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Has your Company Been a Victim of Phone Fraud?

February 23rd, 2009

Do you know what “phone phreaking” is? If not, then consider yourself lucky. Phone phreaking is a term ascribed to criminals who gain access to a company’s voice mail system by cracking the password and using the hijacked phone line for calls to countries such as Sierra Leone. This can result in hundreds of thousands of dollars in fraud against companies and there is no insurance against it. The problem appears to be that Bell’s infrastructure enables hackers to turn four lines into 200 lines that are billed for continuous phone calls.

This is quite different than credit card fraud whereby you are not responsible for the fraud perpetrated against you. Banks and credit card companies are insured against fraud and unless you were somehow negligent or responsible you will not have to pay the fraudulent charges on your credit card bill. However this is not the case with phone phreaking. The onus is not on the phone company to protect its customers from fraud, but rather the customers who are responsible for ensuring that their phone systems are protected from criminals. Unfortunately the phone company does not issue instructions on how to do that. The customer is responsible for paying for all calls originating from, and charged calls accepted at, their telephone, regardless of who made or accepted them. And that can spell bankruptcy for some companies who have been the victims of phone phreaking and are responsible for phone bills of over $200,000.

The customers feel that Bell should be responsible for improving their technology so that phone phreaking doesn’t occur, but that isn’t likely to happen any time soon. In the meantime we are all potential victims.