SMS fraud detection and prevention: The complete guide

SMS fraud detection, it is a growing threat that can lead to significant financial and reputational damage. Fraudsters are on the road to finding innovative ways to exploit SMS services to steal money or sensitive information from organizations.

SMS services have become an important mode for communication for businesses through which they can reach out to customers regarding account information, updates, and content. However, with the popularity of SMS services; the risk of SMS fraud has also increased twofold. SMS fraud detection and prevention is the talk of the town, if you are also looking to protect your business; you are in the right place.

What is SMS Fraud?

SMS fraud refers to a scam that uses text messaging as the main foundation to deceive and exploit businesses and individuals. In simpler words, fraudsters send deceptive messages a clicking link or asking for personal information that then enables fraud.

Remember the recent SMS fraud? A lot of people fell prey to this incident.

Above is an example of SMS fraud on a personal level, individuals thinking that it is about a parcel, clicking on the link; updated the information and in turn, got a message from their bank about a financial transaction.

SMS fraud involves malicious activities on a higher level, where attackers manipulate the SMS system to deceive the organization, leading to huge financial losses, data breaches, and other significant consequences.

Types of SMS Fraud:

There are different types of SMS fraud, both personal and organizational levels. Let’s dive deep into types of SMS fraud. 

Phishing:

Back in time, people did not know about phishing; but due to an increase in SMS fraud a lot of awareness has been made. Phishing is also commonly known as Smishing; and it is also one of the most common types of SMS fraud. The attackers attempt to acquire sensitive personal information posing as a trustworthy entity.

Spoofing:

Spoofing is more of a serious attack; as the attacker sends messages that appear to come from a known source.

Subscription Fraud:

Subscription fraud tricks users into subscribing to premium SMS services without their knowledge, leading to charges on their mobile bills.

Wangiri Fraud:

A scam involving a missed call from an international number, prompting the victim to call back and incur high charges.

SIM Swap Fraud:

Attackers hijack a victim’s phone number by tricking the mobile provider into transferring the number to a new SIM card, gaining access to SMS-based authentication codes.

How SMS Fraud Detection and Prevention Works:

In this present era, where SMS fraud is at its peak; it is important to learn about it. Let’s explore SMS fraud detection and prevention more.

Message Monitoring and Analysis

Message monitoring and analysis are important factors when it comes to SMS fraud detection and prevention, which include the following:

• Content Filtering:

The incoming SMS messages are checked in real-time for phrases and words typical for the frauds, such as ‘You are a lucky winner’ or requests for further personal information. Other sophisticated filtering techniques are capable of learning new emerging scams strategies through iterative evaluation of highly voluminous SMS messages.

• Sender Reputation Analysis:

The system evaluates the reputation of the sender relying on previous records of the events. If a sender was previously involved in fraud or sending out mass unwanted messages, these particular messages are either filtered or banned.

Telecom operators themselves update and tend to ‘blacklists.’ Of numbers and sources of spam. 

• Behavioral Analysis:

The user’s behavior profile over time can be evaluated relative to previous behavior to look for issues such as unauthorized transactions, new SIM cards, or messaging activity.

For instance, if a user who hardly communicates internationally has received several international SMS, this will likely be seen as suspicious by the system.

Transaction Patterns:

Daily expenditure combined with the analysis of transactions makes it possible to detect launches of transactions, for example, several small ones or intending to activate the paid features of the application.

These are patterns that end-user security software algorithms are able to identify and then alert a user/ security personnel to investigate the issue further or as a shortcut, the software automatically rejects the suspicious action.

Machine Learning and AI:

The machine learning models are developed using large datasets of both valid and attempted fraud SMS activities. These models are capable of detecting minor differences that may signify fraud from the normal behavior of a person. AI is self-learning and develops with new data trends, which enhances its capability to identify and fight against fraud. 

• Real-Time Decision Making:

Real-time analysis and decision-making concerning the permission to send a message, its blocking, or its identification for further examination occur in the AS systems using AI. This real-time processing is very vital in a way that it saves the user before fraud impacts his account.

User Authentication Enhancements:

Unlike SMS-based authentication, MFA (Multi-Factor Authentication) requires many more steps, some of which include a code in the email or an authentication application. This extra layer of security reduces the chances of these fraudsters at least getting past any part of the process, even if they are lucky enough to intercept an SMS or shortcode SMS. 

• SIM Swap Protection:

As a result, telecom operators add extra verification for the SIM swap demand; for instance, the client must go to a telecom store or respond to security questions. Through SMS or email, customers are also notified if there is a detected SIM swap request so that they can prevent the request if it is fake.

Collaboration with Regulatory Bodies:

Telecom organizations have a working relationship with regulators to provide the information about fraud that was detected and new trends in the market. There are running and constantly updated files of fraudulent numbers and scam patterns within the organization so the operators are ready to act on them to minimize its spread. 

• Compliance with Regulations:

Business entities need to adhere to the national and international rules and regulations that were put in place to safeguard consumers from SMS fraud. This encompasses such measures as engaging mandatory measures on security and reporting.

User Awareness and Education:

Campaigns are conducted occasionally to ensure that users of the short message service are fully aware of the various frauds that exist and how to avoid them. This may entail the use of SMS, alerts, educational content, and information sharing through social media platforms. Those who intend to forward such messages or those who receive them are advised to report them to their service provider or the regulating authorities, which assists in tracking and combating such dubious activities. 

• Reporting Mechanisms:

The use of reporting which has convenient measures like a special number through SMS or a hotline creates a channel through which users can easily report a suspected fraud giving the organization an easy time in responding to it.

Recap:

SMS fraud is a growing and prevalent issue that poses significant risks to both businesses and consumers. However, by taking safety measures and implementing a prevention strategy, one cannot protect their business from SMS fraud. If you are ready to take your SMS service security to the next level, connect with us for a customized solution.