Forces mobilise on phone fraud

MOBILE phone operators are prepared to sponsor a private member's Bill in Parliament that would outlaw "cloned" phones, following the Government's sluggish reaction to their suggestions for legislation to fight fraud.

"It's a case of whether we'll need a private bill, or will we have to wait another two or three years for the Government to change the law," says Gary Bernstein, head of corporate security at Cellnet, one of the four networks (with Vodafone, Mercury One-2-One and Orange).

Last week, the Department of Trade and Industry said it was "considering" changes to the law suggested by a study group that included representatives of the four networks. A new law could impose a sentence of up to five years for making duplicate phones (cloning) and reconnecting stolen phones to networks (rechipping).

Ian Taylor, the science and technology minister, was guardedly positive about a change in the law, but his response implied that a shortage of Parliamentary time could derail legislation. But Mr Bernstein is determined. "This is the change we've been fighting for the past three years," he says. The matter is likely to come up tomorrow at a meeting of the mobile networks' security chiefs. Getting the changes introduced in a private bill would need the co-operation of an MP who wins a place in the draw for members' bills.

In 1994, mobile phone fraud cost the industry an estimated pounds 36m; this year, the figure is expected to be pounds 100m. The number of handsets bought grew by about 75 per cent. In August, there were 4.5 million in Britain.

However, each month about 12,000 are stolen, and about 4,000 are "cloned". In cloning, the phone number and "electronic signature number", or ESN, of an unsuspecting owner's handset are captured from the airwaves and fed into another handset. Phone theft costs about pounds 200 per incident, and contributes to 40 per cent of car break-ins in city centres. Cloning is undetectable until the owner receives a bill, often running into hundreds of pounds, for calls he or she never made. It has mushroomed by an estimated 500 per cent in the past year.

Yet under present British law, neither cloning nor rechipping a phone is an offence. In the US, it has been a federal offence for more than a year, and some states brought in legislation to outlaw it even earlier.

Although cloning and rechipping is only possible on Vodafone and Cellnet, which use analogue rather than digital technology, owners of digital handsets lose out, too. "Criminals tend to steal first and look later," says a spokesman for Mercury One-2-One, which runs a digital network, as does Orange. Analogue handsets outnumber digital ones by about four to one. At present, it is impossible to rechip or clone a digital handset.

The study group was set up in June, and included representatives from the Home Office and DTI as well as network operators and phone dealers. It delivered its recommendations earlier this month.

Its creation was a step forward. The Government previously resisted industry requests to make rechipping illegal. "I think the Government has been preoccupied before with the idea of the industry coming up with a technological fix," says David Savage, chairman of the Cellular Service Providers Group, which resells airtime for phones.