August 7

August 7, 1996

Cellular Phone Fraud Fraud

Cellular phone "cloning" costs the industry about $500 million per year due to fraudulant use of cellular numbers. That's a bit of a misnomer; truth is it costs cellular customers $500 million since the phone companies obviously just pass the costs along to consumers.

There are about 50 million cellular subscribers in the US (that makes the math easy <g>), which means cellular fraud costs each cellular subscriber $10 per year, or about $1 per month, or about 3 cents per day.

$1 per month isn't that big of a deal when you're spending a hundred dollars or more on a cellular phone. Certainly I'd like to save the dollar, but not if there's any resulting inconvenience.

Solving the $1 problem

So how does my carrier solve this $1 problem? They block my number from being used in areas that are subject to fraud! To save me a dollar! It's worse: As I write this I'm here in Philadelphia for 4 only days. That's twelve cents they're saving. But the cost is that I can't make or receive any calls while I'm here!

That's not entirely true. I can make calls if I charge them to a "major credit card". But not VISA or Discover or American Express or my AT&T or Sprint calling cards. They no longer let you charge cellular calls from Philadelphia because too many people were charging calls to their cards then refusing to pay the bill! (Cellular fraud eliminated; credit card fraud increases.)

I can charge it to Mastercard (they haven't heard, apparently). But then they want me to give my card number, expiration date, name and zipcode over the public airwaves in an area known for credit card and cellular phone fraud!

Well, the other option is to call collect. I can do that if I'm willing to give my last name over the air. The operator finally agrees to put the call through without a last name. My home phone rings but then a recording answers: "This phone does not accept calls from numbers who block Caller ID". I have my phone set up to reject intentionally blocked calls. It turns out the cellular company out here intentionally blocks its Caller ID signal so nobody will know where calls are coming from.

So, to save me twelve cents, my cellular company makes it completely impossible for me to use my phone, even if I take advantage of the "alternatives" they recommend. This solution -- inconvenience customers in order to save a few pennies -- would be like closing all hospitals because sometimes people die there. Or closing all banks becuase they sometimes get robbed. There's got to be a better answer.