EasyPark. 23andMe. Idaho National Laboratory. T-Mobile. What do these seemingly random organizations all have in common?
These five brands experienced significant data breaches in 2023 that exposed sensitive user data and business records. A lack of multifactor or two-factor authentication as part of the login process contributed to these data breaches.
Although data breaches are common—with more than 3,200 cases in the US exposing 353 million users in 2023—many can be avoided with simple security measures such as two-factor authentication (2FA). These added security measures ensure the login request comes from the same user who created the account.
Multiple verification options are available, including email, voice, and other biometrics. For most businesses, SMS verification with a one-time passcode is the easiest and most convenient way to authenticate a login request.
Here’s why: SMS (text subscription) is the ideal channel for user verification communication.
- More than 97% of Americans and 7 billion people worldwide use a cell phone.
- People look at 99% of text messages, usually within 15 minutes of receiving them, whereas other channels, such as email, lack that immediacy.
- Over 75% of consumers are OK with receiving SMS messages from brands they’ve opted in.
Even if you’re already familiar with SMS verification, it’s important to stay up-to-date with the latest trends and innovations SMS verification services offer. In this guide, we’ll dive deeper into SMS verification and how the latest APIs help authenticate users to keep your business and customer data safe.
How does SMS verification work?
SMS text verification lets apps, websites, banks, and other businesses double-check a user’s identity. Companies can verify if the person requesting to log in to an account is who they say they are by sending a one-time passcode via SMS to the number registered with the account. The recipient enters the code into the login page or app to complete the login process.
Here’s what this process involves:
- Step 1: A user logs into your remote server with their username and password.
- Step 2: The server cross-checks the username and password. If they don’t match, the server denies access to the person.
- Step 3: If the credentials match, the server generates an OTP (one-time password) and sends it to the user via SMS, which is valid for a few minutes.
- Step 4: The user enters the password into the login screen, and if it’s correct, the server grants access.
SMS verification is more secure since a hacker needs (at least) two pieces of information instead of just a password. This extra step makes it difficult for hackers to steal credentials and hack accounts.
Users and businesses like the convenience of SMS-based verification. Additionally, best-in-class SMS authentication systems, like Plivo’s Verify API, can deliver passwords via voice call.
A quick note — SMS verification and SMS authentication are two phrases that are often used interchangeably. However, these are different terms worth understanding.
What is SMS verification?
This happens when your business first associates details with a customer account.
- At signup
- When the customer provides new contact information like email address or phone number
What is SMS Authentication?
This happens during ongoing customer interactions and includes MFA (multi-factor authentication) or 2FA.
- At login
- On high-value transactions, customer service calls, etc
Adding SMS verification seems like a no-brainer. But, it’s worth noting that there are costs associated with sending a text message for each login request.
Businesses must weigh the cost of text messages against the significant—often devastating—costs of a data breach. Analysis by IBM found that for businesses with fewer than 500 employees, a data breach costs an average of $7.68 million per incident. This figure puts into perspective the cost of unauthorized access to system user accounts.
And, if the hacker gets access to both the password credentials and second-factor authentication (2FA), there’s no keeping them out of the system.
Finally, for the SMS authentication and verification to work, your organization must have access to the user’s phone number. Not all customers are willing to share this information before accessing the resources.
Overcome key business challenges with SMS verification
1. Avoid SMS traffic pumping fraud
Also called artificially inflated traffic, SMS traffic pumping fraud occurs when fraudsters use the phone number input field to receive a one-time passcode (OTP), an app download link, or anything else via SMS.
Without adequate controls, attackers can inflate traffic and exploit your app by sending SMS to a range of numbers controlled by a specific mobile network operator (MNO) and receive a share of generated revenue. The traffic to your app is inflated due to the attack.
2. Stop SMS phishing attacks
Considering SMS response rates as high as 45% and click-through rates around 20%, hackers know that victims are likelier to text messages than other links. Here, using multifactor authentication (MFA) fraud, the hacker who knows the victim’s username and password can try to steal the verification code, or OTP, required to access the victim’s account.
Protect user credentials from brute force attacks
Unsurprisingly, brute force attacks that use trial and error to deduce login information and encryption keys are highly effective in data breaches. Organizations that simply rely on usernames and passwords are still vulnerable to brute-force attacks.
SMS verification mitigates the risk of a successful brute-force attack. The account is locked if a user enters the wrong PIN or marks passwords invalid after a certain number of unsuccessful attempts, making it harder for hackers to tweak/identify the user credentials.
Build vs. buy: How does an SMS API provider make setting up 2FA easier?
Ready to add SMS verification to your business? There are two options: You can either build a 2FA solution in-house or integrate an SMS API provider.
There are a few reasons why some businesses build their own OTP solution. Building an in-house system allows for tailoring authentication methods to precisely fit the company’s unique workflows and data sensitivity. In some cases, regulations might mandate a specific level of control over user data that can only be configured with an in-house solution.
However, building a custom SMS verification solution is too technical and expensive for most businesses. Instead, a reputable communications platform as a service (CPaaS) like Plivo offers robust 2FA APIs that are secure, cloud-based, and cost-effective. These APIs are simpler and more efficient than writing code from scratch, so an SMS API provider makes setting up OTP easier.
Plivo’s Verify API is an off-the-shelf solution designed to meet regulatory compliance across the countries where your users are based.
Plivo Verify API: effortless, robust fraud control
Plivo’s Verify API makes it simple to start offering SMS verification. Our 2FA technology helps protect your business, build trust with customers, and protect against SMS pumping attacks. Plus, unlike with other CPaaS providers, you pay no extra fee for successful verifications with Plivo’s Verify API.
Here’s why thousands of businesses use Plivo Verify API to integrate SMS verification and deliver a better customer experience.
Pre-approved templates
Boost your OTP conversions with pre-built templates that are regulation-compliant and optimized to avoid carrier filtering regardless of the location. Plivo Verify is ideal for businesses with users across multiple countries. Here’s an example of a pre-approved template provided in our platform.
