Dealer fraud on the rise

Neural Technologies reports seeing a marked increase in attempts by dealers to defraud telecommunication and pay TV companies, through scams such as identify fraud, violation of pre/post validation checks and abuse of commission/incentive schemes.

Said Luke Taylor, Neural Technologies' Commercial Director, "There has been much publicity lately about the increase globally in internal fraud due to the current financial climate. Dealer fraud is just another variant of internal fraud and as a fraud management solution provider we are seeing a substantial rise in activity in this area. Many cases involve the abuse of commission and incentive schemes, for example: creation of false subscriptions; reactivation of old accounts (flipping); and exploitation of weak or non-existent claw back controls or processes. Other cases involve the stock itself, such as stealing and selling of stock, cloning of SIMs, handset unlocking and IMEI identity changing".

Taylor suggests that poor controls are leaving many organisations open to abuse, and asks them to consider the following:  

• Segregation of duties : Have you given too much authority to a single person or group?
  
   
• Physical safeguards : Does everyone in the dealership have access to the equipment inventory?
  
   
• Independent checks : Who audits or checks sales activities/processes?
  
   
• Authorisation policy : Without clear guidelines dealers are able to circumvent processes to offer products, services and goodwill gestures without prior approval.
  
   
• Manual Processes: Are your processes mostly manual? If so your exposure to risk may be higher.

Taylor says, "The good news is that there are several ways of tackling the problem. As a minimum we would suggest operators review the sales for their top ten dealers each month to check for: similar names and addresses; accounts that are sold excessive or abnormal usage; and accounts that have been declined and later re-submitted. We also suggest examining the connections which were terminated for fraud just after a dealer has been paid commission, and which subscriptions have been barred for fraud/ bad debt and matching them up to the dealers to see if there is a recurring pattern".

These methods, along with many others, were outlined in depth in our summer newsletter.