This article is from the January issue of MCI World, a monthly newsletter
published by MCI for it's employees.





CRACKING DOWN ON ABUSE

The nationwide attack on telephone fraud got a boost recently when the U.S.
Secret Service joined the effort to curb the crime that costs the industry
millions in lost revenue annually.

The Secret Service used new jurisdiction over the telephone fraud for the first
time to arrest five individuals in raids on four illegal "Call-Sell" operations
in New York City last November.

The five suspects are awaiting trial in federal court on charges based on a
Secret Service investigation conducted in cooperation with MCI and other members
of the long distance telephone industry.

The defendants were charged with violation of a law on Fraud In Connection With
Access Devices which carries maximum penalties of 15 years imprisonment and a
fine of $50,000, or twice the value of the fraudulent activity.

Several other investigations are under way and future arrests are expected,
according to a Secret Service spokesman.

MCI cooperated in the investigation as a company and through membership in the
Coomunications Fraud Control Association (CFCA), made up of some 35 telephone
industry firms.

"Because it's an industrywide problem, we have organized to crack down on all
kinds of fraud, from the isolated 'hacker' to more organized schemes to use long
distance lines illegally," said Everick Bowens, senior manager of MCI security
investigations and president of CFCA.

The Secret Service said that in the New York cases, the defendants operated
Call-Sell businesses out of their homes and charged "customers" a flat fee for
making long distance calls. They used "Blue Boxes" and stolen or compromised
authorization codes or credit card numbers to use the long-distance networks of
several companies.

Blue Boxes are electronic tone-generatine devices used to bypass billing systems
and gain access to company networks. They can be assembled from generally
available electronic parts or they can be purchased ready-made through illegal
sources.

In the New York raids, agents seized unauthorized code and credit card numbers,
four Blue Boxes and more than 20 telephones.

It is estimated that in 1984, fraud in the telecommunications industry totaled
$500 million nationwide, and approximately $70 million in the New York City
area.

CFCA members are primarily interexchange carriers, such as MCI, but resale
carriers and some Bell operating companies are also members, along with
representatives of computer services and credit card companies.

Bowens says CFCA is intensifying efforts to stop the spread of fraud. Among
other things, CFCA is developing educational packages for carriers and the
public to promote widespread understanding of telephone fraud and ways to
counter the crime.

"Our aim is jointly to prevent, detect, investigate and prosecute any fraudulent
use of our long-distance networks," Bowens said.

Authorization codes are obtained by theft from individuals and by "hackers" who
randomly try combinations of numbers by telephone or through computer scanning
of number combinations until a working code is "hit."  Illegally obtained codes
are fraudulently used by "boiler room" telemarketing operations, for example,
or are passed along for use by individuals.

MCI had developed software to detect illegal entry into its network and it is
expected that the spread of dial 1 service, in which authorization codes are not
used, will help reduce the incidence of telephone fraud.