CCTV-NEWS：赵克锋：TELECOMS FRAUD

Q1. Two young lives were lost as a result of telecom frauds. In order to put a stop to this crime, one must understand it. So how does this notorious industry work?

The bottomline is the criminals are more clever than a professor like me, at least better psychologists. And the victims are really not just the uneducated. My own student just lost several thousand believing a person claiming to be myself with a very similar voice. This is but the tip of an iceberg. According to the Communications Fraud Control Association, fraud losses were about US$40billion in 2015 globally.

There are three types of telecom fraud:

1. Schemes to Defraud Subscribers to make free phone calls or obtain free bandwidth

2. Schemes to Defraud Telecom Service Providers using say regulatory loopholes. This is the most complicated.

3. And the last one are Schemes Conducted Over the Telephone –  This category covers all types of general fraud that are perpetrated over the telephone

For the last category, no matter how credible the stories the criminals are painted, at one point, they almost always ask for money transfers. The recipients’ bank accounts are always from people with stolen identities, and the phone numbers are usually from accounts that have not been authenticated with real names. Sometimes the criminals can fake any phone numbers they want the recipients to see. Many of these criminals operate overseas.

Q2. What measures have been implemented to prevent the crime? What are the challenges?

Several months ago the government held a large-scale meeting across 23 departments to formulate more preventive measures such as emergency bank account freeze.

One important source of the problem is the difficulty in tracing the identities of the criminals. So the MIIT now requires that by end of this year, 95% of the phone accounts should be authenticated with real names, and by June 2017, 100%.

One challenge is that some telecom operators do not properly follow the authentication procedure. Some of the accounts authenticated are still problematic.

But the good news is there are also recent success in repatriating criminals from Africa back to China.

Q3. How can people better protect their personal info? If it has already been compromised how can further losses be prevented?

Call the police and banks immediately to prevent further losses. Talk to your family and friends in person whenever you feel strange about needing to transfer money to another person. Clearly, information asymmetry is the key to the success of frauds. Better prevention include better information push and pull. Push by using a better fraud alert system, possibly through the media and sns. Pull by using a better hotline system. What seems could be largely improved is the incentive system of the relevant parties. In the current tragic case, the school does not lose a dime for the student's loss. Those relevant to the safety education should be more compatible in incentives to respond fast and proactively to win the arms race of fraud prevention. A penalty system for educators might be hard to implement so a corresponding prize system could be considered.