What is VoIP Fraud?

Voice over Internet Protocol (VoIP) phone service fraud occurs when someone uses a network for fraudulent purposes. One common example of this is whenever hackers break into a commercial phone system and sell use of the network out to others fraudulently for a profit. This occurs while phone service costs are racked up and the owner of the network becomes responsible for the expenses. This can result in significant damage to the network owner’s reputation, finances and business. If the fraudster is ever caught, the damage is probably already done and the business may have difficulty recovering.

  • VoIP Fraud–When a VoIP network is compromised and used for fraudulent purposes.

In this article, we will introduce the concept of VoIP fraud and begin discussing how you can proactively fight to prevent it and reduce your risks. You will learn some VoIP security basics and begin to understand why fraudsters target VoIP networks. You will also learn how to access some of the tools you will need to combat fraud in your business by preparing, securing your systems and training your employees.

Article Contents:

  1. What is VoIP and Why is it Targeted?
  2. How Does VoIP Fraud Happen?
  3. Fraud Prevention Mindsets
  4. Steps to Prevent Fraud

By the end of this post, you should have a solid understanding of the basics of VoIP fraud and prevention. This can help you come up with ways to fraud-proof your business and secure your organization from intrusion by others.

1. What is VoIP and Why is it Targeted?

VoIP systems use the Internet instead of copper wiring to transmit voice calls, SMS text messaging and other communications. Using the Internet, VoIP calls arrive at their destination by packaging and optimizing themselves for fast travel along the best online routes. As such, VoIP networks are often targeted by hackers–they can access VoIP networks online and break into them quickly and without making their presence known early on, until it is too late.

In the past, landline phones were a common target of hacking. Hacking landline phones was referred to as “phreking” (pronounced “freaking”). It was a fairly common practice by people who wanted to misuse phone networks or harass phone users with prank phone calls. At the time, phones could be hacked with a variety of methods, most of which required significant knowledge of how landline systems work.

Now, VoIP being computer-based, you can hack into VoIP systems if you know about how computer systems that manage phone networks operate. This can help hackers gain unauthorized access to the phone networks and use them for criminal purposes. Sometimes, use of these systems is even leased out to legitimate companies that are unaware of the fraudulent users and hackers of the network. It is a terrible situation for the phone system’s owners–that company may not find out about the hacking situation until they view their phone bill or start seeing reputation damage. It may take a while before this happens.

2. How Does VoIP Fraud Happen?

VoIP fraud happens when the network is compromised and begins being used by the hackers. In effect, this is similar to the zombie networks of computer systems hacked for the purpose of sending denial of service attacks or running criminal computer processes online. Hackers gain control of the system and begin leasing use, processing further attacks or committing other significant crimes.

It is simply amazing just how effective these attacks can be, which is in part why they are popular with hackers. Hackers can either use phone systems for criminal operations, or they can use them indirectly for criminal activity by funding it with money made from phone system leases. These attacks are then at least partially motivated by financial needs. Criminal operations that need financial support can gain it with their hacking activities. Not only are your systems compromised, but they are also then used to fund criminal activity or generate income for criminal operations around the globe. This is yet another reason why it is important to secure your system and prevent hacking in the first place. Hacking damages your business and can support other criminal activity.

3. Fraud Prevention Mindsets

You can fight fraud with some simple preparation and preventative action. Stopping hackers requires securing your system and working to keep out intruders. It can be helpful to adopt a different mindset with regard to hacking. In this section, we will talk about some mindsets and strategies that can help you fight fraud and hacking.

  • Think Like a Hacker–Prevention starts with taking on a hacker mindset and looking for vulnerable areas of your system. Testing your system for hacking vulnerabilities is sometimes called “penetration testing” or “pen testing.” You proactively try to break in, gain access or find a loophole.
  • Continuous Improvement Mindset–With a continuous improvement mindset, you will be looking constantly at ways to improve and strengthen your security. Hacking is constantly evolving, so your security should too. Do not be left behind.
  • Proactive, Not Reactive–Fight hacking with prevention. Resist the temptation to simply respond to each isolated incident–instead, you will want to look for ways to anticipate future occurrences. Do not wait for something bad to happen to you before you implement protective measures.
  • Compliance–In some industries, robust security is also required by law. For example, healthcare industry businesses and organizations dealing with patient health information must comply with specific security requirements found in the Health Insurance Portability and Accountability Act (HIPAA). These requirements are designed to help companies protect consumers–and in turn, these requirements can help you protect your VoIP system. Following these laws carefully is doing good due diligence. It is also a smart business practice, because these regulations can help you protect your business and even your clients and customers.

4. Steps to Prevent Fraud

Fraud prevention requires taking proactive steps to secure your system, educate your employees and prevent intrusion through other means. In this section, we will outline a few practical steps you can take to secure your phones and company from hacking–of course, it is impossible to completely secure anything, but with these actions you can prepare yourself.

  • Secure Your Phone System–You will need to secure every possible point of entry. This means, you should secure every computer, server, phone, etc. Find out how your VoIP vendor secures your online administrator portal, too–make sure that it is challenging and nearly impossible to gain entry by changing settings. You do not want hackers to gain admin privileges.
  • Train Your Employees–Social engineering attacks are a very real threat to your company. Hackers can use malicious emails, phone calls, in-person visits, etc. to interact with you or your employees and gain important information or access. Impersonating technical support personnel and convincing you to divulge passwords, click on links or hand over access remotely are common social engineering strategies. You need to train your employees on how to recognize these attacks and respond appropriately. Teach them how to verify the identities of people attempting to contact them. Let your employees know what information is off-limits for non-employees to know. Make sure everyone knows which information and access requests they have the authority to grant and which ones they need permission from a supervisor or manager for.
  • Audit Your Security–Use ongoing self-audits to ensure your system is safe. These can be done in-house by your IT department, outsourced or possibly done yourself or by your vendor.

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