Are you a victim of 8XX Fraud?
Does your Company purchase inbound toll-free service from more than one service provider such as AT&T and Verizon? Do you have a “multi-CIC” strategy to control your cost for Toll-Free inbound (8XX) service? If this is the network expense strategy being used by your Company then keep reading, there’s a fair chance your company may be getting fleeced.
What is Toll-Free Most Cost Routing or “MCR”? (hint – it’s fraud!)
If you don’t know how to detect it then your toll-free strategy might be working against you, costing your Company substantially higher rates than you thought you were paying.
Enterprises and service providers who consume large volumes of inbound toll-free service often use more than one upstream interexchange carrier (“IXC”) to route calls from the Public Switched Telephone Network (“PSTN”) to their toll-free number(s). The goal is to leverage each upstream carriers’ geographic strengths. For example, AT&T may provide lower rates in their ILEC territories in the southern states while Verizon has stronger rates in the northeast. By purchasing service from each and building a toll-free template to take advantage of these rate opportunities, toll-free customers can keep their costs as low as possible. This allows your Company to remain competitive with the products they are selling. Within the telecommunications industry, this is called Least Cost Origination (“LCO”) and it’s how the system was intended to work.
What enables this mechanism is the database of routing information managed by Somos , the FCC designated entity for managing toll-free numbering resources in the United States. LCO only works when the Company purchases service directly from IXCs who have their own nationwide Feature Group D network as identified by a Carrier Identification Code (“CIC”). This includes AT&T (CIC 0288), Verizon (CIC 0222 & 0555), Lumen (CIC 0432 and 5102) and others . The routing data is often sold as a query service by service providers such as Teliax and TNS. Historically, gaining full access to the routing database was tedious and expensive, costing providers over $30,000 per month. However, in 2018 Somos productized this database and began selling it as “Routelink”. In doing so, Somos drastically reduced the previous barriers to access the information. This information – used in the intended manner – is very helpful as it enables efficiency and innovation. However – in the wrong hands – manipulation of this information can lead to intentional inefficiencies that enrich the perpetrator while ultimately costing the Toll-Free consumer.
In the graphic above we see a toll-free call is sent to the service provider, for example, T-Mobile. T-Mobile then sends the call to the PSTN where a query is performed on the Somos database to determine how that call should be routed. The query is based on where the call originated. For example, if the T-Mobile customer calls 888-AIRLINE from 720-708-1999, that call should be routed to Verizon. Verizon is the carrier that the toll-free number owner (aka Responsible Organization or “Resp Org”) of 888-AIRLINE has chosen to route calls from that originating location. Presumably, Verizon gives them the best rate and that is how the Resp Org has designated they want their call routed. If the call is originating from a T-Mobile customer physically in Dallas TX, it should go to Inteliquent and if the call is coming from Canada it should go to Iristel. All of this routing data is contained in the Somos database based on what we refer to as a routing “template”.
The customer trusts that the calls entering their network from the IXC are routed correctly.
Currently, there is no mechanism to enforce routing based on the template. Meaning, a call that should be sent to Verizon – based on the template query result – is not guaranteed to go there. Instead, it could be routed to an IXC who is willing to pay more for the call. But why would the IXC pay more to receive that call then they are compelled to? Because the Company receiving the call from the IXC (your Company) is paying a higher rate – and due to the complexity of the IXC’s rate structure the Company is unaware of the inflated cost of the call.
How is this possible? Routelink data reveals that the Toll-Free customer (your Company) is accessible by two different IXC’s. Let’s call them IXC A and B. In the illustration below, if the upstream sending carrier is getting paid $0.002 from IXC A but $0.004 from IXC B, then the sending carrier simply MCR’s the call to IXC B, even though the template – created by the owner of the Toll-Free number – has designated IXC A to receive this call. The customer of the Toll-Free number expects to pay a rate based on the lowest cost carrier. Instead, they are paying a much higher rate. The customer trusts that the template is being followed… caveat emptor.
Believe it or not, this activity is not considered illegal and is possibly even consistent with the terms of service the Customer signed with their Provider. How? The IXC will refer to this as “on-net” calls, and it is likely defined in the agreement. For example, If a Verizon Wireless subscriber calls a Verizon Enterprise toll-free customer, it makes sense for Verizon to keep that call on their network, even if the template says use AT&T. But where this becomes unethical is when an IXC enters into a commercial agreement with the upstream carrier to “buy” the calls at an inflated rate to pad their revenue.
The FCC already addressed originating access reform in October of 2020 . But, if an IXC enters into a commercial agreement to pay more than access reform rates so that it can route “on-net” traffic at higher rates, the customer is being financially disadvantaged and likely isn’t able to detect that they are being fleeced.
But wait! It gets even more duplicitous. Let’s talk about the carrier who is selling your Toll-Free calls to the IXC. That carrier is buying the outbound Toll-Free calls from the same enterprise customers that are getting increased costs on the inbound Toll-Free MCR. Let that sink in… Dazzled with higher outbound 8YY compensation rates, toll-free customers are sending outbound toll-free traffic to the same company that is turning around and selling the call to the IXC at inflated prices causing you to pay more on your inbound 8XX. It’s like being distracted by a magicians card trick while he discretely picks your pocket!
Reverse auditing toll-free records is not easy; it is difficult to detect if this is happening to your company. However, it is a quantifiable problem and the devil – and answer – is in the data.
What can you do about it? We can help.
- Audit call detail records. Are calls entering your network according to your template?
- Review your contracts. Did you agree to “on-net” language? Ask for more information about this.
- Work with your carrier to validate the traffic. Dispute calls that are not routed to you correctly based on your template.
- Negotiate a flat rate. It won’t stop your upstream provider from buying calls at a higher rate but it does create an even playing field which invites competition for your business.
- If you’re an IXC, only pay for calls that should route to you based on your customer’s template.
How can the Toll-Free Exchange help?
- Get a free audit and report to find out if your Company is a victim of MCR.
- Get flat rate service from our peering partners at the Toll-Free Exchange. No templates, no fraud.
 Formerly known as SMS/800
 In Canada we can include Bell Canada, Rogers, Telus, Primus and others
 Technically speaking the data is named a Complex Routing Record or “CPR”.
 Rates are $0.001 per minute and $0.004248 per query (per call).
Catch the recording of our webinar about the Toll-Free Exchange and see how you...
- December 15, 2022
- Kerry Garrison
As more and more businesses move away from traditional telephone systems, the question arises:...
- December 09, 2022
- Kerry Garrison