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              �    (I)nternational (P)hreakers (X)change     �
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              �       Phone Fraud (Newspaper Article)        �
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              �          Typed Up By: GrIm Reaper            �
              �               August 18, 1990                �
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 - Miami Herald

        Phone Fraud

 - Companies' systems become targets of schemes

     NEW YORK-Businesses, not individuals, are becoming the victims of choice
 in the thriving crime of telephone fraud, industry experts think.

     Phone fraud accounts from $500 Million in losses, or about 1 percent of
 the $50 billion in revenues earned by long-distance carriers annually, says
 the Communications Fraud Control Association, a group based in McLean, Va.

     Traditionally, long-distance schemes consisted mainly of calling-card
 fraud - mostly unauthorized use of individual's or bussinesses'
 carrier-issued calling-card billing numbers.  Other phone service thieves
 used so-called "black boxes" that emit a tone to allow access to
 long-distance lines.

     But individual calling-card fraud is being taken over rapidly by another
 scheme - one that victimizes bussiness telephone systmes called private
 branch exchanges or PBXs.

     "Abusers are now going after the more vulnerable PBXs and are having
 a field day." said Rami Abuhamdeh, whose fraud-control association is
 financed by telephone companies and law enforcement agencies.

     PBXs schemes focus on a feature on the phone system that allows
 company employees to dial into the home office - usally on 1-800 or
 WATS line - from outside.  Then, after punching in a personal
 identification number, they get a second dial tone and can make calls
 as if they were sitting at their desk.

     Calls made using this feature, called reorigination, allow the company
 to save the additional charges that long-distance carriers assess for
 calling-card use.

     To get the three- to four didit security codes, computer hackers use
 programs on thier own personal computers.  Equipped with a telephone
 modem the hackers can automatically dial numbers sequentially until they
 hit upon the right combination to access an outgoing line.

     A hacker can even start the program before he goes to bed and by the
 time he wakes up in the morning, he'll have the cde number, said Bob Fox
 of United Telecom.

     Abuhamdeh said that thieves are focusing on PBXs in part because larger
 long-distance companies have increased their security against calling-card
 fraud.

     Access codes also have been sold by disgruntled employees at some
 companies.  Fox said calling-card fraud at United Telecom's US Sprint
 is down to insignificant numbers.  But for businesses victimized by
 PBX fraud, losses can be staggering.

     Fox said $30,000 to $40,000 in extra charges is not unusual.  Among
 the most innovative attempts at eliminating remote-access fraud is a
 device deleloped by US Sprint that can recognize the precise voice
 pattern of a legitimate customer.

     The customer, after registering his voice pattern with the long-distance
 carrier, simply says his identification number into his phone and the voice
 recognition device verifies the user's identity.

     "It applies to both long-distance companies and PBX users.  The
 technology is at point right now where it's changing every day and becoming
 better," Abuhamdeh said.

     Companies can take immediate steps to fight against PBX fraud by
 increasing remote-access code numbers to as many digits as the system allows
 and not using numbers in sequential order, Fox said.

     Fox also recommends that companies turn off the reorigination feature
 of a PBX during hours when the system is not normally used and review
 remote-access records as frequently as possible.




           CRIME CALLS

  The different kinds of telephone fraud and estimated ammual losses in
 millions of dollars:

 Institutional Fraud                   : $150    30%
 Subscription Fraud                    : $50     10%
 Electronic Long-Distance Fraud        : $75     15%
 Flat-rate Multilevel Marketing Schemes: $125    25%
 Call sell Schemes                     : $100    20%

 Institutional Fraud: Fraud originating at colleges, military bases and
 prisions.

 Subscription Fraud: Phone users who don't pay accounts, use fictitous names,
 etc.

 Electronic Long-Distance Fraud: Hackers with personal computers use modems
 to connect to other computers by illegally using long-distance lines.

 Flat-Rate Multilevel Marketing Schemes: One person sells flat-rate
 long-distance service to some of his friends; they in turn sell it to thier
 friends, etc. (Not all such operations are illegal.)

 Call sell Schemes: Someone operating out of a pay phone or residence sells
 long-distance usage, using unauthorized billing numbers to pay for the
 calls.


 -SOURCE OF INFORMATION: Communucations Fraud Control Association, The
 Associated Press.

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