May 9, 1996

NYNEX CONTACT: Media Relations, (212) 395-0500

First Anniversary Of Alliance To Outfox Phone Fraud Is Celebrated With Addition Of `Power Trio'

NYNEX, Bellcore and HP Join Worldwide Telephone Fraud Awareness Campaign

PHILADELPHIA, PA -- The telephone industry's effort to enlist consumers in the battle against the $3.7 billion a year telecommunications fraud problem gained a major boost with the addition of three leading organizations representing key areas of fraud detection, awareness and prevention.

The new members joining the Alliance to Outfox Phone Fraud on its first anniversary are NYNEX, a global communications and media company that provides a full range of services in the northeastern United States; Hewlett-Packard Company, a worldwide provider of network test and management systems, and Bellcore, a provider of telecommunications software, engineering and consulting services. This trio joins nine other organizations, bringing the alliance membership to twelve -- doubling since its formation a year ago (see following for complete list).

"Telephone fraud is a worldwide problem that affects everyone in the telecommunications industry," said Mary Chacanias, chairperson of the alliance and director of fraud prevention for Bell Atlantic. "The addition of these three companies -- each leaders in their respective fields -- indicates the depth of the fraud problem and the commitment across the entire industry to work together to stop it."

Telecommunications fraud victimizes millions of consumers and businesses every year. Losses related to the crime are expected to reach $3.7 billion in 1996 -- an increase of 12 percent over the previous year, according to a survey by Telecom & Network Security Review (March 1996).

From a consumer perspective, telecommunications fraud takes many forms -- "shoulder surfers" watch or listen as customers enter their calling card numbers on pay phones; criminals posing as police officers or telephone company representatives try to bill calls to homes; and cellular bandits use cloning devices to steal cellular phone serial numbers out of thin air.

"Shoulder surfing' is a major problem in busy metropolitan areas," noted Paul Glover, NYNEX staff director, toll fraud management. "NYNEX is proactive in protecting our customers from telecommunications fraud. For example, we've placed protective shields around the keypads of payphones in major traffic areas such as New York City's Penn Station to keep these shoulder surfers in check."

To combat subscription fraud, NYNEX has established centers and implemented systems to monitor the network for fraudulent calling patterns. This enables NYNEX to identify and disable so called "call-sell" operations just hours after they are established. In addition, NYNEX was the first local exchange company in the nation to implement a toll credit limits program for long distance.

Spearheading the public awareness campaign is "Freddie the Phone Fraud Fox." Through informational brochures, public appearances by Freddie, and public service announcements (due to begin airing this summer), the alliance will offer consumers education on how they can help "Outfox Phone Fraud."

Businesses, meanwhile, will realize losses of $1.5 billion in 1996 through customer premise equipment (CPE) fraud. A common route for criminals is to tap into a private branch exchange (PBX) through a remote access feature, steal the code, and then set up a "call-sell" operation. Scam artists also tap into voice mail systems to "crack a code" and then proceed to transfer toll calls through the public switched network.

Both Bellcore and HP have developed state-of-the-art technology to help telecommunications service providers prevent and detect fraud with the help of Signaling System 7 (SS7) networks. (SS7 is a digital switching network utilized by many local exchange carriers and regional Bell operating companies.) The SS7 network enables near real-time fraud monitoring, reducing the time it takes to identify fraud from days and weeks to a matter of seconds.

The Palo Alto, CA-based Hewlett-Packard has developed the HP acceSS7 fraud management toolkit to help phone companies detect fraudulent calls as they occur. HP's solution, which is being implemented by telephone service providers around the world, monitors SS7 links in real-time, looking for fraud scenarios such as length of call, calls to high-fraud destinations and suspicious use of call forwarding.

"We are providing phone companies with a powerful weapon to combat the growing problem of phone fraud," said Tom White, general manager for HP's telecommunications systems division. "Our network-management technology helps companies reduce costs by catching fraud as it takes place. And given that this problem victimizes millions of consumers each year, we also recognize the importance of taking an active role in helping educate telephone customers on how to prevent fraud."

Bellcore has drawn on its wide and deep knowledge of telecommunications networks to offer the NetMavin family of SS7 link-monitoring software solutions. NetMavin applications include fraud reduction, SS7 network surveillance, and ongoing SS7 network analysis.

"With NetMavin, we estimate that our customers can detect more than 80 percent of the direct dial fraud in typical networks, and typically address 50 to 70 percent of fraud cases as they happen," said Vinay Chandhok, director-field marketing for Bellcore.

Systems such as these have helped regional Bell operating companies (RBOC's) and interexchange carriers (IXC's) reduce CPE (customer premise equipment) fraud by seven percent in the past year. Additionally, the loss "per incident" continues to "trend down" -- from $20,000 in 1995 to an expected $17,000 in 1996 (Telecom & Network Security Review, March 1996). However, according to the industry trade publication, the number of users victimized continues to increase.

Membership in the Alliance to Outfox Phone Fraud is available to any company or organization that is concerned about -- or affected by -- telecommunications fraud. For more information on the Alliance to Outfox Phone Fraud, call 800-9-OUTFOX.

MEMBER COMPANY INFORMATION

Bell Atlantic Corporation is at the forefront of the new communications, entertainment and information industry. The Philadelphia-based company provides a full array of local telecommunications services throughout the mid-Atlantic region and is one of the nation's largest cellular carriers. Bell Atlantic is a partner in national alliances that will offer wireless communications, as well as video and interactive programming. Bell Atlantic also has substantial holdings and operations in international markets and provides services for customer-based information technology. INTERNET USERS: Bell Atlantic news releases, executive speeches, news media contacts, and other useful information are available on Bell Atlantic's media relations World Wide Web site (http://www.ba.com), by gopher (gopher://ba.com) or by ftp (ftp://ba.com/pub).

Pacific Bell is a subsidiary of Pacific Telesis Group (NYSE: PAC), a diversified telecommunications corporation based in San Francisco, California. Pacific Bell continues to build California's advanced communications network -- an integrated telecommunications, information and entertainment network that will be capable of providing advanced voice, data and video services, including interactive services. The company plans to connect approximately 5 million homes by the end of the decade and all of California by 2010.

Southwestern Bell Telephone Company, a provider of innovative products and services, is a wholly owned subsidiary of SBC Communications, Inc. (NYSE: SBC), one of the world's leading diversified communications companies. Other businesses include wireless services and equipment in the United States, Europe, Latin America and Asia; messaging services; business and consumer telecommunications equipment; cable television interests in both domestic and international markets; and directory advertising and publishing. SBC Communications, Inc. reported 1994 revenues of $11.6 billion.

Hewlett-Packard Company is a leading global manufacturer of computing, communications and measurement products and services recognized for excellence in quality and support. HP has 105,200employees and had revenue of $31.5 billion in its 1995 fiscal year. Information about HP and its products can be found on the World Wide Web at http://www/hp.com .

NYNEX is a global communications and media company that provides a full range of services in the northeastern United States and high-growth markets around the world, including the United Kingdom, Thailand, Greece, Indonesia, the Philippines, Poland, Slovakia and the Czech Republic. The company has expertise in telecommunications, wireless communications, video, directory publishing and entertainment and information services.

Bellcore is a leading provider of telecommunications software, engineering and consulting services, based on world-class research. Bellcore makes information technology work for telecommunications carriers, businesses and governments worldwide. More information about Bellcore is available at its website, http://www.bellcore.com .

Illinois Consolidated Telephone Company (ICTC) is a wholly owned and the largest subsidiary of Consolidated Communications, Inc., a highly diversified telecommunications holding company which employs some 1,400 people in Illinois, Missouri and Indiana. ICTC, now in its 100th year, serves some 84,000 customers in east central Illinois. Other CCI subsidiaries provide directory publishing, telemarketing, mobile/cellular communications, competitor operator and long distance services, and inmate services in over 20 State of Illinois facilities, fiberoptic-based network facilities and software/data management services.

American Telecommunication Enterprises, Inc., based in Syracuse, NY, was founded in 1992. ATE provides long distance assisted services to local exchange carriers, coin-operated telephone and customer-owned operated telephone customers as well as the condominium, hotel and health care industries. The company serves more than 60,000 customers throughout the United States and has recently expanded to include calling card services.

Public Service Telephone Company (PSTC) of Reynolds, Georgia is one of the oldest companies of its type in the south, serving Georgia's telecommunications needs since 1911. PSTC serves 1,050 square miles of Middle Georgia between Macon and Columbus. PSTC also offers call answering in three of their seven exchanges.

Park Region Mutual Telephone Company, a local exchange cooperative headquartered in Underwood, MN, serves six exchanges in the Heart of the Lakes area of West Central Minnesota and also has an office and video conference center located in Fergus Falls, MN. In addition to state-of-the-art, digital, fiberoptic local service, Park Region provides many wireless services such as cellular, television and alarm systems along with Internet access.

Communications Fraud Control Association is an international association based in Washington, D.C., whose objective is to foster and promote cooperation within the industry with respect to telecommunications fraud control. CFCA's mission statement is "Addressing today's fraud issues with a vision of tomorrow's."

American Public Communications Council, headquartered in Fairfax, VA, is a national trade association dedicated to protecting the interests of the public communications industry, while promoting quality service to customers at competitive prices. APCC represents over 1,400 owners, operators, suppliers and manufacturers of public communications equipment and services.

FREDDIE'S FRAUD FACTS

-- Telecommunications fraud is expected to reach $3.375 billion in 1995 -- an increase of $70 million over the previous year.

-- A survey of over 90 businesses who were victims of toll fraud found that losses ranged from a few thousand dollars to $4 million. The "average" loss for all reported business cases is estimated at $168,000.

-- The amount of long distance charges stolen through customer premise equipment in the U.S. is around $1.3 billion.

-- Average losses caused by customer premise equipment (CPE) toll fraud have dropped to about $20,000 per incident. The average loss per incident was $24,000 in 1994.

-- The cost to users in "800" line charges -- run up by thieves and attempted thieves -- is estimated to reach a minimum of $235 million in 1995. "Hackers" unsuccessful, random calls constitute about 1% of the 2 billion annual calls to "800" numbers.

CUSTOMER PREMISE EQUIPMENT (CPE) TOLL FRAUD COSTS (1995 estimates)

-- Management and staff time lost incurred by victims of toll fraud: $30 million

-- Consultant and attorney fees and costs incurred by toll fraud victims: $15 million

-- Cost of management and staff time incurred by interexchange carriers (IXCs), local exchange carriers (LECs) and other vendors: $35 million

-- Consultant and attorney fees and costs incurred by IXCs, LECs and vendors: $10 million.

Total Annual Direct Cost of CPE Fraud: $1.625 Billion

TELECOM INDUSTRY TOLL FRAUD LOSSES (1995 estimates)

-- Cellular toll fraud: $450 million

-- Calling card toll fraud: $450 million

-- Pay phone toll fraud: $90 million

-- Subscription fraud: $450 million

-- Call forwarding fraud: $70 million

-- Hits to Carrier Switches & Networks $190 million

-- Prisoner toll fraud: $100 million

Total Annual Direct Cost of Industry Toll Fraud: $1.75 billion

Source: Telecom & Network Security Review

FREDDIE'S TIPS TO OUTFOX PHONE FRAUD

When using your calling card...

-- Make sure no one sees you key-in your calling card number or overhears you stating it to the operator. Block the view of the keypad and speak directly into the phone. When possible, use a phone that reads your card automatically.

-- Do not use your calling card as an identification card. Use your drivers license or some other form of ID when dealing with merchants, telemarketers and other "salespeople."

-- Report a lost or stolen card immediately. The moment you suspect your calling card has been lost, stolen, or otherwise compromised, report it immediately to your card provider.

-- Memorize your calling card and PIN number. Select or change your Personal Identification Number (PIN) to an easily remembered number. Request that your PIN number not be printed on your calling card.

When at home ...

-- Don't accept third-party or collect calls that are suspicious or from someone you do not know. When you accept, you have agreed to pay for the charges.

-- Telephone companies or law enforcement officials will never ask customers to accept collect or third-party charges as part of an investigation. Only if you make a call through an operator will a telephone company representative request specific billing information.

-- Beware of individuals who call you requesting calling card verification. Telephone companies will never call you to ask for your calling card number. Only when you make a call through an operator should you give out your card number.

-- Restrict third-party or collect calls from being made to your home or business. Some telephone companies offer this service, thus preventing fraudulent calls from being billed to your line.

In Your Car ...

-- Remove handset and antenna from car when not in use. This will help avoid the unwanted attention of criminals with Electronic Serial Number (ESN) cloning devices.

-- Protect your Electronic Serial Number. Never give your ESN number to anyone. And don't put your subscriber agreement in an unsafe place, such as the glove compartment.

-- Never let anyone use your phone unless you are present. If someone wants to use your phone, offer to dial the number for them. Fraud criminals can easily access the codes stored in your phone.

-- Have service performed only at reputable locations. If you need service, take your phone only to an authorized distributor of your cellular service.

-- If stolen, call your local police and cellular carrier immediately. The sooner you do, the less likely the chance that your phone will be used fraudulently.

PRINT MEDIA: To download a gray scale image of Freddie the Phone Fraud Fox suitable for print reproduction, or to view a color image, open location (http://www.bell-atl.com/security/fraud). To receive a diskette or velox with Freddie the Phone Fraud Fox artwork, contact Roger Williams at 703-974-8128.

BROADCAST MEDIA: To receive a copy of the Freddie the Phone Fraud Fox public service announcements, contact Carolina Munoz at 703-974-8819.

NYNEX is a global communications and media company that provides a full range of services in the northeastern United States and high-growth markets around the world, including the United Kingdom, Thailand, Gibraltar, Greece, Indonesia, the Philippines, Poland, Slovakia and the Czech Republic.

The Corporation is a leader in the telecommunications, wireless communications, cable television, directory publishing and entertainment and information services.

FAX copies of recent NYNEX news releases are available free of charge, 24 hours a day. Call 1-800-331-1214 and an automated system will provide instructions.

return to news archive