*scottstuff*

VoIP Fraud

Posted by Scott Laird Tue, 28 Jun 2005 02:43:19 GMT

It’s amazing the ways that people can find to steal money. The latest scam goes like this:

1. Set up the local equivalent of a CLEC in some third-world country.
2. Publish exorbitant rates for a block of numbers (say, $5/minute).
3. Sign up with a US-based VoIP provider using a freshly-stolen credit-card number.
4. Verify that the VoIP provider doesn’t know about your rates, and only charges a small fee to dial the country in question (say, $0.10/minute).
5. Have a SIP auto-dialer call your numbers via the VoIP provider until the CC is declined or the account’s balance limit is hit.
6. Repeat.
7. At some point in the future, the VoIP provider will receive a massive bill from their upstream provider, while the Telco in whatever third-world country you’re using will hand you a big check.

This is just a twist on the old “modem dialer” scam, but it’s been costing VoIP providers big money. NuFone has apparently lost $400,000 recently, and other providers are reporting huge fraud rates–according to Teliax, roughly 1/3 of their new customer signups are fraudulent.

There’s a long thread following this on Digium’s list server.

It looks like this has helped kill at least one VoIP provider: LiveVoIP has declared bankruptcy, although they had a spotty reputation to start with.