New start-up aims to protect firms against the blight of PBX fraud

4 Sep 2012

PBX fraud is one of the biggest secrets of the telecoms industry and the reason why it is secret is the industry is ill equipped to deal with it and prefers to pretend it doesn’t exist. Now a Dublin-based start-up called PBXwall has developed a managed service that will protect firms from falling victim to costly PBX fraud.

PBX fraud is a crime that occurs typically when businesses are closed for the night or the weekend. Hackers break through the PBX and before the unsuspecting firm knows it their PBX is being used to rack up thousands of euros worth of calls by hackers running calling card businesses in other countries.

The unsuspecting business owner – usually an SME – only becomes aware of the problem when they receive their telephone bill. Because of the recession and because of staff turnover often IT managers and other technical staff who can monitor the PBX for unusual activity are seldom replaced when they leave, totally exacerbating the problem.

PBX fraud is known as the telecoms industry’s dirty little secret often because executives take the futile step of thinking if they don’t talk about it, it will go away. The problem often comes to light when business owners refuse to go away quietly.

The International Forum of International Irregular Network Access (FIINA) estimates that telecoms fraud is costing companies €42bn a year and is growing at 15pc a year. IDC estimates there are more than 200 different types of PBX fraud in existence.

The most high-profile instance of telecoms fraud in Ireland occurred in 2003, when a Comptroller and Auditor General report revealed that the Department of Social Affairs was defrauded to the tune of €300,000. In one weekend alone, an overseas crime gang that had hacked into the department’s phone exchange (PBX) racked up calls of €12,000.

In another case, an unidentified business in Dublin was one of the victims of a PBX fraud attack by an organised crime gang which hacked in and made international calls The owners of each of the PBXs had substantial carrier bills to pay, particularly the final PBX, where costs of more than €75K were run up on a weekend. The destinations of the calls were in India, Pakistan and Africa.

If anything, because of the rise and rise of unified communications and the multitude of different communications paths into the enterprise PBX fraud is only set to increase.

Finally, a solution to PBX fraud

PBXwall, which has just been selected as a high potential start-up (HPSU) with the ability to generate employment, is a Dublin-based managed service provider that has developed its own IP aimed at detecting and deflecting PBX fraud attempts.

The company has emerged as a spinout of Telcom Ltd and plans to employ 10 people by the end of next year.

Company founder Paul Byrne explains that the company has developed a server appliance that is positioned in the telecoms rack of a business and is then remotely monitored by PBXwall for strange activity.

“Pbxwall is an independent voice firewall that in real time monitors all trunks that integrate to a PBX system,” Byrne explaind.

“Our algorithm continually samples and compares audio frames which are taken from all active trunk channels for the purposes of detecting matching audio signals.  

“Should PBXwall detect a match, it will than determine if this call activity is fraudulent or not before either ceasing the call automatically or allowing it continue,” Byrne explained.

Byrne added that the company is actively working with potential value added resellers (VARs) in Ireland and the UK with a view to driving uptake of the technology and save firms from falling victim to PBX fraud.

The company has secured private investment from a company called Conex Electrical as well as funding from Enterprise Ireland as a HPSU.

Enterprise Ireland senior development advisor Kevin Kerr told that it the agency was attracted to investing in PBXwall because it was tackling a very real problem in the business world that wasn’t being helped by the industry’s silence on the problem.

“We did technical evaluations of their technology and we are convinced that this is a venture that could lead to jobs and export sales. We were struck by how well they were clued into the industry and particular resellers in the UK.

“The key here is proactive intervention and the technology works independent of human involvement because the algorithms are capable of stopping calls that shouldn’t be made, thereby saving firms the stress of unnecessary bill shock,” Kerr pointed out.

Pictured below: PBXwall founder Paul Byrne

Paul Byrne

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years