Richard Handford, [email protected]
The Independent Committee for the Supervision of Standards of
Telephone Information Services (Icstis) has imposed among its
largest-ever fines on a number of UK companies accused of running mobile
phone scams.
The move reflects the regulator's hardening attitude towards an
activity that nets huge profits for fraudsters, according to Mobile
Communications research.
In a typical scam, text messages are sent to hundreds of thousands of
users at once, encouraging them either to call a premium-rate number or
respond with a short-code SMS for the chance to collect a nonexistent
prize, pick up a fake voicemail message or go on a fictional date.
Icstis most recently targeted a subtle variant of the usual scam in
which users were sent messages asking them to call a number with a 0871
prefix, charged at 10 pence (E0.07) a minute.
After making the call, users were asked to dial a second number
carrying a 090 prefix, which was charged at a much-higher �1.50 a
minute.
This call-within-a-call strategy was intended to disguise the
scammer's activity.
Icstis fined the companies involved �75,000 each and banned their
services.
In the past, fines for similar offences have usually been �10,000.
But many in the industry doubt the effectiveness of such fines,
arguing that only about 50 per cent are actually collected from
scammers. This is because telecoms carriers that run premium-rate lines
pay scammers very quickly, and by the time Icstis becomes involved, the
scammers have already departed.
Icstis says that its success rate in collecting fines may have been
true up to last year, but its record has since significantly improved.
False economy
The first cost incurred by scammers is that of sending a massive
volume of texts to their intended victims. To minimise this cost,
fraudsters have made use of mobile service providers based outside the
UK.
One provider in South Africa, nicknamed Ping-pong Telecom because of
the speed with which it sends bulk messages back to the UK, has become
well known for being able to cheaply distribute blocks of text messages
that originate with a UK provider back to UK users.
But such "bulk deals" have become increasingly expensive:
over the past year, UK cellular operators have raised the charge for
delivering an incoming foreign text message threefold - from about 1 to
3 pence.
UK operators are also more wary about large message flows from
foreign operators and are therefore increasingly inclined to block them.
This tougher approach has encouraged scammers to start using UK-based
content aggregators to get to market, although this method ends up being
slightly more costly and also come under scrutiny from network
operators.
If a scammer has hundreds of thousands of texts to send, it can
secure a deal with a UK aggregator for about 3.5 pence per text.
Assuming it sends 500,000 texts, a scammer would pay �17,500 to reach
its potential victims.
In the most popular form of the deception, the scammer next needs to
lease a premium-rate line, usually an 090-prefix number, from a
fixed-line telecoms carrier.
Because that sector is so competitive there is generally no upfront
cost for the line, but the fixed carrier takes a proportion of the
revenue generated - usually in the region of 40 per cent.
Most scams are designed to keep the caller on the line for at least
five or six minutes, generating about �10 per customer. Experts reckon
a scam will attract a response rate of no more than a few percentage
points of the hundreds of thousands targeted.
In the past, the figure would have been higher, but users - often
listed on a database that has been traded among scammers several times
and who have therefore been targeted more than once - are increasingly
savvy.
"The response rate is likely to be in the low single digits, no
higher than that for direct marketing," says Craig Barrack, founder
of the Mobile Networking consultancy.
Even so, the response rate is still higher than in the fixed-internet
world, points out Adrian Harris, the founder of Grumbletext, a UK
consumer complaints website. "It's higher than e-mail spam,"
he says. "A lot of people believe it the first time they receive a
message."
And even a mere 3 per cent response rate - 15,000 victims each paying
�10 - works out at an income of �150,000. Once 40 per cent (or
�60,000) is paid to the telecoms carrier, the scammer is left with
�90,000.
After paying a further �17,500 to mobile operators for delivering
the original text messages, the scammers are left with a profit of
�72,500.
A response rate of just 1 per cent would give �12,500 profit.
However, one source claimed the so-called BPQ scam - whose
instigators Icstis has just fined so heavily - was operating on a
grander scale than in previous scams in terms of the number of victims
targeted, and had generated "millions of pounds" in income as
opposed to the typical tens or hundreds of thousands of pounds.
The higher figure could be explained by five or six interlinked
companies running the scam with some degree of coordination. Each has
now been hit by a �75,000 fine.
The BPQ scam was first run at the turn of the year but has recently
started again.
FAQ (Frequently Asked Questions)
Adv. Search
Register
Profile
Log in to check your private messages
Log in
