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PayPal Fraud – A Serious Disease in the Voice Over IP Landscape

Today, we’ve gotten a threatening email from an anonymous sender (go figure…) alerting us that we should not be verifying customers IP addresses when they buy service from us. This John Doe seems to think we’re violating a so-called law and we could be sued for it. The gist of his email was that he collects information about customers that have been denied service based on the location of their IP address – Starbucks for example.

Now, here comes the logical question: as a provider of what could be construed as an equivalent to “telephone services” (notice VoIP is NOT a replacement for phone service!) – wouldn’t we expect our customers to use their service at home or work? why would an honest user choose to create their account from Starbucks – when they are required to have internet service at home to use our service anyway?

The answer is simple- except for the odd exception (a fraction of a percent), it doesn’t make sense, and the obvious proof is that real users with nothing to hide sign up from their home or work computer connected to a network that makes it possible to verify their identity to a reasonable level of certainty Buy Cashapp verified Account.

If that’s the case, then why are we, as a provider, receiving such “notice”? the answer is simple: IP address verification and fraud combating measures implemented by VoIP stop criminals in their tracks. When we first started furnishing service to the public, the percent of stolen credit cards thrown at us was an amazing 40%(!). We were not ready nor expecting such figures. The main offenders were crime rings from Egypt, Jordan, the Palestinian territories, and some countries in Africa – but we most definitely have gotten some criminal transactions from right here in the USA. After implementing minimal steps like preventing automatic processing for new unverified accounts our figures dropped to a manageable 5%, and after adding IP address validation we are at a comfortable fraction of a percent and can concentrate on doing business rather than worrying who we provide service to.

This online-crime epidemic is especially aimed at companies that provide VoIP service. Why? because it is an easy target, and as good as cash in the bank. For an international crime ring, getting their hands on stolen credit cards or PayPal accounts is not only easy – but also cheap. We’re talking a few cents per number. Not only do they get the identity theft victim’s credit information – they typically also get their name, address, and sometimes even more than that. For US-based criminals it is possible to do things like create a credit card in the victim’s name which could net them thousands of dollars. However in the case of criminals in Egypt for example – there’s not much they can do except shop around online. They of course cannot log into your-electronics-store.com and get a TV shipped over to them, so they need a simple way to “launder” their stolen cards into cold, hard cash. The solution? international calling minutes. A company that runs a network of call shops or calling cards in the middle east can get that cash from their customers, while getting free minutes from the victim Voice over IP provider of their choice. If you’ve been in the VoIP business for a few days you quickly learn that international minutes is just as liquid as cash. In fact some carriers pay each other by exchanging minutes rather than money.

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