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EDITORIAL DCB and VAS fraud: the time to tackle it is now

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As Direct Carrier Billing (DCB) and the attendant value-added services (VAS) that it goes with have proliferated during the lockdown, so too inevitably has fraud, non-compliance and all the other problems that go with mobile content services and billing.

While the numbers are up for the amount of fraud going on, that is pretty much a reflection of the fact that there are way more services out there and so way more badness happening.

In reality, there is a lot of good news around these services and their compliance, as the latest report from Empello attests.

It has found that compliance in Western Europe markets, for instance, is at an all-time high. In the UK alone it is close to 100% – a state of affairs that, just a few years ago, would have seemed impossible to imagine.

According to the study, at 99% compliant, the UK had the fewest cases of fraudulent traffic. On the contrary, the three markets with the lowest levels of compliance were: Saudi Arabia: 60% compliant; South Africa: 61% compliant; and Egypt: 76% compliant.

Compliance rates for videos, games and mixed content matched the figures for overall VAS compliance in 2020. VAS were 90% compliant across all markets. At 95% compliant, video streaming services were the most compliant service, closely followed by games at 88% compliant and mixed content at 87%. The least compliant type of VAS in 2020 were sweepstakes, which were only 52% compliant.

However, sweepstakes only made up 1% of all global traffic, and are banned in many markets.

This has come to pass through improved regulation in the markets where things look good and, naturally, a lack of clear, autonomous regulation in the markets that haven’t been so successful, points out Jeremy Flynn from Empello in our interview with him for Telemedia8.1. The UK and other successful markets have managed to create (finally – Ed) a regulatory regime that seems to work and has pushed these services to be more compliant.

This has seen more mainstream brands adopt VAS – and Google ads to market them – and DCB to charge for them in greater numbers, adding to the pressure for the industry and the regulator to make it work.

Also, for MNOs, it is such a small slice of their revenues that if it doesn’t work they just shut it down.

Conversely, elsewhere in the world where there is little autonomous regulation and where MNOs police it themselves, there are more issues. In these less compliant markets there are many, many merchants and they are often self-regulated by the MNOs.

Much of the traffic in these markets also comes from affiliates and, increasingly, from social media, making it harder still for the MNOs or anyone else to police what is going on. In the markets such as the UK and Belgium where compliance is high, the bulk of traffic comes from Google.

The DCB angle

While VAS attracts problematic traffic and services, the DCB element that increasingly goes with it is also seeing its share of fraud. As James Macfarlane, CEO of PM Connect, outlines the increasing use of DCB is leading to increasing fraud – and unless it is checked and checked soon, DCB will start to face all the same problems it has over the years whenever it has shown signs of a breakthrough into mainstream use.

As Macfarlane points out, when fraud is rife, end users unknowingly lose money, Mobile Network Operators (MNOs) see toxic revenue increase that incurs extra hidden costs and user churn, merchants lose brand reputation, aggregators risk market erosion and anti-fraud companies will ultimately lose clients as a result of merchants and MNOs suffering.

It’s a conundrum that is only going to become more acute as our sector grows. The proliferation of mobile is not stopping. However, unless we tackle the issue effectively as an ecosystem, DCB as a frictionless, transparent and effective payment method, may be stifled.

Macfarlane has a proposition: inherently, the DCB value chain coming together is complex – but ultimately if we want to combat fraud successfully, that is what we need. He has a wishlist: anti-fraud to be led by the MNO – with multiple certified independent anti-fraud suppliers to choose from; merchants to be held accountable for the mobile traffic they generate; oversight and policing from the regulator, with technical solutions implemented following close working with the industry; and all working collaboratively to provide a robust solution that combats mobile fraud.

It is increasingly essential to pull these things together to make the business work and to continue its upward trajectory – the hard work starts now.

 

>>> Did you know we print Telemedia Magazine every quarter.  Free to qualified readers.  Essential reading for any buisness that wants to engage users, monetise content and drive sales of VAS and premium applications.  Download the current Issue.
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