Overview

Like businesses in other industries, the telecommunications industry is waging a high-tech war against the fraudulent use of its products and services. In the area of cellular communications, this problem emerged in the late 1980s on an unsuspecting and technically vulnerable cellular industry. Despite the availability of tools for identifying fraud, it is estimated that cellular fraud continues to cost the industry more than $1 million a day in North America alone, with global losses to fraud estimated between $3 billion and $6 billion a year.

Nobody truly knows the extent of cellular fraud because much of it goes undetected and the call charges if they are not outrageous enough to trigger suspicion are paid for by unsuspecting consumers. In the United States alone, over 40,000 illegal wireless numbers are activated every month. Although the cellular service providers typically adjust any fraudulent charges that may appear on a customer's bill, the losses keep service charges unnecessarily high for everyone. In addition, being a victim of cellular fraud causes many subscribers to cancel their service. This continues to be a major cause of customer "churn" in the industry.

The mobile phone industry has recognized and addressed this challenge by implementing a variety of fraud-prevention technologies, by working with law enforcement to trap and prosecute those who steal signals and clone cell phones, and by helping lawmakers define cellular fraud as a serious crime with potentially severe consequences. The creation and use of a counterfeit or cloned mobile phone is now a federal...