What is SMS Pumping? Detection & Prevention Solutions

SMS verification codes are something that have become a regular part of most of our lives. Yet, not every user is familiar with this kind of authentication. It is directly tied to reducing a lot of online fraud.

Common processes like user registration, login, transaction confirmation, new device login, and password resets are some of the many use cases of SMS verification codes. However, SMS pumping is a type of fraud that exploits the efficiency and convenience of SMS authentication.

Every business, app, and user needs to be aware of what is SMS pumping and how to avoid it to build a safe and secure SMS authentication process.

Understanding the Threat: What is c and SMS Toll Fraud?

Let's understand the basics of SMS pumping and toll fraud.

Definition of SMS Pumping Fraud

SMS pumping is also called artificial traffic inflation or SMS toll fraud. All of these terms refer to a type of fraud in which attackers exploit the SMS-based services, such as SMS verification codes or one-time passwords (OTPs), to create excessive message traffic via fake phone numbers.

Source:twilio

As a result, the businesses providing SMS services have to pay higher costs, get false engagement, and even face significant disruptions throughout their operations. Generally, SMS pumping fraud is committed to gain financial benefits or strain the business or app's resources.

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How Does SMS Pumping Work?

While this process might seem complicated, the reality is that SMS pumping is a serious, growing threat to most businesses and enterprises. About 20% of global OTP traffic is estimated to be artificially generated with losses of around $1.15 billion annually.

SMS Toll Fraud “Business Model”

The fraudsters can make money from the SMS toll fraud in three different ways:

• Revenue-Sharing System: In some regions, especially developing markets, mobile network operators (MNOs) and their partners can split termination fees for incoming SMS traffic. So, they benefit from artificially inflated traffic.
• Fraudster-Carrrier Collusion: Fraudsters form close relationships with corrupt or poorly-regulated telecom carriers, so that when SMS traffic is increased via fake numbers, both parties can profit from it.
• Numbers Game: Fraudsters can get a large number of phone numbers in the premium-rate category. These numbers are typically expensive in certain territories and have artificially high termination fees.

Common SMS Pumping Attack Vectors

SMS pumping attacks are carried out via different complex techniques, including:

• Account Creation in Bulk: This is the most common vector where bots are used to rapidly create fake accounts and trigger SMS verification codes at a massive scale.
• Password Reset: Attackers can also abuse the "forget password" option by requesting reset codes again and again for fake accounts. Every business must pay attention to this vector as it typically does not have any limits.
• Referral Programs: Platforms with referral programs are also often targeted with fake phone numbers to get SMS verification codes and the gaming referral rewards involved in such programs.
• Low and Slow SMS Pumping: Not every SMS pumping fraud needs to be via high-volume fake phone numbers. Some fraudsters can do this under the radar with steady fraudulent verifications to mix with the genuine traffic.

Why Must Businesses Act Against SMS Pumping Immediately?

Building a strong defense system against SMS pumping is important for businesses because the financial impact of these scams is devastating. Moreover, other than the direct costs, SMS pumping also adversely affects the relationship with SMS service providers, which can flag your account for suspicious activity, leading to delays and suspension.

SMS pumping attacks can also damage the sender's reputation and even result in delays or rejection of legitimate messages. These issues lead to erosion of customer trust, who won't receive timely SMS verification codes due to rate limits activated in response to attacks.

Building Your Defense: SMS Pumping Protection and Prevention Strategies

You need to have a comprehensive, multi-layered in-house approach to protect your business from SMS traffic pumping fraud. Here are the key aspects of a secure framework to build robust defenses:

1. Implement Smart Rate Limits

Rate limiting is the very first step you should take against SMS pumping. You should implement adaptive rate limiting to ensure these limits don't affect legitimate users. For example, your mechanism should limit requests to 3-5 SMS verification codes per hour and 2-3 attempts for a phone number before additional verification.

2. Geographic and Carrier Intelligence

Build an integrated database of destinations and number ranges vulnerable to SMS toll fraud. You can either block these numbers and services directly or require additional verification from them to minimize SMS pumping issues.

3. Advanced Bot Detection

You can also implement advanced SMS toll fraud detection and mitigation solutions, including bot detection mechanisms that are much more sophisticated than simple CAPTCHA. These solutions use behavioral analytics to identify automated traffic patterns and differentiate humans from bots.

4. Phone Number Validation and Verification

You can make it compulsory for users to go through multi-tier phone number validation. For example, first verify the format and structure using the international numbering standards. Secondly, perform the number lookup using the Home Location Register (HLR) to confirm the number is real. Thirdly, the provided number can be verified against databases of VOIP numbers and other SMS services.

5. Real-Time Traffic Monitoring

You should also perform real-time traffic monitoring to have baseline metrics for normal SMS traffic patterns. These baselines should include typical volumes by hour, geographic distribution of your audience, and average cost per message.

You can further improve security by implementing automated alerts whenever traffic deviates drastically from the established baselines.

Monitor for sudden spikes in traffic to specific countries or carriers, clusters of registrations from similar phone number ranges, and verification requests that never convert to active accounts. These patterns often indicate ongoing attacks.

Market Solutions to Prevent SMS Pumping Attacks

The following are some of the most effective solutions available to prevent SMS toll fraud via customer verification and advanced security protocols:

• Twilio SMS Pumpin Protection is a broad suite of anti-fraud tools that includes pre-configured verification rate limits, geographic permissions, number insights API for real-time monitoring, and advanced fraud detection algorithms.


Source:Twilio

• Vonage (formerly Nexmo) offers the Verify API for intelligent adaptive routing to avoid expensive routes and suspicious carriers. It also offers rate-limiting features at multiple levels.
• MessageBird is an SMS protection solution that has strong and direct relationships with numerous carriers to ensure better transparency and minimize SMS detection fraud.
• You can also find specialized SMS pumping anti-fraud tools like TeleSig, which offer advanced security features, including risk assessment APIs, device intelligence to detect bots, and reputation databases.

Overall, an effective SMS pumping prevention strategy is a combination of in-house security protocols and the implementation of smart technological defenses that understand your user patterns and behave as per your business logic.

Why EngageLab is Your Ideal Partner for SMS Toll Fraud Prevention?

Why EngageLab?

EngageLab is not a standard SMS verification code sender. Instead, it is a complete customer engagement platform with robust security and reliability to maximize safety and privacy.

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As discussed, every business needs to be concerned about rising SMS phishing fraud. Considering this threat, EngageLab is built with a strong IT foundation to provide features like OTP (one-time password) delivery and security verification. EngageLab's value proposition is in the combination of user-friendliness, global reach, omnichannel flexibility, and built-in strong security protocols.

EngageLab's Protection Capabilities

Here's why EngageLab should be your top choice to securely engage your customers:

• Multi-channel OTP verification: EngageLab not only supports SMS verification codes, but also via other channels like email, WhatsApp, and even voice OTPs. This flexibility improves security as you don't have to rely solely on SMS channels.
• High Deliverability: EngageLab has a strong global IT infrastructure for high concurrency and high deliverability, ensuring consistent delivery even during peak usage.
• Global Compliance: EngageLab operates in 200+ regions and ensures compliance with all the leading security standards and data-protection regulations, which further reduces the risk of SMS pumping.
• Complete Lifecycle Tracking: You can use EngageLab to fully track message lifecycle, delivery metrics, and user behaviour. It also helps you detect anomalies and unusual volume spikes to prevent toll fraud in SMS.

Key Reasons to Choose EngageLab

Here's why you should choose EngageLab as your primary customer engagement solution for SMS toll fraud prevention:

• EngageLab's user-friendly approach allows anyone to use it to send OTPs securely without spending money on building their own infrastructure.
• EngageLab has a global reach with a secure architecture designed to accommodate businesses of all types and sizes.
• As part of the larger organization, EngageLab has decades of experience in professional support structure and compliance with privacy frameworks like GDPR and DPPA.
• You get a wide range of features like SMS verification codes, OTPs, omnichannel messaging, and lifecycle analytics in a unified platform.

Overall, EngageLab provides a great combination of user-friendly SMS verification codes with maximum deliverability and reliable analytics. It offers strong defenses that can prevent unauthorized SMS toll and other such frauds.

Conclusion

SMS pumping scams are one of the most serious frauds that threaten digital businesses today. But the good news is that you don't have to face these threats alone or even build complex anti-fraud systems from scratch because solutions like EngageLab offer comprehensive SMS toll fraud prevention strategies.

With EngageLab, you get advanced threat detection, global carrier intelligence, and flexible verification options.

Don't wait for an SMS pumping attack to validate the significance of protection mechanisms. You should contact our fraud prevention experts today to assess your current risk and implement the perfect protection plan.