Billions of rand in airtime has been stolen from mobile subscribers in South Africa, and there is nothing they could do to stop it.
This is according to feedback from two industry insiders who spoke to MyBroadband on the condition of anonymity.
The airtime was stolen by rogue wireless application service providers (WASPs), which bill cellular subscribers’ accounts without their permission.
“Over the last decade, billions and billions were illegally and immorally taken by WASPs and mobile network operators alike – sometimes for services which were never delivered,” one industry source said.
He said that subscribers are defenceless against these criminals as there is no way to proactively block WASP billing on their accounts.
How it works
WASPs are given tools by mobile operators to bill mobile cellular users’ accounts and take their airtime for content subscription services.
Many rogue WASPs exploit weaknesses in the system to bill people’s accounts without their permission or knowledge.
The only thing mobile users can do about this fraudulent activity is to regularly check their account and ask for a refund if their airtime was stolen.
Unless a mobile user detects this fraud on their account and lodges a complaint, the money is gone forever. The rogue WASP and mobile operator profit in this case.
Rogue WASPs have been stealing airtime for over a decade
Rogue WASPs have been stealing airtime from South Africans for over a decade, and mobile operators are well aware of this problem (Read this article from 2008).
While mobile operators are continually implementing new measures to limit fraudulent billing, they have not been very effective.
As soon as a mobile operator implements a new measure to fight fraud, the fraudsters find a way to bypass it.
The simple solution to this problem to block all WASP services by default and to give mobile subscribers power over who can take money from their account.
The mobile operators, however, stand to lose a lot of money if they implement this solution, and to date this has not happened.
Telkom is the only large operator which blocks WASP billing by default on its network and therefore does not have this problem.
Vodacom unveils some information
Vodacom revealed in its latest annual report that there was a 41% decline in subscription-based content services revenue as a result of its “stringent policies to minimise content fraud”.
The 41% decline in subscription-based content services revenue, Vodacom said, was the main reason for a 0.4% decline in digital services revenue.
In the 2017/2018 financial year, digital services revenue was around R2.29 billion, which declined to approximately R2.11 billion in the 2018/2019 financial year.
According to Vodacom’s annual report, the R181 million decline was therefore mainly caused by limiting fraudulent content subscription services.
This figure gives a rough estimate of the scale of the problem, but Vodacom highlighted that other factors also contributed to the decline in digital services revenue.
Vodacom said the sharp decline can also be attributed to heightened competition and the fact that consumer spend is under pressure.
Debate about blocking WASP services
One industry source told MyBroadband that there is a debate inside certain mobile operators about blocking subscription-based content services.
He said there are only a handful of WASPs which still offer subscription services – often engaging in unethical practices – and that they are well-known to operators.
He added that several executives at mobile operators support blocking WASP billing by default to protect their subscribers against these unethical companies.
Other executives, however, are against blocking WASP billing by default because of the potential loss in revenue.
Vodacom said it has a zero-tolerance approach to any type of illegal activity that takes place on its network.
“We have on numerous occasions communicated the proactive steps taken to restrict click-jacking fraud, a global and industry-wide phenomenon,” it said.
“These measures include taking a hard line in the event that a third-party contravenes any agreement they may have with Vodacom or the likes of WASPA’s code of conduct.”
“We have and will continue to suspend and terminate the services of WASPs and their affiliate content aggregators, and will continue to investigate reported transgressions.”
Vodacom added that it also seeks to ensure that affected customers are fully refunded on first contact with their customer care.
MTN SA executive for corporate affairs Jacqui O’Sullivan told MyBroadband that it has always had a policy of crediting customers for disputed spend.
“While we credit customers for disputed spend on content-type services, this amount is minimal on a monthly basis,” O’Sullivan said.
She added that there are no unlawful subscription content services. “All partners are committed to offer value to our customers,” it said.
O’Sullivan explained that MTN has a double opt-in process where customers have to approve the subscriptions to any services.
“In addition to this, MTN made this process utilising two different bearer types (WAP and NI USSD) to ensure that it mitigates any automated fraudulent activity due to malware on customer’s handsets,” she said.
Cell C responds
Cell C told MyBroadband that it agrees that fraud does occur in the industry, but at Cell C this is minimal.
Cell C said fraud is limited on its network because of its processes, which include active monitoring and double opt-in.
The company said that it operates its WASP business on ethical grounds with relevant processes and policies in place.
“We are in constant communication with our WASP partners and their agreements with Cell C will be cancelled for any unethical business,” Cell C said.