In the digital age, SMS remains a cornerstone for user authentication, particularly through One-Time Passwords (OTPs). However, this reliance has made businesses vulnerable to a growing threat: SMS pumping fraud.
What is SMS pumping?
SMS pumping, also known as Artificially Inflated Traffic (AIT) or SMS toll fraud, is a fraudulent scheme where attackers exploit SMS-based services to generate large volumes of fake traffic. This is typically achieved by:
- Automated Bots: Using bots to flood online forms with fake OTP requests.
- Premium Rate Numbers: Directing these requests to phone numbers that incur higher charges, often controlled by the fraudsters or complicit telecom operators.
The perpetrators profit by receiving a share of the revenue generated from these inflated SMS charges, leaving businesses to bear the financial burden.
Real-World Impact: The Twitter Case
A notable example of SMS pumping's financial impact is Twitter (now X). In 2023, Elon Musk revealed that the platform was losing approximately $60 million annually due to SMS pumping fraud. The scheme involved over 390 telecom operators worldwide, who were either complicit or negligent in allowing the abuse of SMS services.
How does SMS pumping work?
The process typically unfolds as follows:
- Targeting Vulnerable Endpoints: Attackers identify websites or applications that send OTPs via SMS.
- Flooding with Requests: Bots submit numerous fake requests, often using disposable or premium-rate phone numbers.
- Revenue Generation: Each SMS sent to these numbers incurs a cost, which is shared with the fraudsters.
This leads to significant financial losses for businesses, as they pay for messages that serve no legitimate purpose.
Signs Your Business Might Be a Target
Be vigilant if you notice:
- Unusual Traffic Patterns: A sudden spike in OTP requests, especially from unfamiliar regions.
- Sequential Number Requests: Multiple OTP requests to consecutive phone numbers, indicating automated bot activity.
- Low Conversion Rates: A high number of OTPs sent but a low rate of successful authentications.
Preventive Measures: Safeguarding Your Business
To protect against SMS pumping fraud, consider implementing the following strategies:
- Rate Limiting: Restrict the number of OTP requests per user or IP address within a specified time frame.
- Bot Detection: Use CAPTCHA or other bot detection mechanisms to prevent automated submissions.
- Geo-Blocking: Limit OTP requests to regions where your user base is located.
- Traffic Monitoring: Regularly analyze traffic patterns to identify and mitigate suspicious activities.
Plivo’s Solutions to SMS Pumping
Recognizing the growing threat of SMS pumping, Plivo is proud to offer two innovative tools, free of charge, designed to protect your business from fraudulent SMS traffic:
- SMS Pumping Protection for OTP Traffic: This solution is specifically built to safeguard your SMS API endpoints that handle OTP traffic. By detecting and preventing fraudulent OTP requests, it helps ensure your messaging services remain both secure and cost-effective. Read more about SMS Pumping Protection here.
- Fraud Shield for Verify Applications: Designed for applications leveraging Plivo’s Verify API, Fraud Shield delivers advanced fraud detection by analyzing traffic patterns, identifying anomalies, and blocking suspicious activities. This ensures your verification processes stay protected from abuse. Read more about Fraud Shield here.
Learn more about Plivo’s tools for combating SMS pumping by requesting a trial.
