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Burner Phones
Understand the rising impact of phone fraud. Scammers often use burner phones—cheap, disposable devices without contracts or advanced features.
Understand the rising impact of phone fraud. Scammers often use burner phones—cheap, disposable devices without contracts or advanced features.
Current phone fraud statistics are impressive. According to the Truecaller report, 21% of Americans in 2023 have experienced this type of crime. As a result, they lost more than $25 billion.
Scammers do everything they can to hide their real identities. This includes using burner phones to make calls and text messages.
A burner phone is a cheap device for temporary use. It can simply be thrown away or “burned” when not needed. Hence, the name of such phones.
In addition to the price, it is distinguished from the usual smartphone by several features:
Burner phones are designed to preserve the privacy of their owners and can serve quite legitimate purposes.
To purchase a burner phone, you can go to the nearest supermarket or online shop. Therefore, this device is available to everyone.
The legitimate purposes of its use include:
The burner phone itself and prepaid communication services are inexpensive. Therefore, many subscribers recharge their accounts and continue to use such a phone further.
At the same time, there are people who throw away the burner phone after the first call.
Usually, such an act is explained by the acquisition of the device for the purpose of telephone fraud.
This type of communication, along with disposable numbers, is preferred by criminals. Several factors contribute to this:
1. Lack of subscriber data. Law enforcement agencies will not be able to contact the mobile operator and find out information about the owner of the number. The operator simply does not have it. After all, there is no contract with such a user.
2. Tracking of the device location is not available. Cheap devices do not support GPS. Accordingly, it is impossible to track the geolocation of a fraudster.
3. Low probability of exposure. A criminal can easily change the burner phone number after another fraudulent call. If a criminal get caught, the device will contain minimal data.
Such features of burner phones lead to disappointing statistics:
This is why it is so important for financial organizations to obtain information about a borrower's phone number in order to objectively assess the borrower.
Modern lending organizations are increasingly turning to alternative data providers. They obtain information about borrowers from sources other than traditional credit history.
A mobile phone number is one such source. Its verification, called phone number lookup, provides the lender with hundreds of data points to optimize credit scoring.
Among other things, as part of this check, a financial institution can detect an applicant's use of a burner phone. This fact will automatically lower the digital credit rating. As a result, the loan will be granted on unfavorable terms or not at all.
Many lenders rely on phone number lookup due to the wide coverage of the world population by mobile phone operators.
Statista predicts that almost everyone on the planet will be using mobile phones by the end of 2025.
EcoFinAgency analysts say that the number of unique mobile subscriptions will increase over the next six years. At the same time, almost half of new subscribers will appear in countries of Sub-Saharan Africa and India.
It is in these countries and other developing regions that alternative credit scoring is relevant. After all, the coverage of the population with banking services there is extremely poor.
This is why lenders who want to enter emerging markets are favoring alternative credit scoring and one of its technologies – phone number lookup.
Phone lookup and, in particular, the definition of burner phones in the context of credit risk management has several purposes.
1. Identification of favorable borrowers. The technology makes it possible to identify reliable applicants who do not have a credit history and rating. This helps expand the target audience of lenders and promote financial inclusion.
2. Identifying potential defaulters. Using burner phone numbers allows you to assign a high risk level to an applicant and subject them to more thorough screening.
3. Prevent fraudsters from processing loans. An applicant's desire to conceal their real phone number may indicate criminal intent.
Burner phones are temporary devices and numbers that are often used by fraudsters to process loans.
Modern scoring systems allow lenders to take into account the fact of using such a number when evaluating a borrower. This creates a complete picture of the applicant and helps to make an informed decision on the loan application.
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