TMC’s Erik Linask (News - Alert) had the opportunity to interview TransNexus’s CEO Jim Dalton (News - Alert) as part of the recent ITEXPO East 2012.

Dalton served on a panel discussing fraud in telecom. Setting the issue in context, Dalton told Linask that fraud has been a problem in telecom “forever.”

TransNexus (News - Alert) offers products to help VoIP companies fight “traffic pumping,” which is a scam where somebody sets up a conference server somewhere and make a deal with the local state-owned phone company to collect fees for any calls terminated to their conference server.

The scammer then hacks into an IP PBX (News - Alert) or SIP phone, and generates multiple calls to the server. This can cost tens of thousands of dollars for the international long-distance vendor, which bills the SIP service provider for the hacked enterprise customer. In the end, the SIP provider is usually stuck with the bill.

VoIP has been blessed with not having to worry much about fraud until the last couple years, Dalton said, telling Linask that TransNexus is now hearing about issues with fraud “across the board” from their customers.

There are other tools and scams people can use to hack into systems and profit from free calls -- including one called SIPVicious, Dalton noted wryly -- but the basic problem is they end up sticking the service provider with a huge bill for a lot of international calls, and the service provider is unaware they’ve even been hacked. The scams can cost victims anywhere from $5,000 to an upwards of $50,000, and it’s almost always too late. “The fraud occurs Friday and they don’t know it until Monday, when they come in and see a million calls to Ivory Coast,” or some other location, Dalton said.

Dalton explained that his company’s product can detect unusual calling patterns such as those used by scammers, and immediately shut down the connection to “stop fraud in its tracks.” He discussed other approaches companies can take, and how to use software products intelligently to prevent such scams.

To see the full interview, check out the video above.