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All Leakages and Frauds Suffered by Comms Providers, Ranked by Value

By Eric Priezkalns 27 Nov 2020

To my chagrin, I made a mistake when writing the report for the Risk & Assurance Group’s Revenue Assurance and Fraud Management Survey. I genuinely believed professionals who claim to be (1) numerate, (2) analytical and (3) grounded in data would not need me to perform every single calculation for them, especially when all the raw data has been made freely available. But it seems I must, or some will take the data provided by 175 professionals during September and October of this year and then seek to confuse it with data provided by 61 professionals more than a year earlier. For those who take little interest in statistics, let me reiterate some key essentials:

  • A sample size of 175 is much larger than a sample size of 61. There is no point in conducting surveys if the reliability of the survey is ignored. If sample sizes do not matter then we might as well rely on one person’s opinion without making enquiries of anyone else. And a risk professional who does not care about sample sizes is not a competent risk professional.

  • A survey done in 2020 is a more reliable indicator of what is happening today than a survey done in 2019, 2017, 1999 or 1845. That is because the world, and hence the facts, change over time. A risk professional who is not interested in changing data might as well pick the one survey which gave them answers they most liked whilst ignoring any subsequent surveys. Sadly, this happens in real life.

My mistake was to not include in the survey report a simple league table which presented the global annual monetary cost of each category of leakage and fraud as well as the percentages. This prompted some to repeat the monetary numbers from an inferior, older survey because they simply could not be bothered to convert from percentages to absolute figures. So here are the league tables of the absolute US dollar value of all the kinds of leakages and frauds suffered by comms providers, as reported by the 175 respondents to the RAG RAFM Survey.

Fraudulent and Criminal Leakages

  1. Subscription and identity fraud: USD8.15bn
  2. Bypass fraud including simboxing: USD6.86bn
  3. International revenue share fraud (IRSF): USD5.63bn
  4. Commissions fraud: USD5.23bn
  5. Handset crime: USD3.95bn
  6. Artificial inflation of traffic: USD2.53bn
  7. Theft of network assets and equipment: USD2.15bn
  8. Messaging fraud: USD1.62bn
  9. Compensating customers for wangiri: USD1.31bn
  10. Compensating customers for account takeover including SIM swaps: USD1.16bn
  11. Compensating customers for PBX hacking: USD1.14bn
  12. Customers sharing services with non-customers (e.g. passwords for services): USD1.13bn
  13. Piracy of digital content: USD0.87bn
  14. Compensating customers for mobile money fraud: USD0.83bn
  15. Denial of service attacks: USD0.74bn
  16. Tax fraud: USD0.67bn

Non-Fraudulent Revenue and Cost Leakages

  1. Bad debt: USD14.16bn
  2. Billing and collection errors: USD7.26bn
  3. Rating and tariff errors: USD6.36bn
  4. Usage errors: USD6.17bn
  5. Subscription fee errors: USD5.29bn
  6. Network and system outages: USD3.24bn
  7. Products with negative margins: USD3.05bn
  8. Excess operating costs: USD2.33bn
  9. Stranded assets and underused equipment: USD1.8bn

All Leakages

  1. Bad debt: USD14.16bn
  2. Subscription and identity fraud: USD8.15bn
  3. Billing and collection errors: USD7.26bn
  4. Bypass fraud including simboxing: USD6.86bn
  5. Rating and tariff errors: USD6.36bn
  6. Usage errors: USD6.17bn
  7. International revenue share fraud (IRSF): USD5.63bn
  8. Subscription fee errors: USD5.29bn
  9. Commissions fraud: USD5.23bn
  10. Handset crime: USD3.95bn
  11. Network and system outages: USD3.24bn
  12. Products with negative margins: USD3.05bn
  13. Artificial inflation of traffic: USD2.53bn
  14. Excess operating costs: USD2.33bn
  15. Theft of network assets and equipment: USD2.15bn
  16. Stranded assets and underused equipment: USD1.8bn
  17. Messaging fraud: USD1.62bn
  18. Compensating customers for wangiri: USD1.31bn
  19. Compensating customers for account takeover including SIM swaps: USD1.16bn
  20. Compensating customers for PBX hacking: USD1.14bn
  21. Customers sharing services with non-customers (e.g. passwords for services): USD1.13bn
  22. Piracy of digital content: USD0.87bn
  23. Compensating customers for mobile money fraud: USD0.83bn
  24. Denial of service attacks: USD0.74bn
  25. Tax fraud: USD0.67bn

About the Author

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.

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