Unveiling SMS Pumping Fraud: Everything You Need to Know About It

As the prevalence of SMS communication continues to rise, so does the threat of SMS pumping fraud—a deceptive practice wherein perpetrators generate substantial volumes of fraudulent SMS traffic to exploit businesses.

SMS pumping, or Artificially Inflated Traffic (AIT), poses significant business challenges, leading to financial losses, disrupted services, and diverted focus from core business objectives.

This article delves into the various ins and outs of SMS pumping fraud, such as:

• What is SMS pumping fraud?
• How does SMS pumping fraud lead to overspending, service interruptions, and diverted focus?
• Preventive measures like setting rate limits, implementing bot detection, and using modern CAPTCHA solutions.

Read this article till the end to read more about this.

What is SMS Pumping?

SMS pumping, or Artificially Inflated Traffic (AIT), is a form of SMS fraud in which perpetrators create substantial volumes of fraudulent SMS traffic via a company’s application or online platform.

This deceptive practice leads businesses to send one-time PINs (OTPs) or links for downloading apps through SMS to fictitious phone numbers.

How Does SMS Pumping Work?

SMS pumping operates through fraudsters’ use of bots to fabricate and dispatch counterfeit OTP requests to businesses.

These bots are programmed to input fictitious phone numbers into online submission forms, creating an illusion of authentic SMS OTP requests from users.

However, a significant portion of this traffic is illegitimate.

Ultimately, businesses incur costs for sending SMS messages to nonexistent numbers, resulting in no tangible outcomes.

Detecting SMS pumping isn’t always straightforward, and consequently, numerous businesses unknowingly allocate a significant portion of their budget to fraudulent traffic.

Another common type of SMS scam is SIM Swapping in which the scammer extracts all the user data through social media accounts,

How Does SMS Pumping Impact Businesses?

In 2023, 20 billion fake A2P (Application-to-Person) SMS messages flooded digital channels, making up 5% of all A2P SMS traffic.

As reported by Mobile Europe, this wave of fraud cost businesses a staggering $1.16 billion.

When businesses encounter SMS pumping, they face three main problems:

1. Overspending

Businesses end up paying for messages sent to fake recipients, wasting money on zero results.

2. Interrupted Service

SMS attacks can disrupt regular communication between businesses and customers, sometimes forcing companies to pause their services.

This means genuine customers can’t easily reach the business.

3. Shifted Focus

Dealing with fraud takes time and effort away from focusing on essential business tasks.

Businesses must tackle fraudulent activities instead of concentrating on growth and customer needs.

Therefore, businesses must invest in better fraud detection systems and develop cybersecurity measures.

By protecting themselves from SMS fraud, companies can save money, maintain uninterrupted communication with customers, and stay focused on their goals.

How Does SMS Pumping Happen?

SMS pumping typically occurs in several common scenarios, primarily involving web forms and smartphone applications that trigger A2P (Application-to-Person) SMS messages.

Here are some examples:

1. SMS Sign Up

When users register for services or accounts using their phone numbers, fraudsters exploit this process by inputting fake phone numbers into web forms.

This triggers the sending of A2P SMS messages to these fictitious numbers.

2. Sign Up via SMS with 2FA (Two-Factor Authentication)

Many platforms utilise SMS for 2FA during sign-up.

Fraudsters exploit this by generating fake sign-up requests, prompting the system to send verification codes via SMS to counterfeit numbers.

3. Change MSISDN (Mobile Station International Subscriber Directory Number) for 2FA

Some platforms allow users to update their phone numbers for 2FA purposes.

Fraudsters abuse this feature by submitting fraudulent requests to change phone numbers, leading to delivering A2P SMS messages containing verification codes to fake numbers.

4. SMS with App Store URL for Mobile Phone

Businesses often send SMS messages containing links to app stores for users to download applications.

Fraudsters take advantage of this by submitting fake requests, causing the system to send SMS messages with app store URLs to non-existent numbers.

5. Sending SMS with App Store Link to Mobile Phone

Like the previous scenario, fraudsters exploit processes where businesses send SMS messages containing links to app stores.

By triggering these messages with fake requests, fraudsters manipulate the system into sending SMS messages to fabricated numbers.

In these scenarios, fraudsters manipulate legitimate processes to trigger the delivery of A2P SMS messages to fake or non-existent phone numbers. This deceptive practice leads to inflated SMS traffic and financial losses for businesses, as they incur costs for sending messages that do not yield genuine results.

Implementing robust security measures and authentication protocols is essential for companies to effectively detect and prevent SMS pumping.

Recommended Read: My Own Number Called Me – A Phone Scam or An Error

SMS Pumping Fraud Examples

Examples of SMS pumping fraud come in various forms, often targeting web forms or login authentication processes.

1. Web Form Attacks

A typical scenario involves fraudsters exploiting web forms where businesses collect mobile numbers.

Using automated bots, fraudsters input thousands of numbers into these forms, tricking businesses into sending numerous messages to costly destinations or premium-rate numbers.

Despite believing they’re reaching potential customers; businesses are victims of SMS pumping.

2. SMS OTP Fraud

The banking sector is frequently targeted in SMS pumping schemes, particularly on websites that employ one-time passcodes (OTPs) for login verification.

In such attacks, cybercriminals acquire stolen credentials from the dark web and employ OTP bots to execute many logins attempts swiftly.

Consequently, the targeted company incurs substantial costs due to the mass delivery of OTPs triggered by fraudulent login attempts.

These costs can escalate into thousands or even millions of dollars because SMS messages are diverted to high-cost destinations.

How Do You Detect SMS Pumping Attacks?

Potential SMS pumping fraud in your SMS traffic can be identified by looking for five key indicators.

1. Location Anomalies

Given your knowledge of your customer base’s typical locations, any unexpected OTP requests from unfamiliar regions or countries could signal attempted SMS pumping fraud by fraudsters.

2. Surges in Requests:

If you suddenly receive a surge of OTP requests within a short timeframe, it may indicate a spamming attempt by fraudsters to artificially inflate your traffic.

3. Sequential Number Patterns:

A series of OTP requests from phone numbers displaying sequential similarities is a strong indication of SMS traffic pumping aimed at deceiving your business.

The likelihood of multiple individuals with such closely related phone numbers making simultaneous OTP requests is minimal.

4. Decrease in Conversion Rates:

Noticing a lower-than-expected conversion rate on OTPs could be a red flag. Fraudsters may be sending requests, and despite your unwittingly sending PINs, no genuine interactions result.

Monitor your average conversion rates, which can vary by country. Significant drops may indicate SMS pumping fraud affecting your business.

Example:

• September: Average SMS OTP conversion rate of 70%
• October: Average SMS OTP conversion rate drops to 50%

5. Depletion of SMS Budget:

SMS traffic pumping often leads to the rapid depletion of your SMS budget due to the high volume of OTP requests sent to illegitimate numbers.

If you observe a swift depletion of funds in your SMS budget, SMS pumping fraud will likely target your business.

To assess whether your business is vulnerable to SMS pumping attacks, ask yourself the following questions:

• Are the requests clustered within a short period?
• Do phone numbers exhibit sequential patterns?
• Are web forms only partially filled out?
• Have you observed drops in conversion rates?
• Do the numbers originate from countries where your business rarely or never has customers?

How to Prevent SMS pumping?

If your answer to these questions is affirmative, your business may be experiencing SMS pumping fraud.

To prevent SMS pumping, consider implementing the following measures:

Set Rate Limits on OTP Web Form Input Box

Limit the number of OTP requests submitted within a specific time frame through your web form input box.

This will help prevent fraudsters from inundating your system with fake requests.

Implement Bot Detection Solutions

Utilise advanced bot detection solutions to identify and block automated bots attempting to submit fraudulent OTP requests.

These solutions can analyse user behaviour patterns and distinguish between legitimate users and bots.

Implement Delays Between Verification Retry Requests

Introduce delays between successive verification retry requests to thwart automated bots from rapidly making multiple attempts to submit fake OTP requests.

You can deter fraudsters from overwhelming your system with fraudulent traffic by implementing delay mechanisms.

Identifying and Preventing Bot Infiltration with CAPTCHA

Fraudsters seeking to exploit SMS pumping fraud often employ malicious bots, software programs designed to automate online tasks.

While traditional CAPTCHAs may not effectively block many bots, modern solutions like the Arkose MatchKey Challenge can be a robust defense mechanism against bot infiltration into your SMS system.

Wrap it Up

SMS pumping fraud is a common type of mobile phone scams that poses serious business risks, including financial losses and service disruptions.

To combat this threat, companies should implement measures like setting rate limits on OTP requests, using advanced bot detection, and employing modern CAPTCHA solutions. By proactively securing SMS systems, businesses can protect against fraud, maintain communication integrity, and focus on growth and customer needs.

This proactive approach is essential for safeguarding against evolving digital threats in today’s SMS-dependent business environment.