80s CBS News Street Stories - Phone phreaking

[Music] each year billions of dollars are being stolen in the weapon the thief holds in his hand isn't a gun it's a telephone technology has led to a new type of phone scam this isn't just a case of someone stealing your calling card this scam is so sophisticated it goes right into the telephone computer system Peter Van Sant reports on how the scam artists are picking up the phone but their victims are picking up the tab a typical night in downtown Los Angeles the streets are full of people many of them immigrants lining up at phone booths to call friends and family far away see do you want to call Puerto Rico yes follow me you may not realize it but you're witnessing a scam that rips off billions of dollars every year telephone oh oh just sit on my telephone number 809 the man taking these undercover videos works for Street stories what you see happening here and in cities across America is telephone fraud hustlers known as call cell operators sell stolen long-distance phone time to people on the streets how much do I owe you $10 okay see the telephone companies estimate that phone fraud tops four billion dollars a year but don't feel sorry for them they're not the ones getting stuck with the bills the victims are companies like Alexa it's the only crime I know of where the victim is held financially liable for the damages David McCarty is the president of Alexa a small biomedical company near San Jose California this is the R&D laboratory one day last year David was stunned to learn that people in New York were somehow tapping into his company's phone system and making thousands of calls all over the world on his lines we got a phone bill and we looked at $40,000 you know how can this be that was just the beginning after election reported the phone fraud to AT&T who supplied the long-distance lines and to Pacific Bell who provided the local service and equipment the phone companies were unable to stop the unauthorized calls for another month in fact $40,000 was just the tip of the iceberg it turns out that we we wind up with a two hundred and thirty three thousand dollar phone bill before we were able to stop this crime from being committed david McCarty's problems started last year when Alexan purchase business phone system from Pacific Bell customers called in orders on an AT&T 800 number we have everything we need to ssin products out to you okay so we called up AT&T Pacbell and said we didn't call all these places in South America Central America he said oh you're you know a victim a remote-access pride and that's the first I had yeah what's that it's the first time I had really ever even heard of the term McCarty and his office manager brandy McGill say that when they bought the system no one from the phone companies even hinted that security and fraud might be major problems and even at the point of talking to them the experts on the equipment no one said anything about danger no one ever mentioned danger they don't make you pay for this right well that's what I thought even though they were the ones that were in charge of putting the blocks on the system they're saying that I'm responsible for the bills that occurred after I notified them well what do you think of that I think it's things companies have to realize that a telephone system is not a like any other kind of acid or equipment they have it's like a safe it's like it's like their company fleet of cars it's like the office furniture they have to keep it safe guarded bobner seccion is a phone fraud specialist with AT&T who thinks it's right that companies like Alexa should be responsible for the bills it seems to me that this is about the only crime that I'm aware of where the victim has to pay the victim is the one who pays it doesn't seem right unfortunately the victim the customer is in the best position to prevent it it's a series of steps that have to be taken it's a combination take some education learn what the hackers are trying to do make sure you've got the right systems in place to put a lock on your door if you will okay be vigilant how is that possible though when they don't know how a phone system works well and and these phone systems are marketed WiiWare call us it'll just be plug in your phone and off you go what I can tell you is that AT&T we don't market systems that allow a hacker to penetrate them this is going through store Barnes County these two teenagers are about to show you just how simple it is to penetrate an AT&T system this is Alan and his partner Bob they're in the illegal business of breaking into the phone systems of companies like Alexa they asked us to disguise their faces and alter their voices is it tough to get into a company's phone system I call a number and I get your computers and then from that computer are just old your whole component your own phone system and then I could quality into a number to get your dial tone and then call out near Dalton how long does this take you to do Cartman see what we've done right there is a list of all carriers of account we asked Bob to show us how easy it is to break into telephone systems which allows them access to the long distance lines that is more than character and we've just connected to it you're in someone's phone system right yes see this is a private system so right now in just the last really about minute you're on the verge of breaking into AT&T system under which you could use their phone systems and it calls anywhere in the world right so for Joe Frank some elapsed time less than four minutes and keep in mind these teens claim they infiltrate hundreds of different phone systems every year and they're not alone there are hundreds of phone hackers like them across the country who steal telephone codes it's a booming business once you get these numbers what do you do with it so boom who buys it you bought the street who sells them to mobile people to call their home country what do you charge your customers for these numbers it's our numbers two girls once the hackers get the telephone codes it's just a matter of minutes before they're sold here on the streets in cities like New York and Los Angeles this is where the action really begins who's making the phone call to a large extent is people who are recently arrived in the United States they have friends and relatives and locations overseas and you'd want to be able to talk to them Jim Schneider is a fraud investigator with MCI today he's in Los Angeles more carefully a man watching the illegal call cell operators work the phones I see it usually the way that you can identify a call cell operation is that there are numerous people who are standing at the payphone will be someone the operator who will actually sell the telephone calls he'll dial the numbers put the person on the phone and then collect whatever the going rate is usually $10 so the one fellow there has a piece of paper in his hand and it probably has authorization codes that are written on the piece of paper if you look over on this wall over here and the bank of payphones there there's a call cell operation that's going on over there highly mobile and with hundreds of phone booths to use as a base of operations the call cell criminals are tough to catch MCI takes another approach warning its customers when it appears they're being mugged by phone we've pulled up some data here that seems to indicate that a particularly 800 number is being hacked Bruce Wells works with Jim Snyder at MC eyes headquarters in Washington looking for suspicious calling patterns with computers but here we see that the dialing a 1 and then a 9 and a whole lot of zeros that tells me that they're probably trying to get to an outbound operator be it a local operator along this this company operator this is Bruce walsim systems and Terry back from Washington how you doing today we happen to notice that one of your customers was getting whacked on their 800 number this morning MCI says it notifies up to 50 customers a week that someone has broken into their business phone system has anyone ever broken into MC ice phone system they answer your question yes but isn't it true whether you're MCI or AT&T that you guys can't guarantee the user that his system will be broken into now there is no silver bullet there is no magical cure it's going to prevent this which brings us back to Alexa which still owes two hundred thirty-three thousand dollars for a fraud that the telephone companies admit they can't stop I mean they've just sort of left us out there twisting in the wind it's just been unbelievable lack of customer concern lack of communication and lack of of support being a start-up company you can't afford to have your customers inconvenience people but how fickle those phone companies are why just last year Pacific Bell featured brandy McGill and Alec's on in a commercial design to sell we kid you not the very phone system that started this whole mess we pack Bell you make one phone call plug it in and it works and all these hassles started what didn't they say to you hey you're the one that was starting our commercial don't worry about anything we'll take care of it never in fact there was very little mention of the commercial and I was very very disappointed to find out that it hadn't counted for anything shortly after election complained about the phone fraud bill Pacific Bell took the commercial off the air everybody passes the bond you get the bill and we get the bill exactly if it were Pacific bowels bill we might look at it differently it's not Pacific bells bill it's 18 t's bill so it is not ours to forgive Judy Peterson is a spokesperson for Pacific valve at AT&T says it's your fault that this occurred because it's your equipment give me an answer though give me an answer to that AT&T says it's your fault you should pay for because it was your equipment mm-hmm but it wasn't our equipment but the equipment has Pacific bells logo written right on top and was sold to a Lexon by Pacific Bell it's like buying an automobile and not being told that like 100 other people have the keys to your car I think it's ridiculous I mean we were the victim of a crime and then we have to turn around and pay also so it doesn't make sense to me both AT&T and Pacific Bell are threatening to sue Alex on if it doesn't pay that 233 thousand dollar bill David McCarty says if he's forced to pay it jeopardizes his company's future Alex on by the way has changed long-distance companies so far the scam has only hit businesses that use certain kinds of telephone systems if you wonder whether your business is at risk experts say the answer is as close as your phone just call your local phone company next we make a call of our own visit a woman about to make history Maya Angelou

Channel: Anderson Ramos

Views: 5,991

Keywords: phreaking, oldschool

Id: 4b-QbXoZqxE

Length: 12min 34sec (754 seconds)

Published: Mon Jul 16 2018