The cloning of SIM cards is re-emerging as a significant threat to mobile operators revenues it is claimed in a new report by Chorleywood Publications. It allows fraudsters to make anonymous, high value calls for which the telco cannot collect any revenue. In addition, in most instances of cloning, the operator will find it has substantial payments to make, either to roaming partners or premium rate service providers.
Unlike analogue networks in which sensitive personal data is announced over the air and can be easily intercepted, GSM networks are protected by encryption algorithms. The algorithms serve to protect the radio signal between the mobile customer and the network, meaning that even if the signal was intercepted, it would be virtually impossible to decipher the information.
Earlier versions of the algorithms were compromised by fraudsters, who if given eight hours access to the SIM card and the correct equipment could clone a handset. The length of time taken for this process, plus the expense of the equipment required, has served as an effective deterrent and made other types of fraud more attractive. Worryingly, advances in technology mean that traditional cloning can be carried out in as little as four hours, using equipment bought on the black market for less than two hundred dollars.
The compromised algorithms have been superceded by new releases, the latest (A5/3) becoming publicly available from the GSM Association in Q3, 2002. The A5/3 algorithm will be used on GSM networks, but also for GPRS and EDGE services. It is based on an algorithm for 3G networks and paves the way for the evolution towards a secure UMTS network. Despite this advance, many operators are choosing not to upgrade the algorithms they are using, either out of ignorance or as a misguided cost saving measure. "Cloning of GSM handsets is rare, but it is getting easier and easier to carry out", says Daniel Winterbottom, author of Chorleywood Publications' new report: 'Minimising the Fraud Risk in Next Generation Networks'. "Operators who continue to use compromised algorithms will find that incidents of cloning on their network and the related losses will rise significantly".
The job of the fraudster has been made even easier by a recent discovery. The traditional methods of cloning have been replaced by a technique that can crack a SIM card within a minutes of access to it. The power consumption of the SIM card is monitored whilst certain instructions are run through the circuit, allowing the data to be analysed and the SIM card cloned.
Although significant danger is represented by the cloning of handsets, the potential losses will increase massively as m-commerce applications become more commonplace. Users will be able to transfer money out of their bank accounts and make payments for goods and services through their handset. "Without careful planning, operators will find that their customers become the victims of huge losses and the liability for the loss will rest squarely on the telco's shoulders", says Winterbottom.'"
Posted to the site on 8th August 2002
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