(Newswire.net — October 20, 2014) — Bob Foreman thought that the $166,000 phone bill he got from the phone company was simply a matter of a print error, but it wasn’t. Mr. Foreman’s architecture firm was one among thousands of fraud victims. According to the Communications Fraud Control Association the scheme affects mostly small businesses and cost victims $4.73 billion globally last year.
Telecommunications fraud experts say that the swindle works this way: There are thousands of web-based services in US that charge dialers over $1 a minute. In the US premium-rate numbers are easily identified by 1-900 prefixes and the caller must confirm he except the charges. However, there are numerous countries with similar services, mainly phone-sex or psychic lines, that charge immediately without confirmation. The payout to the lessees can be as high as 24 cents for every minute spent on the phone.
So, hackers sign up to lease premium-rate phone numbers from one of the web-based services that charge dialers over $1 a minute and give the lessee a cut. Then break into a business’s phone system and make calls through it to their premium number, typically over a weekend, when nobody is there to notice. The hackers get a cut of the charges, typically delivered through a Western Union, MoneyGram or wire transfer.
In 2012, the phone lines at 26 small businesses around Albany were hacked and ran up phone bills as high as $200,000 in a few days.
Senator Charles E. Schumer, Democrat of New York, last year pushed the Federal Communications Commission, to adopt new regulations in order to prevent internet frauds. However, catching the phone hijackers is difficult because the crime can cross as many as three jurisdictions.
In 2011, in cooperation with Philippines police, the FBI arrested four men who used the scheme to make $2 million in fraudulent calls, the income was directed to Saudi Arabia.
Foreman’s architecture firm is disputing its $166,000 bill, however, the phone company TW Telecom included $17,000 in late charges and termination fees.
Bob Meldrum, Vice President for Corporate Communications at TW Telecom, said that someone had to pay for those calls, insisting that Foreman’s company should have better protected its equipment from hackers. Mr. Foreman said his firm didn’t even realize this was a potential risk.