Irish police yesterday wrapped up "Operation Kiosk," arresting eight people in a phone-card scam that had been operating in Dublin. The scam involved cloning, or artifically raising the balance, on high-value phone cards sold by Telecom Eireann, Ireland's national telco.
The suspects, six men and two women, allegedly used phone-card emulators to jack up the credit remaining on the cards. The pirates then used the cloned cards to call a premium phone-line service operated by the same group under a phony company name, according to Hack Watch News, an Irish computer-security Web site.
"They were ringing up the premium phone number, and half [of the proceeds] were going to Telecom Eireann and the other half were going to them," said Brendan Walsh, press relations officer with the Garda Síochána na h-Éireann, Ireland's national police force.
In an interview with Wired News, Walsh said that the scam had cost Telecom Eireann the equivalent of US$163,400.
Hack Watch News said that the Telecom Eireann cards are EPROM devices. Similar, cryptographically-weak cards were at the center of another phone-card scam that emerged last month in Germany, where Dutch pirates resold cloned cards.
"Phone-card fraud has been happening in Europe for years," said Markus Kuhn, a smartcard expert with Cambridge University in England. "It seems to have just recently started to reach a scale that starts to interest the international media."
Kuhn said that clone cards were independently developed at first, manufactured by hand in very small numbers by various electronics freaks as curious projects. But cards started turning up in bigger numbers after instructions on the process began circulating on the Internet.
"Much later," he said, "other people with the necessary criminal energy got interested in this field and started to produce these cards professionally in large quantities, selling them to special markets, such as near immigration resident homes."
