Date: Wed, 13 Mar 91 21:16 CDT From: Arun Baheti Subject: Secret Service Foils Cellular Phone Fraud [Moderator's Note: Mr. Baheti passed along this article which I am presenting as part of the two part series on cellular fraud. The last issue of the Digest (#200) presented a story by Joe Abernathy. PAT] {New York Newsday}, March 7, 1991, By Joshua Quittner The US Secret Service said one of its agents cracked the code of counterfeit computer chips to block a kind of cellular telephone fraud responsible for an estimated $100 million a year in unbillable long-distance calls. During the past two months, the service has quietly distributed a free software "patch" that blocks unauthorized long-distance calls at cellular telephone switches. The patch is being heralded in New York City, where more phone service is stolen than anywhere else in the country. The first day the patch was put into use in Los Angeles, more than 5,000 illegal cellular calls were blocked, a Secret Service spokesman said yesterday. [...] The counterfeit chip used by phone cheats exploits a weakness in the cellular telephone system that allows a caller's first call to be completed before the billing status is verified ... A legitimate mobile phone has a silicon chip that generates an identification number. When a call is made, that number is relayed to the carrier, along with the caller's phone number, and the two numbers are compared to establish billing. However "depending on where you're roaming and how busy the cellular network across the country is, you can make a phone call before that procedure is completed." [Norman Black, Cellular Telephone Industry Association] To exploit that weakness, underground engineers designed a counterfeit chip that generates a different, phoney identification number on each call, tricking [the cellular telephone exchange] into thinking each call is the first. One illegally rigged phone, confiscated by police in New York City last year, was turned over to the Secret Service, which investigates, among other things, telecommunications fraud. Like a hacker -- a phone computer cheat -- the agent broke into the chip, read the microcode, decoded the algorithm at its core, then wrote a program that would help carriers detect its peculiar pattern. Dave Boll, who heads the Secret Service's Fraud Division in Washington, said that cellular telephones equipped with the counterfeit chips "sell for as much as $5,000 each". And he estimated that such phones are used to make $100 million in unbillable calls each year. [The article goes on, to talk about the call-stealing problem being the worst in NYC and how the unbillable calls tied up the network for the paying customers].