
calling card has been lost, stolen, or otherwise compromised, report it
immediately to your card provider.
-- Memorize your calling card and PIN number. Select or change your Personal
Identification Number (PIN) to an easily remembered number. Request that your
PIN number not be printed on your calling card.
When at home ...
-- Don't accept third-party or collect calls that are suspicious or from
someone you do not know. When you accept, you have agreed to pay for the
-- Telephone companies or law enforcement officials will never ask customers
to accept collect or third-party charges as part of an investigation. Only if
you make a call through an operator will a telephone company representative
request specific billing information.
-- Beware of individuals who call you requesting calling card verification.
Telephone companies will never call you to ask for your calling card number.
Only when you make a call through an operator should you give out your card
-- Restrict third-party or collect calls from being made to your home or
business. Some telephone companies offer this service, thus preventing
fraudulent calls from being billed to your line.
In Your Car ...
-- Remove handset and antenna from car when not in use. This will help avoid
the unwanted attention of criminals with Electronic Serial Number (ESN) cloning
-- Protect your Electronic Serial Number. Never give your ESN number to
anyone. And don't put your subscriber agreement in an unsafe place, such as the
-- Never let anyone use your phone unless you are present. If someone wants
to use your phone, offer to dial the number for them. Fraud criminals can easily
access the codes stored in your phone.
-- Have service performed only at reputable locations. If you need service,
take your phone only to an authorized distributor of your cellular service.
-- If stolen, call your local police and cellular carrier immediately. The
sooner you do, the less likely the chance that your phone will be used
PRINT MEDIA: To download a gray scale image of Freddie
the Phone Fraud Fox suitable for print reproduction, or to view a color image,
open location (http://www.bell-atl.com/security/fraud). To receive a diskette
or velox with Freddie the Phone Fraud Fox artwork, contact Roger Williams at
BROADCAST MEDIA: To receive a copy of the Freddie the Phone Fraud Fox public
service announcements, contact Carolina Munoz at 703-974-8819.
NYNEX is a global communications and media company that provides
a full range of services in the northeastern United States and
high-growth markets around the world, including the United Kingdom,
Thailand, Gibraltar, Greece, Indonesia, the Philippines, Poland,
Slovakia and the Czech Republic.
The Corporation is a leader in the telecommunications, wireless communications,
cable television, directory publishing
and entertainment and information services.
FAX copies of recent NYNEX news releases are available free of charge, 24
a day. Call 1-800-331-1214 and an automated system will provide