At about 5.30pm one evening, Jenny Hibbert’s cellphone was stolen from her handbag at a restaurant. Only noticing the missing phone at 10am the next morning, Hibbert immediately reported the phone as stolen.
Although only 17 hours had elapsed, R32?000 worth of calls had been charged to her MTN account.
In a similar incident, a Cape Town woman handed in her iPhone for repairs, forgetting to remove her SIM card. Four days later, the store informed her that her iPhone had been stolen and by this time R170?000 had been charged to her account.
What many cellphone contract holders are unaware of is a new type of cellphone fraud that exposes them to unlimited call charges, making their cellphone contracts their biggest financial liabilities.
According to Vodacom’s head of media, Nomsa Thusi, international revenue share fraud is a new type of fraud where a syndicate steals handsets or SIM cards from victims and uses them to dial international premium numbers in which they share a portion of the revenue.
Thusi says: “This could result in cellphone bills as high as R120?000.”
This does not, however, fully explain how Hibbert’s bill reached R32?000 in such a short period. Even if a person spent 17 solid hours on premium-rated international calls, at about R8?per minute, it would only account for just more than R8?000.
In Hibbert’s case, her itemised billing showed that not only were calls being made to Somalia at about R8 per minute, but that calls were also being made simultaneously.
Leor Atie, the director at Saicom Voice Services, explains that syndicates call premium-rated numbers for which they get a portion of revenue. Using specialised equipment, they conference additional numbers on to the call.
“You can conference five additional people on to the call. Thus, you are paying for six calls concurrently and up to R48?per minute. That’s why you see a few calls at the same time,” explains Atie. At a rate of R48 a minute, a cellphone contract can rack up charges of R2?800 within an hour if the theft is left unreported.
Unlike a credit or debit card, where the bank carries the liability for fraudulent transactions, cellphone companies have no liability and the customer is 100% responsible for the resulting bill, despite the fact that fraud has clearly taken place.
This means that for any person with a cellphone contract, their financial risk is unlimited. Even a credit card would be limited to the amount of credit you have available but with the cellphone, there is no limit to how much money you could owe.
The question is whether cellphone companies, knowing that this type of fraud is on the increase, are doing enough to protect and inform customers.
When asked why MTN did not notice the unusual call volume on the cellphone number, Lucky Mokabane, the operator’s head of public relations, said MTN is always on the watch to detect unusual call behaviour.
“At times, the type of account a customer has with us can inform us not to be alarmed by the volume of high calls.
“The customer in question has an SME account, which has a higher call limit than a normal user,” explains Mokabane. This despite the fact that over
the last six billing periods, the average call spend on Hibbert’s phone was only R100 per month.
It is understandable that some commentators are questioning the tactics of cellphone companies, especially as they could be benefiting financially from these fraudulent calls.
None of the cellphone companies were prepared to divulge the value of fraudulent calls made each month. But Karen Fourie, the head of communications at Cell C, said this kind of theft and subsequent fraud was increasing.
Thusi explains that Vodacom or any other network in South Africa has to pay the international networks for any premium calls generated from local cellphones and “therefore cannot guarantee that the customer will have no liability if they don’t report their handset as lost or stolen”.
Atie believes there is not a conspiracy by cellphone companies to make money out of fraud syndicates and that the negative publicity around these types of fraudulent calls does more reputational damage than any revenue they earn.
He does, however, agree that cellphone companies need to re-evaluate their policies.
“Sharing of the risk needs to take place, this is an evolving industry and it needs to keep up with the developing crime,” says Atie, who advises consumers to negotiate with their network.
While your network may have to pay the international network, they should not be making any profits themselves out of fraudulent activity and should not charge their portion of the call.
Atie adds: “It is also incumbent on the networks to implement sophisticated fraud detection mechanisms and to suspend a SIM card when there is obvious fraudulent activity.”
Currently, there is no legislation, not even under the Consumer Protection Act, to protect customers from this unlimited liability.
According to Ina Meiring of Werksmans Attorneys, there is no legislation that imposes any obligations on the cellphone companies in terms of fraud as a result of theft.
She says: “Any person claiming from a cellphone company would have to prove that the loss suffered was caused by the company’s negligence or fraud. It
would not be that easy.”
At the time of going to print, neither the National Consumer Commission nor the Consumer Protector had responded to requests for comment.