March 20, 2024

Know Your Customer (KYC) Standards in the Telecom Industry

Know Your Customer (KYC) Standards in the Telecom Industry

Scammers and bad actors use any means available to take advantage of consumers. Unfortunately, this could implicate your business in their crimes. Organizations must be vigilant in vetting potential customers to prevent their software, services, or tools from falling into the wrong hands. The telecom industry is aware of this and has adopted a Know Your Customer (KYC) strategy to prevent scammers from benefiting from legitimate services.

Telecom Industry Focuses on KYC and Digital Identity

Know Your Customer (KYC) is at the heart of protecting consumers and businesses from fraud. Recent advancements in technology mean that service providers must confirm digital identities.

The telecom industry is evolving alongside the techniques used by bad actors. While digital identity verification moves toward a user-centric model that improves convenience, service providers must improve their processes to ensure accuracy.

So far, telecom leaders have embraced Caller Name Presentation (CNAP), STIR/SHAKEN, and rich call data (RCD). Some stragglers haven’t conformed to KYC standards, but the FCC and major service providers in the industry have pressured them to adopt reasonable regulations. It’s an ongoing struggle, but closing regulatory loopholes shows promising signs.

The Importance of KYC Compliance

KYC compliance helps restore the public’s trust in incoming phone calls. Some research shows that the average American receives more than three scam calls daily.

Generative AI has made the situation increasingly dire as scammers use the technology to impersonate the loved ones of their targets.

Criminals have made a lot of money from these and other scams. Reporting on trends in 2022, the FCC says that:

  • Scam calls stole $8.8 billion from Americans.
  • Impersonator scams robbed Americans of $3.8 billion.
  • Investment scams cost Americans $3.8 billion.

These numbers show a shocking increase in the effectiveness of criminal behavior. Not surprisingly, people have lost faith and stopped answering calls from unknown numbers. That often means people don’t answer legitimate calls about serious topics, including healthcare and product recalls.

Restoring Consumer Confidence

Service providers can prevent scammers from using telecom technology to contact consumers when they know their customers. Evaluating all potential customers might seem like a significant burden, but failing to do so means that every business that uses outbound calling campaigns may need help to meet its goals.

Following Know Your Customer guidelines is obviously the right thing for service providers to do. Failing to uphold KYC rules, however, does more than tarnish a company’s reputation. It can lead to fines and removal from the Robocall Mitigation Database, which effectively blocks them from participating in the U.S. telecom system.

The FCC is taking action against service providers that don’t conform to standards. In February, the agency removed 12 companies from the Robocall Mitigation Database. All voice service providers and intermediary providers will stop accepting calls from the designated entities.

Dangers of Working with Untrusted Partners

Ensuring your organization works with trusted partners helps build a positive reputation with your clients and consumers. In October 2023, the FCC removed 20 voice service providers from the Robocall Mitigation Database, effectively blocking them from doing business in the US. Companies that facilitated calls through these providers were kept from reaching their consumers.

How Can Service Providers Comply with KYC Standards?

A few simple steps can help service providers know their customers and comply with KYC standards.

First, service providers must confirm their customers’ identities before granting them access to tools. Instead of trusting that a company or person is who they claim to be, require some kind of evidence. For example, you might require an email from an address that includes the company’s domain name. If you receive a message from a suspicious email address (such as contact@calleridrep.com instead of contact@calleridreputation.com), you should take a closer look into the customer’s identity before approving them.

Second, you should know what your potential customers do. Legitimate companies won’t struggle to explain their missions. They will use straightforward language that tells you what products and services they offer. If they can’t answer such a basic question, consider them a threat to your reputation, other businesses, and the public.

Third, you should continue monitoring your customers to identify unlawful behaviors as soon as possible. Do their metrics suggest that they use robodialers unlawfully? Do analytics engines spot scripts and techniques common among scammers? If any activity concerns you, take steps to confirm the customer’s identity and business goals. You might want to sever ties with any unsavory businesses before they damage your reputation.

Know Your Customers (KYC) Principles Are Essential

Caller ID Reputation’s services help companies maintain positive phone number reputations so they can reach more leads. The software includes tools for real-time reporting when numbers receive blocks or labels, actual device testing that shows users what consumers see on their caller ID screens, and number redress remediation when numbers receive unwarranted labels or blocks.

Bad actors could rely on Caller ID Reputation’s software solutions to continue dialing consumers illegally. Knowing this, Caller ID Reputation takes Know Your Customers principles very seriously so it doesn’t unintentionally assist unlawful activity.

Why We Vet Clients

Although Caller ID Reputation offers a free five-day trial of its software, not every company qualifies for access. When you request a free trial, you must communicate with a professional who will verify your business. This is part of Caller ID Reputation’s commitment to knowing its customers. While it might seem like a short-term inconvenience for new clients, it offers long-term protection that enables reliable service without interruption from the FCC and other regulatory bodies.

Speak with a Caller ID Reputation representative today to learn more about taking control of your numbers’ reputations.