Stop the Fraud, Stop the Churn

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telco churn reduction strategy
When clients are unhappy, they stop doing business with you. It's that simple. The more they leave, the less you grow. If you want to protect your reputation and retain customers, a telco churn reduction strategy is key. And while there are various factors influencing customer churn in telecommunications, fraud is the elephant in the room.

What is Churn Management in Telecommunications?

Reducing churn means improving service quality and customer support. Timely dispute resolution. Strengthening your brand reputation and building trust in your subscribers. But it's nearly impossible for a telco to achieve these things while fraud attacks persist on their network.

Fraud undermines call quality, violates user privacy, drops calls, causes country-wide blockages and more. Operators lose trust in one another, dispute tickets pile up, brand loyalty deteriorates and service providers face immense customer churn.

Any telco churn reduction strategy that doesn't account for fraud will face major long-term challenges. By eliminating fraud, we can start to fix each of these issues.

The Cost of Reputational Loss and Customer Churn

In total, it costs hundreds of dollars to acquire a new customer in most telecom industries. According to a recent study of 2,500 consumers in the USA, the telecommunications sector has the highest churn rates.

As your reputation deteriorates and subscribers leave, you lose both the future revenue from this subscriber as well as the resources spent to acquire them in the first place.

Over time, these losses compound the revenue that fraudsters steal on a regular basis. Losses to telecom fraud reach billions of dollars each year. In 2019, total telecom revenue lost to fraudsters was $28.3 bln and is steadily growing. In 2021, that figure climbed to $39.89 bln.

How Can We Reduce Churn in the Telecom Industry?

What is churn management in telecom? Reducing churn in telecom via advanced analytics is one approach, but fraud is at the core of this issue. Mitigating fraud is essential to protecting your reputation and reducing churn. It requires a special approach.

By eliminating fraud, you improve connection quality, dispute resolution, traceback requests and much more. You improve the quality of your service and communication with your subscribers by efficiently resolving disputes. The list of benefits is enormous and each issue is connected. Ultimately, you retain more clients.

With AB Handshake's anti-fraud system, eliminating fraud with 100% confidence is possible.

But to understand the solution, we need to first understand the mechanism behind the fraud. What kind of threat are you really up against? How exactly do these fraud schemes damage your reputation and lead to churn?

How Telecom Fraud Damages Your Reputation and Increases Churn

Different types of fraud impact carriers and subscribers in different ways. Let's look at each one, individually.

Interconnect Bypass – Eroding Call Quality

One form of bypass fraud is SIM Boxing. SIM Box fraud involves the illegal connecting of international calls via low-cost, prepaid SIM cards to bypass interconnects and inflate profit margins on internationally connected traffic.

The fraudsters inflate their profit margin by undercutting prices the Mobile Network Operators (MNO) charge and avoiding government tax surcharges. But operator losses aren't only financial.

Calls rerouted through a SIM box can't sustain the quality that a normal connection can. Calls take longer to connect, are dropped, not authorized or rejected, creating major frustration among callers, and leading to immense industry churn rates.

Other fraud schemes, like Wangiri and Spam calls, target users directly in their wallets and drive subscribers away.

Wangiri – Surprise Charges and Deteriorating Brand Loyalty

Wangiri can affect both enterprises and subscribers. In either case, carriers bear the majority of the costs.

The aim of a Wangiri attack is to generate calls from consumers or enterprises to premium rate numbers. First, a subscriber receives a seemingly innocuous missed call to their mobile phone or landline. Curious as to who it may have been, they call back. They reach a recording of some sort and hang up after a few moments, once they realize something isn't right.

At the end of the month, they're shocked by the enormous charge on their phone bill. Unknowingly, the subscriber dialed a local number, but was connected to and charged for a premium rate destination.

Hundreds of thousands of subscribers can fall victim to such an attack in a single day. Eventually, subscribers begin filing disputes with their carriers. Without an effective anti-fraud solution, dispute tickets pile up and the carriers simply can't resolve them. They face a dilemma – either foot the bill or face customer churn.

While Spam Calls are less conspicuous, they are no less damaging to a carrier's reputation and no less of a threat to their subscribers. They have an immense impact on telco industry churn rates.

Spam Calls Hit Your Subscribers in Their Wallets

Most likely, you know how obnoxious Spam Calls are. They are a primary source of frustration among people around the world today. The avalanche of calls we receive each day is only growing.

According to First Orion, there was a 118% increase in the volume of scam calls made in the USA from 2020 to 2021.

A spam call is an unsolicited call from any business directly to your mobile or home phone.

Often, the fraudsters spoof the CLIs to make the call appear as if it's coming from a local number. They try to dupe subscribers into purchasing a non-existent product or service. In some cases, the calls even originate from legitimate businesses.

While the financial damage inflicted upon subscribers is enormous, the reputational damages that carriers face are equally problematic.

How Spam Calls Cause Reputational Damage

Amidst the threat of spam calls and Wangiri callback fraud, end-users have become increasingly distrusting of calls from unknown numbers. In fact, eight out of ten Americans don't answer phone calls from unknown numbers. The FCC even condones it.

As a result, many legitimate calls from businesses to customers simply go unanswered.

While the financial effects of this are quite obvious, the reputational damage it inflicts upon carriers are devastating. Having lost their faith in their carrier to stop the barrage of spam calls, subscribers simply move on to another service provider. Carrier reputations suffer from a problem they simply can't prevent.

Short Stopping inflicts similar damage upon carriers, but with a different technique.

Short Stopping – Country-wide blockages and more unresolvable customer disputes

In simple terms, short-stopping occurs when a fraudster hijacks a call before it reaches its destination. They then route the hijacked call to a high-rate destination and connect the caller to a recording of some sort. The goal is to keep the caller on the line for as long as possible while racking up a charged duration.

Like in a Wangiri attack, callers don't even know the fraud has occurred until they get their monthly phone bill. Also, like Wangiri fraud, victims of Short Stopping file dispute tickets which the operators struggle to effectively resolve.

Operators transfer dispute tickets to the downstream operators in the routing chain, who also can't identify the source of the problem. Payment disputes emerge, which compounds mistrust and reputational damage.

Carriers faced with Short Stopping attacks often take the desperate measure of blocking entire numbering plans of high-rate destinations altogether. But subscribers who place legitimate calls to these countries can't get through, leading to greater frustration and greater telco industry churn rates.

The pattern in reputational-caused fraud loss is quite clear. Voice fraud either hits customers directly in their wallet or creates very unpleasant calling experiences, both of which lead to immense churn.

Call Stretching, however, adds a very sensitive element to this problem.

Call Stretching – Privacy concerns

With Call Stretching, a caller may be in the middle of a conversation when a fraudster suddenly disconnects the B-side from the call and routes the A-side to a recording of a previous portion of their conversation.

The goal is similar to that of Short Stopping and Wangiri – to keep the caller on the line as long as possible. Here, they inflate their profit margins for the charged duration and earn major profits.

At a time when data security is of utmost importance worldwide, it's unacceptable when a third party manages to record a subscriber's private conversation. The carrier's reputation suffers immensely.

The range of tactics fraudsters use to turn profits at the expense of various telcos is wide. Any telco churn reduction strategy must stop the fraud attacks so telcos can regain control over traffic and repair their reputations.

Stopping Telecom Fraud With a Fraud Management System

Using a Traditional FMS in a Telco Churn Reduction Strategy
In their anti-churn efforts, telcos have turned to traditional fraud management systems to stop fraud. But this approach has always come up short.

Firstly, these systems rely on outdated methods like threshold-based rules and historical lists of fraudulent numbers. They have limited prevention capabilities – they can't detect all fraud attacks, nor stop them in real-time.

They can only provide feedback after an attack occurs, allowing operators to update their system settings and rules to prevent similar future attacks. But telcos end up in a game of cat-and-mouse. Fraudsters' tactics evolve, remaining steps ahead of any solution and the losses persist.

Secondly, these systems offer very little insight into how and where the fraud occurs on the call chain and who's responsible for it.

Due to a lack of transparency along the call chain, fraudsters can embed themselves in a call at any point along the transit path without being seen. They commit the fraud, steal revenue and leave the carriers and subscribers to bear the burden of the attack.

As a result, distrust between international carriers grows. Lack of communication and increased isolation between operators prevails, further enabling the fraudsters to operate undetected.

By reversing this isolation and creating transparency along the entire call chain, fraudsters can't hide. We can stop voice fraud in its tracks before calls connect, protect reputations and retain customers. This is a key part of an effective telco churn reduction strategy.

Call validation is the game-changing technology that makes this possible.

Build Trust, Solve Disputes, and Retain Subscribers – AB Handshake

Call validation is an anti-fraud technology created by AB Handshake. The system is based on the simple, but impenetrable, principle of cross-validating call details from the A and B call registries of any call before it connects.

As a result, it guarantees 100% detection and blocking of all types of voice fraud, with zero false positives. It's a key piece of any telco churn reduction strategy.

Here's how it works:

  1. When a subscriber initiates an inbound or outbound call on a network covered by the AB Handshake solution, the details of the call are immediately delivered to a call registry.
  2. The call registry then simultaneously sends a validation request to the terminating network, which always reaches there before the actual call.
  3. The system then cross-validates the call details of both networks to detect any discrepancies.
Even the slightest discrepancy between the call details can indicate only one thing – fraud. When fraud is detected, the system gives the operator the choice between blocking the call before it connects or letting the call through (as is sometimes appropriate).

Each additional member that joins the AB Handshake community strengthens the ecosystem by expanding the portion of network traffic validated by the 'handshake'. As the volume of secure traffic around the world grows, the volume of unsecured traffic shrinks, eventually leaving the fraudsters with nowhere to turn.

If adopted on a global scale, AB Handshake can eliminate telecom fraud worldwide, giving telcos the ability to repair their reputations and bring customer churn back to reasonable levels.

Call Validation is a guaranteed and affordable means of eliminating telecom fraud on your network with absolute confidence and no false positives.

Benefits of a Fraud-free World - Beyond churn

By implementing an anti-fraud system into your telco churn reduction strategy, you can reduce churn rates, but you can do much more. Without fraudulent interference, existing processes work more efficiently and serve businesses and subscribers in new ways:

  1. Reduced customer churn: Subscribers remain loyal to their provider and call more actively
  2. Simplified dispute resolution: Dispute resolutions and negotiations between transit carriers are simplified and effective
  3. Transparency: Traceback requests from regulators are simple and fast
  4. Confidence: When only fraudulent calls are blocked (not legitimate ones) our services are more attractive and trustworthy
  5. Increased security for subscribers: By eliminating voice fraud, calls suddenly become a reliable means for authentication, verification, and other security measures like highly sensitive financial transactions

You can read the entire list of benefits here.

Low Integration Costs of AB Handshake – Affordable telco churn reduction strategy

The team behind AB Handshake understands that no such vision can be realized if the solution costs more than the fraud, itself.

The AB Handshake system can easily be integrated into the default network system of any operator located anywhere in the world. Integration takes up to one week and our pay-as-you-grow model makes the solution affordable to any operator in any market worldwide.

Join the AB Handshake Fraud-Free Community Today

By addressing the fraud issue, carriers can implement a telco churn reduction strategy that is effective in the long run.

With reliable anti-fraud technology, carriers can streamline traceback requests, quickly resolve disputes, provide a higher quality service and minimize churn. Carriers can again start trusting each other. Subscribers can again start trusting their carriers (can you imagine a world free of robocalls?).

Today, the AB Handshake system validates live traffic to every country in the world. 200+ operators have joined the AB Handshake ecosystem. They are at various integration stages, from negotiation to contract signing and onboarding.

We are actively onboarding providers around the globe, serving as a robust tool for their telco churn reduction strategy.

If you'd like to learn more about AB Handshake, or if you're interested in eliminating fraud on your network, feel free to contact us here. One of our specialists will be in touch within one business day.