Telfort Case Study

Enterprise Risk Monitoring System Helps Telfort to Combat Fraud

The telecommunications industry has gone through alternating periods the last couple of years – periods of strong investment have been followed by periods of consolidation and belt-tightening. Also the mobile communications market has faced numerous new challenges. Telfort B.V. entered this market begin 1997 and is now serving 1,291 million customers.

Problem

As consumers demanded more and more competitive rates and services, the profit margins minimized. To be still profitable within these tight margins, Telfort attached great importance to collect all the revenue that they were entitled to. The need to assure these revenues was only intensified by the increased complexity of the data crossing their networks. The introduction of third generation (IP-based) networks added to the demand of (A)SPs and content providers on Telfort. No longer they simply had to monitor call duration and destination, but also the amount of bandwidth, the value of the transaction, or the type of data downloaded.

“These were the pressures we were faced with,” says Rachid Koorn, Manager Risk & Fraud at Telfort. “We quickly realized that we couldn’t escape from telephone fraud and dubious debtors. Furthermore we understood that failure to deal with fraud, bad debt, churn, and billing errors could have an immediate impact on our business, our market share, and eventually, our viability. Therefore, we decided we needed a system that could manage both the traditional and the new risks we were facing by monitoring all our customer activity. This system also had to be able to scale with our organization, products and services, ensuring that we would be able to manage risk efficiently if we would grow.”

Solution

The solution was found in the software tool ERASE of NetEconomy. ERASE monitors network activity in real time, collecting intelligence about the customer to evaluate risk and ensure customer care. The system manages risk and detects fraudulent activity before damage is done, enabling Telfort to protect its customers and business. ERASE is active day and night, working in outsource mode at NetEconomy’s Headquarters in The Hague.

Because prevention is better than curing, every new subscriber undergoes testing before acceptance regarding credit worthiness and the possible risk accompanied by this. “Of course we deal with this very carefully. We are very liberal, but also very firm,” Koorn says. The individual market is rated by NetEconomy’s mother company EDR, a credit rating company. EDR has the disposal of a database filled with individual payment experiences of consumers and businesses in The Netherlands. EDR currently has the largest database in the Benelux.

ERASE helps Telfort in several areas, e.g. detecting fraud, optimizing their credit and collection efforts, detecting high usage and automatically reporting high usage to their roaming partners. “If a new subscriber immediately starts making calls to premium rate numbers, than this is identified straight away, as ERASE detects in real time,” Koorn explains. “Moreover, ERASE sets risk priorities and although this is built-in, one can say that the system itself determines which call behavior is the most riskful to us. Also, there are thresholds posted. As soon as a caller approaches his individual and dynamic threshold, he will appear in the system. We will then investigate and take appropriate action, often by calling the caller. Usually customers are not aware of this and appreciate a warning. The follow-up on high-risk cases is being done by my team.”

“Fraud is often committed through stolen identity papers, which are an easy way to purchase a telephone and immediately make expensive calls. Especially new providers in the telecom branch will be approached by fraudsters, because they think their security is not yet optimal. Telfort has experienced this as well. With ERASE we are alerted immediately when such a fraudster is active on our network. ERASE fully automatically generates a fingerprint of each subscriber. This fingerprint entails a unique list of called destinations categorized by the number of times that they were dialed. ERASE permanently compares this fingerprint to other fingerprints, which are already known to Telfort as fraudster or dubious debtor. In this manner fraudsters, who try to enter our network using a false name, will automatically be detected before any real damage is done. We were able to refine the system so, that we are now able to disconnect the fraudster at a minimal calling debt. Up to now this match has always been 99% accurate,” Koorn concludes.

Benefits

Koorn has experienced a substantial Return On Investment (ROI) over the last 5 years. With ERASE, Telfort now is controlling credit by applying dynamic risk profiles or profiles of an individual that are continuously updated to each customer. When a customer suddenly deviates significantly from his of her normal behavior, ERASE will alert the risk personnel and advise them on corrective actions. Morover, they are managing inaccurate billing to safe the company from unnecessary revenue losses. ERASE identifies problem areas by matching all relevant data in their network, and fix them before billing occurs. Also, all forms of fraud are being detected, as they will leave a trace of unusual behavior, either in airtime, destinations, log-ins, amount of bandwidth, types of data downloaded.