Network Protocol Analysis: A New Tool for Blocking International Bypass Fraud Before Revenue is Lost

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1 Network Protocol Analysis: A New Tool for Blocking International Bypass Fraud Before Revenue is Lost How to Defend Your Network Against the New SIM Server Threat A WHITEPAPER BY SPONSORED BY

2 The international bypass of telecom operators via the SIM box is a costly and highly destructive type of fraud. In the advanced industrial nations of the world, subscription fraud and International Revenue Share Fraud (IRSF) are the fraud types that take the greatest revenue toll. And that only makes sense, since postpaid subscription accounts, smartphone subsidies, and IRSF-vulnerable PBX machines abound in those nations. But the main target of bypass or SIM box fraud is quite different. In bypass fraud, the fraudsters prey primarily on the developing nations, those regions of the world where the banking, commerce, and communications infrastructure are relatively immature. And it s in these nations where prepaid GSM phones serve a large percentage of the population. The SIM Box bypass fraud is not a new one. Most telecom operators around the world have detection and control solutions in place. So, why does the fraud continue to cause such massive losses? We ll take a look at how new technologies are exposing the need for operators to reexamine their approach to this problem. The Loss to Telecoms, Governments, and a Nation s Prosperity So how much telecom revenue is being lost from international bypass fraud globally? The answer varies and is often based on industry association reports from a limited number of telecom operators. In 2013 the CFCA estimated the telecom loss through bypass to be about $2 billion a year. Other reports claim over $3 billion to $5 billion per year. Billions of dollars is a huge figure for telecom operators to lose. Plus in many nations, bypass also greatly reduces the government tax revenues that are added to inbound international calls. But probably the most destructive effect of bypass is its reverse Robin Hood effect. Robin Hood stole from the rich to give to the local poor. But bypass steals from relatively poor nations to enrich largely foreign criminals. Robust telecom infrastructure and services are vital for growing the economic prosperity of a nation s people. Governments have neither the money nor skills to invest, build, and run communications networks on their own. They rely on private firms to do that. And for this very reason, regulators in each nation strictly control the number of telecoms who are licensed to operate there. But when major revenue from international voice calls is stolen by fraudsters, the legal operators who play by the rules are severely hurt. Criminals in faroff places like Miami and Monaco steal a fortune, but the legal operators -- who struggle to make payroll and earn a return on their investment -- are discouraged from expanding their business and thereby helping the national economy to grow. Traditional Detection Techniques are No Longer Stopping the Fraudsters So how much revenue can a lone SIM box steal? Well, the experts at LATRO Services estimate that fraudsters can easily generate over $100/day per modem in a SIM Box. And if a typical SIM box has 30 to 60 modems, that s a revenue loss of $6,000/day or over $2 million per year. Imagine the financial gain for the fraudster! And while we can t detect the precise monetary value of bypass (fraudsters don t report their income), the evidence that SIM boxers are succeeding can be plainly seen from a carrier s international interconnect revenue. If SIM box mitigation is truly working, international revenue should see a dramatic increase. But that s usually not the case. In fact, operators in some countries will privately tell you that their international inbound traffic have decreased by as much as 50% in recent years! Yet the irony is these same operators have invested heavily in anti-fraud campaigns, and they actually do detect and block fairly large volumes of SIM boxes on a daily basis.

3 So what does this mean? It means the fraudsters are succeeding despite the anti-fraud efforts of the carriers. They are replacing the blocked SIM cards with fresh supplies of SIMs and continue their bypass. To the fraudster, current anti-fraud measures are nothing more than a minor annoyance a speed bump on their way to multi-million dollar riches. The History of Anti-Fraud Methods: Why the Fraudsters are Winning So why are current anti-fraud solutions no longer stopping SIM box fraud like they used to? Well, to answer that question, we need to look at the methods used to block and frustrate the fraudsters. The major methods used today are three: 1) Test Call Generators (TCGs), 2) Fraud Management Systems (FMS), and 3) SIM Card Distribution Control. Let s now discuss the strengths and weaknesses of these methods: 1. Test Call Generation Systems When the SIM box bypass problem was first identified in the late 2000 s, Test Call Generation (TCG) was the first detection technique that proved effective. Here s how test calls work. Test phone numbers are set up within the local market where the bypass fraud is occurring. Then test calls are generated from many different countries via various interconnect voice routes around the world including VOIP services, Calling Cards, wireless and fixed line services. This establishes from where the grey routes are originating and the paths they use to reach SIM boxes in the affected country. Test Call Generation is all about probability. The more routes you test and the more test calls you make, the higher the chance of finding SIM boxes. Once you find routes that have a high volume of SIM box terminations, you can focus your call campaigns on those routes to maximize detection. Test Call Generation technology worked very successfully for many years, but recently fraudsters are succeeding in frustrating the test call method. Here s why: SIM Boxers can Identify the Test Calls - The fraudsters analyze the voice call traffic coming toward their SIM boxes. Then based on usage and other patterns, they can determine which calls are real subscriber calls and which are originating from a TCG system. They can then either block the test calls and prevent them from reaching the SIM box to begin with, or reroute the calls to a legitimate route so as to avoid detection. SIM Boxers are using Pools of SIM Cards as Decoys - Fraudsters are even allocating pools of their SIM Box cards as decoys to be sacrificed. That is, they allow certain SIM cards to be detected to deceive the wireless operators into thinking its anti-fraud measures are producing good results. This ploy is a diversion that allows pools of undetected SIM cards to drive the major bypass revenue losses. SIM Boxers are using Very Large Volumes of SIM Cards - Since the test call method is all about probability, fraudsters are provisioning the latest SIM Server systems to automatically manage hundreds of SIM cards per fraud operation. By increasing the number of SIM cards used and decreasing the usage per SIM card, they are making it increasingly improbable that a given SIM card will be detected by test calls. 2. Fraud Management Systems (FMS) and CDR Analysis The second technique used to detect/block SIM boxes is the Fraud Management System (FMS), an enterprise-wide data analysis platform that works well in detecting many different types of fraud. In SIM box detection, the FMS uses Call Data Records (CDRs) to create usagebased profiles that distinguish the SIMs used in SIM boxes versus those used in legitimate subscriber handsets. FMS and similar CDR analysis platforms have also been effective in detecting SIM boxes, but in recent years, fraudsters have found clever ways to evade usage profile detection.

4 Human Behavior Simulation Go to a SIM box manufacturer s website and you ll see they advertise a Human Behavior Simulation (HBS) software capability. This means that the SIM boxes are programmed to mimic real mobile subscriber behavior. HBS techniques involve automating features on the SIM Box such as SMS messaging, self-calling, and international dialing in order to frustrate detection algorithms used by FMS and CDR analysis. Growing the Pool of SIM Cards Another scheme is to rotate the use of a large volume of SIM cards through a SIM Server system. When you do that, the volume of traffic going across any one SIM card is reduced to the point where they fall off the usage analysis radar. Now in both cases -- test calls and the FMS -- by nature of their methodology, the fraud has been committed by the time you detect it. So you are already losing money before the detections occur. 3. SIM Card Distribution Control And then finally, the third major mitigation strategy is controlling the distribution of SIM cards in the nation affected. SIM cards, of course, are the enabler of international bypass fraud: to complete a call, every device on a GSM network needs to have an IMSI Subscriber ID number that resides on the SIM card. Now over the years, as carriers got better at SIM Box detection, fraudsters needed to obtain thousands more SIM cards to replace those already detected or burned and made no longer usable on the network. At first, fraudsters had no trouble obtaining SIMs in large quantities. This is why nations experiencing bypass introduced measures to control SIM card distribution and block fraudsters from buying SIMs. These measures include requiring government IDs to buy SIMs, cross-checking multiple SIMs registered by the same person, and preventing the sale of pre-activated SIMs. Yet despite these control efforts, the fraudsters in most countries have -- through identify theft, fake IDs, and other schemes -- been able to get their hands on the volumes of cards needed to keep their SIM box operations humming. The SIM Server: Fraudster s Powerful New Stealth Technology SIM box fraudsters are often characterized as small-time crooks who buy their equipment on ebay and keep their SIM boxes and antennas in a small apartment. Such a simplistic picture of the SIM box fraudsters may be true in certain regions of the world, but the unmistakable trend among fraudsters is toward large-scale automation and the use of advanced technology on a global scale. There s no better example of this than the recent rise of the SIM Server and its associated banks of thousands of SIM cards. The SIM Server, which was developed in the early 2000 s, was first used as a central test platform for various end-to-end quality of service and roaming test automation. Unfortunately, it also proved a major breakthrough for fraudsters because it virtualizes the SIM card. The server could be located in Singapore or Los Angeles, but it can manage multiple SIM box operations on multiple continents simultaneously. Here s a quick rundown on the major challenges that SIM Servers bring to the bypass battlefront: The Supply of SIM Cards are No Longer an Issue Before SIM server technology arrived, fraudsters would typically run out of SIM cards in a week since the SIMs would be detected and burned. But by virtualizing the SIM card s use, fraudsters no longer need to maintain a local supply of SIM cards in the country where their SIM boxes operate. So a pool of 1,000 SIM cards can last a month or two. The SIM Box becomes an Empty Shell The net effect of SIM virtualization is that the local SIM box no longer needs to have any SIM cards at all! It s a box with only modems inside. This means that in-country SIM distribution control programs will rapidly become obsolete. SIM Detection via Test Calls Becomes a Lot Harder With the expanded pool of SIMs in SIM Servers, massive volumes of test calls are needed to detect the hundreds to thousands of SIMs in the SIM banks.

5 SIM Server SIM Servers, a recent fraudster innovaron, can control SIM boxes from anywhere in the world. SIM Servers can: AutomaDcally manage & replace hundreds of SIM cards. Virtualize SIM cards so that SIMs can be quickly assigned to modems and rotated between calls. Enable IMEI & IMSI pairing in a database so every SIM has a unique IMEI. Look like hundreds of unique mobile subscribers, rather than a central machine cycling many SIMs through a small set of modem hardware. SIM Card Control SIM cards enable bypass fraud, but as SIM cards are "burned" (detected & blocked), the fraudsters need a fresh supply of SIMs. So governments control the distriburon of SIMs by requiring IDs to obtain them at stores where they are sold. SIM Card Control defense Fake IDs o/en enable fraudsters to maintain a big supply of SIMs on hand. SIM Servers are making SIM control obsolete because SIMs can be obtained and consumed in large quanrres in another country. The local SIM box becomes merely a box with modems. The Battle To Stop International Bypass Why the Fraudsters are Winning interconnect "grey route" SIM Box CDR TCG Switch SIM Box deployment & carrier revenue loss SIM boxes are o/en deployed at 5 to 10 gateways in a city so as to serve a large numbers of mobile users. Fraudsters can make $100/day per modem (aka channel) in a SIM Box. With 30 to 60 modems in a SIM Box, they can generate a loss of $6,000/day or $2 million a year. If a SIM box mirgaron is truly working, regular internaronal revenue should go up. But some countries are experiencing 50% loss of internaronal traffic even with acrve SIM box defense solurons in place. It's proof that the fraudsters are succeeding despite the many efforts to detect and block them. Test Call Generators (TCGs) Test calls are made from many countries to test numbers in the country where SIM boxes operate. The interconnect grey routes to the SIM boxes are discovered, so the paths can be blocked. Test Call defense... Fraudsters spot test calls from their usage paperns, so the test calls are blocked or traffic is redirected to avoid detecron. They use pools of SIMs as decoys. They are sacrifaced to give false hope that SIM blocking efforts are working. Large pools of reserve SIMs at SIM Servers means a huge number of test calls are needed to detect all the SIMs. Fraud Management System (FMS) The FMS uses Call Data Records (CDRs) off the switch to create usage- based analysis profiles to detect SIMs being used in SIM boxes versus those used in legirmate subscriber handsets. FMS defense... Simulate human behavior: SIMs call & SMS each other & move between modem geographic locarons. These make it very hard to detect them. Distribute huge volumes of voice calls across a high volume of SIM cards, keeping the calls per SIM very low. This is achieved using a SIM Server. Losing money before detecdons occur. In both FMS and TCG solurons, significant revenue losses occur before any SIM boxes are detected.

6 A Vast Number of Fake Mobile Subscribers - SIM Servers can change IMEIs with every call, enabling a database of paired IMEI and IMSI so that every SIM card has a unique IMEI. Hence, the SIM Server looks to the network like a collection of hundreds of unique subscribers rather than a centralized machine cycling many SIMs through a small set of modem hardware. Huge SIM Card Reserves Enable a Flexible Usage Strategy - The SIM banks that live in remote countries are large enough to allow fraudsters to employ a very flexible strategy. The latest electronic chassis can carry 6,500 SIMs inside. So they can drive multi-national campaigns. And as SIM cards are burned, they are automatically replaced. Detecting SIMs with an FMS Becomes an Order of Magnitude Tougher - Consider this: To detect SIM boxes, FMS systems rely primarily on volumetric data. Their algorithms hone in on usage that is statistically significant, or rises above the number of calls an average mobile caller makes. Yet we know that FMS systems are already having a hard time detecting SIM boxes with 60 SIM cards inside. So imagine how hard it is to detect SIM cards from a remotely controlled bank of 6,500 cards! Not only that, the virtual IMSIs and IMEIs are automatically rotated and served up across multiple modems and perhaps multiple countries where the SIM fraudsters operate! In other words, the usage footprint of any individual SIM card at a single modem is exceeding small so small that the SIM can easily hide in the noise of other traffic. Network Protocol Signatures A New Detection Solution for the SIM Server Threat The introduction of the SIM Server has given fraudsters a new stealth technology allowing them to leapfrog carrier efforts to detect and block bypass. But all is not lost. Carriers have a new technological trick up their sleeves that can help them meet the SIM Server challenge. The new technology to leverage is Network Protocol Analysis, and its main virtue is that it recognizes the signature (or fingerprint) of the SIM Box as it comes onto the network, blocking the use of any SIM card used on the box s modem. Network Protocol Analysis performs its magic through network signaling data -- a set of data never before used to detect SIM box fraud. To understand how it works, you can think of signaling as the computer operating system of the mobile network. It s the lower level protocol messages being exchanged between the mobile device, cell towers, base stations, and the like. SIM boxes, including SIM Servers, generate a characteristic set of these protocol messages, allowing the fraudulent devices to be distinguished from other users on the mobile network. By the way, this rich set of data goes far beyond the information that s captured in CDRs. In all, the data set tracks the information contained in dozens of protocol messages that are exchanged to set up a single GSM call and before the first CDR is even cut on the switch. These signaling data provide the key to distinguish calls made by a SIM box modem from those made from regular mobile handset or smartphone. In fact, the technology works without having to know the IMSI of the SIM card or the IMEI of the modem hardware at all. When you power up your mobile phone, the first thing the device does is register itself and authenticate the SIM card that s in the phone. So the Protocol Signature of the mobile device is the set of messages and data passed back and forth when the device signs onto the network. It is subsequently used for calls, texts, and data. And no matter how a fraudster tries to hide its SIM Box s identity or play the human simulation game, the fingerprint of the modem in the SIM box cannot be masked because the messages it sends to the network reveal its true identity. Not surprisingly, the engineers who developed this SIM Box detecting mechanism are experts in the radio network domain. Their solution detects SIM box modems coming onto the network in real-time and also includes a strong big data capability enabling the analysis of millions of mobile network calls per day. The key advantages that Network Protocol Signatures bring to the SIM box battle are as follows:

7 A. SIM Boxes are Detected as Soon as They Come onto the Network - There s nothing the fraudsters can do to prevent detection. Before they generate any bypass, the SIM modem announces itself in the signaling layers. As soon as the modem communicates, a network protocol signature is created. Even if the SIM Box attempts to disguise itself as a Samsung S5 smartphone, the Network Protocol Signature technology is not fooled and detects the SIM Box or SIM Server immediately. B. It Stops Fraud Before Revenue is Lost - Other means of SIM box detection such as test calls and FMS require considerable time to collect the usage, analyze it, and take action on the usage data. In that time, the fraudsters can do a lot of bypass. But protocol signatures detect the modems and block the bypass as soon as they sign onto the network and before revenue is lost. C. It s Fully Passive - Unlike active detection technology such as test call generation, network protocol signatures are captured passively so the fraudster is not aware of the method of detection. How to Stop the SIM Server: Use a Coordinated Attack Strategy OK, here are our recommendations on how to fight SIM box fraud in the coming era of global SIM Server deployments: 1. Use Protocol Signature Analysis as the First Line of Defense - Protocol signatures are desperately needed to regain the edge over SIM box fraudsters. So fraud and revenue assurance experts need to quickly get up to speed on this new, unfamiliar technology so they can deploy it wisely and rapidly. 2. Employ a Multi-Pronged Defense Strategy - Protocol Signature Analysis is a powerful technology, but it s not a silver bullet. It needs to be used in concert with the fraud management tools already in place. For instance, the intelligence gained from FMS systems enable Protocol Analysis systems to be deployed in the most fraud infected parts of the network. Likewise, TCG systems are critical for pinpointing the interconnect carriers who are sending bypass traffic toward its networks. And the more interconnect routes you can send test calls through, the better. For this reason, working with multiple TCG vendors each employing different test routes -- is very useful. 3. Invite All Solution Parties to the Integration Table Fraudsters know full well that it s advantageous if the anti-fraud solutions of a carrier remain siloed solutions that fail to coordinate and pass information freely between each other. Therefore, it s the carrier s responsibility to see that vendors truly open up their APIs and make a concerted effort to defeat the common enemy. As we ve seen, the arrival of the SIM Server has made the battle to stop international bypass much harder. The SIM Server has enabled fraudsters to leapfrog conventional FMS and TCG solutions ability to keep a lid on bypass. In fact, carriers who have their SIM box fraud problems under control today are now quite vulnerable to the new SIM Server threat. It s likely these carriers will see a resurgence of bypass due to the formidable stealth power and deployment flexibility that SIM Servers enables. To survive and thrive in the new era of SIM Server-led bypass, carriers must add protocol signature analysis to create an integrated and effective anti-sim box defense. Technology Research Institute (TRI) is an analyst firm that has been following the market for telecom systems and software since TRI is also the publisher of Black Swan Telecom Journal. For more information about Protocol Signature detection and advanced bypass fraud control, contact LATRO Services, Inc 1550 Lehigh Drive, West Easton, PA Copyright 2015 Technology Research Institute and LATRO Services, Inc.

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