Are Techno-criminals
Stealing the Show?
Are Techno-criminals |
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| by Noelle Backer | Illustration by Larry Knox | ||
The saying, "For all that is good, there is an evil," has probably grown more familiar to each of us throughout the years. With the growing popularity of television, followed concern about the 'TV Generation'. With the genius of the computer, came 'crashes' and 'viruses'. With the rapid emergence of the Internet, quickly came issues of freedom of speech, expression and censorship. And, with cellular phones and cellular credit card terminals, comes cellular fraud and invasion of privacy.
With new technology awaiting us at every turn, it is difficult enough to stay abreast of what's out there, and to choose which technologies are right for each of us. It is even more laborious to stay informed about the "good" and the "evil" of the technology we choose to use.
Many of us are already well-accustomed to the convenience of mobile phones. Many craft artists have also jumped at the opportunity to obtain immediate approval on credit cards through cellular credit card terminals. The benefits of this are several: you have an advantage over "cash only" competitors; you can determine over-extended, lost or stolen cards immediately; once approval is received, funds are electronically deposited into your account within 48 hours; and you may receive up to a 50 percent discount on each transaction from your bank for verifying electronically.
Fewer of us are aware of the potential hassles involved in criminal activity sometimes associated with using cellular phones and cellular credit card terminals, such as cloning, tumbling and number blocking. The truth is, everyone who uses a cellular phone or credit card terminal is at risk. However, there are ways you can help to protect yourself and your business -- primarily by gaining knowledge.
Cellular fraud is defined as the unauthorized use, tampering or manipulation of a cellular phone or service. It was considered a misdemeanor until 1993. Now, it is a federal crime. (See the Sidebar for the four types of fraud.) The cellular industry estimates that more than $1.5 million a day in revenue is lost to fraud, despite efforts to detect and prevent it.
Cellular theft: a phone is stolen from a legitimate customer and used before the theft can be reported;
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Phone companies like AT&T Wireless Services and Bell Atlantic NYNEX Mobile are developing methods of analysis to detect discrepancies in customers' calling patterns, so that they may alert the customer in advance if their mobile number is being used fraudulently. The downside is that if a local phone company detects a severe discrepancy in a customer's calling pattern, they have the authority to "block" the customer's phone number from further use. (Cellular credit card terminals transmit over phone lines and can be affected by this as well.)
As reported by a representative of Bell Atlantic NYNEX Mobile, in 90 percent of the cases, the local carrier will notify the customer before blocking their number. However, if the discrepancy is detected by a long distance carrier, the long distance carrier will notify the local carrier, who will then notify the customer. In the meantime, the long distance carrier may have already blocked the number to prevent further illegal usage. In this case, the customer may try to make a call, and will not succeed. They would then have to make arrangements for a new mobile phone number. This can be a major inconvenience to a craft artist who plans to use his cellular credit card terminal at a craft show, and discovers during his first sale that his number has been blocked.
There are certain signs that you, as a cellular subscriber, can watch for to detect fraudulent use of your mobile phone number even before the phone company does:
(List provided by AT&T Wireless Services)
Task forces dedicated to combating fraud have been developed by many long distance and local cellular carriers. In 1991, a Fraud Task Force (FTF) was formed by the Cellular Telecommunications Industry Association (CTIA). The FTF works to advance investigations, research, public education and preventative technology.
Companies such as AT&T and Bell Atlantic NYNEX have reported industry progress in the development of digital technology -- a method of transmitting cellular calls that has several advantages over the most prevalent technology used (analog technology). In somewhat basic terms, digital technology can handle three cellular calls on one radio channel, while analog can handle only one. It helps to prevent privacy invasion, may help to obstruct counterfeiting and cloning, and it is setting a foundation for further advancements in wireless communication. Another type of cellular technology, referred to as Cellular Digital Packet Data (CDPD), has also been introduced to 50 cities in the U.S. CDPD is advantageous over standard cellular technology in both speed and cost. Data are first encrypted, or coded into a complicated series of challenges and responses, and then digitally transmitted over unused cellular voice frequencies, which bypass local phone line service.
Unfortunately, the consumer is relatively helpless against cellular fraud. Technically sophisticated thieves, referred to in the industry as "bandits," have free access to anything being transmitted over the air waves. But certain measures can be taken to make cellular fraud a bit more difficult and less likely to occur:
(List provided by Bell Atlantic NYNEX Mobile)
While the preventative measures listed above may help in the deterrence of cellular fraud, they do not ensure it. There is, however, one method of consumer protection that is at least closer to foolproof -- the PIN code.
A PIN code is a fraud protection feature that every cellular subscriber can have installed through their cellular carrier. Steve Fleischer, general manager of Corporate Communications for Bell Atlantic NYNEX Mobil says, "The PIN code is probably the most effective tool we have right now. From January through September of 1995, the PIN code reduced fraud by more than 80 percent in tested markets." While these numbers are quite impressive, Fleischer admits that the PIN is not foolproof: "We're not saying that the PIN is the final answer, but it is a great deterrent. It's a lot like 'The Club' in relation to car theft."
Do you avoid accepting checks at craft shows becuase of processing delays or hassles? Do you dread the possibility of insufficient funds? You may want to investigate a system designed to make check approval or denial as simple as processing a credit card -- without the attendant fears of credit card cloning and fraud.
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While legitimate cellular customers are not required to pay for phone calls made by bandits, they should still report suspected fraud or stolen equipment to prevent additional fraud. If you either suspect fraud or your cellular phone has been stolen, you should immediately report this to your cellular carrier. If your credit card number or a customer's card number is stolen via a cellular terminal, this should be reported to the police, not the cellular company.
Despite the potential drawbacks, you still may want to buy a cellular credit card terminal to take advantage of conveniences offered by this technology. Companies such as U.S. Wireless Data offer a range of products to consumers, and also may offer rental options, full support services and 24-hour customer information numbers. Prices for cellular credit card terminals are dependent on merchant-bankcard relationships, i.e., if you need only the hardware, you could pay $1,695; if you have to purchase credit card processing as well, you could pay $2,500-$3,000. To obtain more information about costs, call U.S. Wireless Data at 800-979-DATA (800-979-3282). You can also hunt down information on various Internet Web pages. Just make sure you explore all the options, and investigate the "good" as well as the "evil" of the product you're looking to buy.
Noelle Backer is The Crafts Report's associate editor.
FOUR TYPES OF CELLULAR PHONE FRAUD