CELLULAR-PHONE FRAUD IS one of the easiest high-tech crimes. With an ordinary scanner, any thief can lock on to a call and swipe the data needed to start dialing on someone else's nickel. Cell-phone fraud costs phone companies more than $547 million a year, according to the Cellular Telecommunications Industry Assn.
Now, Motorola Inc. is doing something to stop the plague. Sometime in mid-1996, it will start selling cell phones containing a microchip that will encrypt a subscriber's phone number and electronic serial number, the two data items essential to cellular piracy.
Here's how it works: Subscribers would dial just as they do today, but the new chip will scramble the pertinent identifying data with an algorithm called CAVE, for cellular authentication voice encryption. A chip at the subscriber database site decodes the information and transmits the call. Even though the robbers can still pick out the signal, it's doubtful they'll have the costly computerized devices needed to break the encryption, Motorola figures.
Motorola also has a phone-company-based security solution. It's concocting software that will develop a list of a customer's most frequently called numbers. A customer making a call outside that list would be asked for a personal ID number to complete the call. Since customers would rarely need to use their PINs, it's unlikely that phone thieves would be able to purloin the numbers. The company expects to introduce the software in mid-1996.