The UK mobile industry is losing up to £140m per year on premium rate fraud, according to billing company BillingScore.
The problem of fraud is about to get worse as mobile purchasing becomes even more prevalent through the rise of in-app payments and Near Field Communications (NFC) payments, the company said.
The £140m per year cost of fraud affects not only the mobile operators, but all the players in the mobile industry, from SMS wholesalers and aggregators, through to content providers and ultimately retailers and their consumers, BillingScore said.
Telesperience research director Teresa Cottam said: 'Premium rate fraudsters in the UK are cheating the mobile industry out of more than the biggest ever Euromillions lottery win - every single year! We need to stop this money going into their back pockets, and use it instead to improve mobile networks or lower mobile bills for customers.'
Cottam added: 'Everyone in the mobile industry knows that fraud, bad debt and other types of revenue loss are a major issue – yet hardly anyone talks about it. The scale of the problem is hidden and the cost built into existing business models. The mobile sector simply cannot afford to continue haemorrhaging money in this way; nor can it keep hitting honest customers in the pocket in the form of higher charges, simply because it has failed to address the losses.'
'What’s worse, a range of new risks mean that the mobile industry will become even more vulnerable to this type of revenue loss in future unless it acts now.'
BillingScore said operator billing is expected to explode with the growth of App Stores, in-app payments and NFC, combined with the fact that many online retailers are considering mobile commerce as an additional sales channel. Revenue from in-app payments, for example, is predicted to grow by 600% this year. The problem of mobile payment fraud – and the associated cost to the industry – is only going to get bigger unless steps are put in place to prevent it.
'Sticking your head in the sand and hoping the problem will go away is not a viable strategy for the operators,' added Cottam.
'Those who fail to act will see themselves increasingly targeted by fraudsters and will become ever-more uncompetitive due to unsustainable revenue losses and disgruntled customers.'
Providing protection for the millions of daily mobile payments transactions would see even faster adoption of mobile commerce by the wider mobile community, the retailing sector and consumers, BillingScore said. This will create more revenue opportunities for the entire mobile industry.
BillingScore assesses purchasing data in real-time, across a number of different data points and can identify patterns and unusual behaviour that might indicate fraudulent behaviour.