CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

            Following the exponential growth in the telecommunications sector in the end of past century, the telecommunications operators face a new challenge: fraud. It is not only a risk, but a highly organized global business, that affects operators all over the world. In order to realize the severity of this problem, Communication Fraud Control Association (CFCA) published some statistics stating that the annual global fraud losses in the telecoms sector are now between US$54 Billion and $60 Billion, an increase of 52% since 2003[6].Global System for Mobile (GSM) fraud has identify itself as the single biggest cause of revenue loss for telecom carriers with the increasing number of mobile phone users, global mobile phone fraud is also set to rise. [29]distinguished different fraud scenarios: subscription fraud, dial through fraud, free phone fraud, handset theft and roaming fraud. The Cambridge Advanced learners Dictionary defined fraud as “the crime of obtaining money by deceiving people”, while the concise Oxford Dictionary defines it as a “criminal deception; the use of false representations to gain an unjust advantage”. GSM fraud can be simplified described as any activity by which service is obtained without intention of paying. Using this definition fraud can only be detected once it has occurred. In subscription fraud, the typical behaviour of fraudsters is to abuse service by making significant usage of telecom services (for example, calling, messaging, internet, etc) before the bill is served. Customers applications are sometimes rejected by the company at the time of application if they find that it is risky to entertain customers who are likely to hold bad dept. Estevez et al (2006) propose neural network model to detect subscription fraud at the time of  application.

1.2 STATEMENT OF PROBLEM

Currently, due to the development of new technologies, traditional fraudulent activities, such as money laundering, have been joined by new kind of fraud like GSM fraud and computer intrusion. Fraud is increasing dramatically each year resulting in loss of a large amount of money worldwide.

During the research, some problems have been identified as a likely cause of increase in subscription fraud. They are:-

1. The use of GSM lines without proper registration of SIM card.
2. Call roaming, that is making calls outside home system.
3. Signing up GSM telecom service using false or stolen identification.
4. No standard fraud detection system to checkmate fraudsters.

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