Date: Tue, 28 Jul 1992 15:35:54 GMT
From: knop@duteca.et.tudelft.nl 
Newsgroups: comp.dcom.telecom
Subject: Re: Solve Three Problems (was Telecom Fraud)
Organization: Delft University of Technology, Dept. of Electrical Engineering
X-Submissions-To: telecom@eecs.nwu.edu
X-Administrivia-To: telecom-request@eecs.nwu.edu
X-Telecom-Digest: Volume 12, Issue 594, Message 9 of 9

phaedrus@cs.washington.edu (Mark Phaedrus) writes:

It is amazing how people misread/misunderstand the properties of a
stored value card. I will try to make things more clear.

> In article <telecom12.578.2@eecs.nwu.edu> gast@CS.UCLA.EDU (David
> Gast) writes:

> There's one major problem I can see with this solution.  Most
> telephones in this country are still not capable of magnetically
> "reading" even the current calling cards.

Yes, you will have to upgrade every public phone that is to use a
stored value card.

> So unless you plan on replacing most of the telephones in the
nation, or making the stored-value cards unusable on any phone without
a card reader, the protection against fraud largely goes out the
window; there's still going to have to be a number on the card for
people to punch into older phones, and "shoulder-surfing" will still
work just like it does now.

A stored value card does not have a number, anywhere, whatsoever.  It
contains a hologram that is destroyed one milimeter at a time by the
phone as the value is used up.

> In fact, I would wager that your protection from fraud would
> actually *decrease* under these circumstances.  Under the currnt
> system, if someone steals your card number and rings up fraudulent
> calls, you can generally get the charges reversed; with fraud on a
> stored-value card, the providers would probably adopt the same policy
> that many providers of debit cards do now ("if your card or number
> gets stolen and all the money in your card gets drained, well, sorry
> about that").

Correct! The maximum value of a stored value phonecard is (in the
Netherlands at least) about US $ 14.--.  Really, that is much less
than I usually carry around in cash. Cards are available in much
smaller values too.

A stored value card is much easier than using coins, because:

 - I don't always carry sufficient coins of the right type. 

 - The phone has a much higher probability of not getting broken into,
   because there is no cash inside, therefore the stored value card
   phones more often work.

> Also, unless you want to further modify every phone in the
> country so that they're capable of *writing* to the cards too, the
> privacy advantage is going to be eliminated as well; since the phones
> won't be capable of recording usage onto the cards,

The phones can ERASE the card, not write on it, they don't have to.

> the cards' value will have to be stored in some centralized database
> somewhere;

No, no, no. The phone can recognize that a valid card is inserted and
reduce the value by erasing part of the card. No central database (or
any other type of database) needs to be involved. The phone cannot
distinguish two cards of the same purchase value if they happen have
the same number of remaining "units".

> One other personal problem I have with stored-value cards: they
> require payment in advance, which may be okay for those who use the
> cards regularly, but is a pain for those like me who only carry a card
> in case of emergency or running out of change.  Why should I give my
> long-distance carrier an extra $5 or $10 of my money to take care of,
> on the off-chance I need to make a calling card call someday?

The lowest value phonecard here costs about US $ 0.60; good for four
local calls. It does not last very long on long distance calls
though ...

>> Also, since it is a stored value card, other carriers would
>> have no incentive to honor the card (they won't get paid), so they
>> could try to vandalize the card or more likely just reject it. Thus,
>> protection from AOS overcharging.

> This is about the most Pyrrhic form of "protection from AOS
> overcharging" I've seen in a while.  Are you saying that you'd rather
> have a phone try to erase your $50 worth of stored value than to
> overcharge you for the call?  As long as we're updating every phone in
> America to deal with these cards, why not just encode the carrier
> choice into the card?  You would pick up the phone, insert your card,
> and then dial the number; the phone would read the carrier code from
> the card and automatically select the proper carrier, without any of
> this 10XXX nonsense.

Indeed, this could be done. But having several providers of phonecard
phones does create a nontrivial problem. The phones must be able to
recognize several brands of phonecards and -- in some secure and
indisputable way -- record how many units they have burned of each
type.  The owner of the phone must charge the issuer of the card for
that number of units.

I believe that this can be done.


Delft University of Technology, The Netherlands, knop@duteca.et.tudelft.nl