It looks like a legitimate card, but it's not.

Playing Cops and Robbers

How Faking Works

"Don't speak for more than five minutes," fake phone-card dealers instruct their customers. "Call from the hostel, it's safer. See if any unfamiliar faces are watching the phone booth. If they catch you, I don't know you."
In the past they used to steal the whole coin-operated public phone in order to get the money, so the card phones were invented to get rid of the coins, because this was actual money. "It was safer for us," said Ulrich Schaumann, chief technical officer at MATAV the Hungarian telecommunications company . "Now we have this trouble to deal with."
Counterfeiting phone cards started in 1991, one year after cardphones were introduced on the Hungarian market.
In 1996 there were 34,000 public pay phones, 14,000 of them (41%) card operated ones and half of those located in Budapest.
The cardphone works through a certain algorithm which takes the shape of a software code and identification system. A phone card is like a cash card: you have a certain amount of money and you put it in the cash machine. As long as there is cash on the card you can "real" money with it. The same works for the phone card: you put it in the phone which identifies it to know if it's the right card. If it is accepted, you can place a call and the pulses are deducted from the card until it's empty. The trick is in copying the identification code, by which the card can be "never ending."
In the "ancient era," the first fake phone cards looked like a broken radio, with wires and threads hanging out of it. The newer generations look exactly like the oriignal ones, except they're a bit thicker at one end.

To gain access to the codes, makers of fake cards have to break a cardphone - which costs HUF 80,000 each - and take the special identifying software piece - the card reader - out of it.
Stories told around the ELTE's Budaorsi hostel that claim that a group of students at Sasadi was busy with stealing a phone and didn't pay attention to the sex worker pacing the street corner because they were accustomed to seeing prostitutes there. She proved to be an undercover police woman who took out her mobile phone and had two police cars show up within a minute. They caught the thieves redhanded
In order to stop the cheating the phone company introduced new software in each card reader for every machine in town. "We have a permanent race, like cops and robbers," says Schaumann. "As soon as we change it, there are no counterfeit cards available, so for a certain time we are free of cheating."
This period is getting shorter and shorter. The methods are improving on the other side as well. "In the beginning we had two to three months, now we have weeks," said Attila Szasz, assistant director, Switching System Department at MATAV. "We can follow it in the traffic. When they spread the new faked cards around it's increasing slowly, so then it's time to change again the software. It is very costly to do it: 7 to 8 million HUF for the whole country. Last year we did it four times, this year twice already. Our loses are permanently increasing, because the number of card phones has grown and the criminals have gotten more experienced."

The Victims!

Some companies, like Westel Radiotelefon Kft., had but insignificant loses, says Laszlo Makkos, its Data Security manager. "We caught a few criminals, four or five, who changed the program of the device to make illegal phone calls. But we stopped them by strengthening our security system."
The main loser is MATAV. According to its 1996 annual report, it had revenues of HUF 51,307 million from national calls and HUF 16,164 million from international calls. Estimates for 1996 HUF put its losses due to fake phone cards at 250 million.
According to Istvan Barany, MATAV controlling executive director, any estimate is misleading: "We can't tell if someone uses fake or real phone cards. Only if someone talks on the phone for hours do we suspect that something is wrong. But now users don't speak more than 3 or 5 minutes, for they realized they can't cheat uninterruptedly. They talk for a while, then take the card out and dial again. Police patrol might say: 'What on earth is this man doing in the phone booth' and catch him in the red but the phone center can't notice any wrong-doing. It looks like a person talked five minutes, then another one came and talked for another three minutes."

The Law and The Criminals !

Criminals fall under three categories: manufacturers, dealers and users. "Luckily we are not talking about hundreds," said Gyula Bajnai, head of Economic Protection Department at Budapest Police Headquarters. "We estimate the number of sellers at under 100, and that of manufacturers at less than 10. We caught many and they are under investigation."
It's not enough that the policeman says, "This is a fake card." Experts have to say it. MATAV has an agreement with Monetel, the contractor company, that is analyzing the fake phone cards and finds out how the faking was done. They take the due correction of the software to prevent further cheating.
But even so, many suspects say they had just found it there," said Bajnai. "They found it by chance, and tried it by chance."
Only in May 1994 was card faking included in the law as a crime. Before that police couldn't do anything, even though it caused great losses to MATAV.
"The law is not formulated clearly," said Makkos. "We suggested a rephrasing, but it was not accepted. In order to catch the criminal it's very costly the way it is now. It implies a team of many people, doing a long term work to prove the crime, so police prefers to deal with more serious crimes."
Those found guilty of making fake cards face up to eight years in prison, while those caught using it can be fined up to hundreds of thousands of HUF. MATAV and district police stations have agreements to check up on Budapest "hot spots" with many phone booths. However some use the card in the night thinking that it can't be noticed. "We do notice," says Imre Kozma, executive director of MATAV security branch, contrary to what Barany said. "We have a survey system and we direct our own workers and the police to the phone booth."
The police doesn't just happen to come there by chance. Through common actions involving about 150 people from districts' self-government, MATAV employees, police people in civil or uniform, a whole city underpass is closed, or places around the railway stations, or around dormitories. Not inside them. "We don't want to undermine the student self governments's authority," says Bajnai.
Policemen that manage to catch criminals are awarded a prize. The Foundation for Telecommunications Equipment Protection was established in 1993 by MATAV and National Police Headquarters (ORFK) to award every second month not only to policemen but also to civilians investigators. "This doesn't mean this is a new source of income," says Kozma. "Hopefully people would not take a seat next to the phone booth to watch and then ask us money for it."
Those who try to save the high phone fees are but small fishes compared with those who talked for hours to the international Audiotext service - horoscope, sex telephone - based in Israel, in Dutch Antiles, in Caribbean countries. When this came out, the MATAV's loss was of millions. The service can be called now only through an operator.

Police blames faking on Hungarian habits: "In Lyon the newspapers automate is on the street," says Bajnai. "You insert a coin and take out the paper. In Hungary they would take out the paper and sell it on the other corner."
"Maybe we don't perceive it as a crime because that's what we were used to in the past," says Olga T., a university professor. "The state took so much from us that it seemed quite natural to seize whatever it was seizable, from office supplies to holiday tickets."
Others, like Schaumann, say that the fact that we need less expensive communication tools doesn't excuse a crime. Emergency calls are for free. The students are missing the conscientiousness that this is a criminal act.
"You could say 'okay this is a poor student, he is clever and calls his parents or girlfriend only with the fake card.' You could have some understanding, if he takes away his 'daily food stuff', but if he faked a card and sells it for thousands of forints and the damage to MATAV is millions of forints, then it's not anymore a 'gentleman' fake."
Fake phone card softwares travel via internet, says Kozma.
"This is a phenomena in all Europe, said Schaumann. The software technology is higher here than in other countries. Maybe India is as advanced as here. Folks here have more time or bigger needs because they are poorer. For a rich American student or an Italian, maybe the risk factor is too high, because he is not as needy. Ukrainians are also very clever in this field. They go to every country now. It's a business. They fake them for Italy, Greece, wherever they have a chance to. They are real professional criminals."
The criminal is obviously at least one step ahead the policeman, says Bajnai. "That's why we chase him, and not viceversa. At present I would be happy to keep the pace with them, but I doubt it. It wouldn't be a bad idea to recruit them. If I were an entrepreneur I would definitely try to make them work for me, not against me, for it would be profitable. But the police force doesn't have the money to buy them."
If these students are that bright wouldn't it be profitable for MATAV to employ them? "No," says Schaumann. "We have the knowledge, we don't need their know-how. Anyway they are too many, it's not one guy, which we could buy."
Phone companies don't trust people capable of crimes.
"Why don't go to banks and steal money?" said Schaumann. "It's as criminal as that. It's not smart! It's like you fake a signature. The same energy and cleverness burglars have, or how one steals money? As a pickpocket, you need more skill in your fingers. In this case you need more skill in your brain. Why parents or society are not educating their children in a way that they should respect people's property?!"

The Criminals And The Law !

MATAV and Police say that fake phone cards are bought by people from the flea market, Vietnamese, Chinese who have to plan the arrival of the next transport.
A free lance journalist acknowledged she is using one. "I can't work otherwise," she said. "Until I manage only to line up local interviews for a report, two 120 units phone cards are gone. I don't get it: why to call let's say from California here is half a dollar a minute but to call California from here is twice that much."
She also mentioned that it is not just a crime of need. "My boyfriend, though he can call abroad as much as he likes from his office, because he works for a rich humanitarian aid institution, he also uses it. For the thrill of it. 'It's so funny to be a criminal,' he said."
Foreign students "chain use" it. The whole dormitory keeps in touch with their loved ones with the help of ten, fifteen fake cards. A student monthly allowance is up to HUF 10,000. Since spring when prices went higher, they barely afford to buy their food with it.
"The lines in the hostel have grown because of the fake phone cards," said Leila S., a student from ELTE's dorm. "People talk more now. In the past my home calls were like: 'Hi mom'. I'm fine. I passed the exam. I'm broke.' because the units just disappeared in one minute. So I bought a fake one. Now I chat longer, listen to my parents' health complaints. I can call friends abroad. Ideas exchange is faster."
"These cards are like a sponsors for networking," said Pal Gabor, a high school teacher who acqknowledged that fake phone cards are popular among his pupils. "In the evening they go down in front of their homes and chat for hours in the phone booth."
When all card phones announce that: "Your card is empty" it means that MATAV has changed the softwear again.

"They changed again the codes!" say the dealers who get another opportunity to collect new fees and provide new cards. One card can be purchased for between 10,000 to 20,000 HUF, depending on how many intermediaries handled it.
For one week is peaceful. No lines in the hostel. The dealers update their clients: "The decodification program is working day and night. Until all possibilities are tried it takes one week. If the geek can't break it, then he would buy the software program for the MATAV guys with HUF 200,000." Then one day he gives around the new cards and lines in front of the phone booth start again.
Is it possible that the information leaks from MATAV's employees?
"There is no prove," said Kozma. "No police investigation find out any of our personnel working for outsiders."
Do foreign students face deportation? "Yes. It's a crime," says Bajnai. "They can be expelled. No country is happy that its students are criminals abroad."
Some say that the students fake cards for the sports of it. "Many take it as a challenge to break a code," says Bajnai. "They never think it as a crime. They realize it only when the policeman shows up."
"They burst in the phone booth and grab the card from the machine," said Leila S. "Sometimes they scold you and take away the fake card with them and that's all. Other times you give them some $50 and you get away with it. Depends on the person who checks you, how important they think themselves. Or on your looks. It's luck."

No! These are not fake phone cards manufacturers!
These students are in one of MATAV's training programs.

The Solution?

In France the phone card goes completely inside the machine. In Hungary only half of it does, so the thicker part of a fake card doesn't enter the machine. "I think it's a less effective system. Maybe the solution would be if the machine wouldn't physically permit the fake cards to enter," said Bajnai. Is it possible that MATAV was supplied outdated equipment? Schaumann said no. "At the time they introduced it, it was really up-to-date, modern system. Hungarians are famous for buying equipment that is too modern."
"The only rescue we have is to get a completely new system which cannot be faked anymore," said Schaumann. Nowadays MATAV gains only three months and then they are back to the old situation. Then they start to write again a new software, and change the reader's pieces. MATAV has an agreement with Deutche Telekom AG to use their system, the Eurochip. They will start to implement it this year. They will have to change all the cardphones. As a side benefit of using a central billing system, people could use this phone card in both countries.
"You cannot copy this card - at least for the time being," says Schaumann. "I don't know what will happen in the future. The guys are also learning, but this is much more difficult, this is the highest security. If you try to copy it, it will be so expensive that it won't be worth it."

The Budapest Week, August 14-20, 1997

I hope you've enjoyed my discreet layout.
As you see I managed to moved in.
Just between you and me, Ella is quite lenient, if you know how to take her.
The story here is a bit faked.
She wanted to write an "I" story.
But the editor said they could be accused,
I mean SHE could be accused of breaking the law.
She wanted a lead like this:
"One day I told to my editor:
'How sad this faking phone cards business is.' 'Yes," the editor said with a concerned mien. "MATAV looses millions.'
'Say, I have one in my pocket. You wanna see it?' I said innocently.
My editor darted to the phone booth and tried its efficiency by speaking for 15 minutes to his relatives in Las Vegas."
So, I hope you've enjoyed my layout.
I relly on your being discreet.
Just between you and me, okay?
Ciao Bella : )

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