Fraud is Eroding Trust in Telecoms: Protecting SMS Against Rising Risks

June 28th, 2024 by · Leave a Comment

This Industry Viewpoint was authored by Eli Katz, Founder and CEO of XConnect

Fraudsters are ramping up their attacks on messaging services and it’s draining revenue streams. SMS is a hugely valuable channel for brands with one of the highest engagement rates, and yet it also still holds a large untapped business market. Despite this, it is facing an uncertain future due to a sharp rise in fraudulent activity.

Currently, the levels of trust that exist within the messaging industry are amongst the lowest they have ever been. One of the biggest threats driving damage to trust is the growth of Artificially Inflated Traffic (AIT) across SMS. AIT is a technique used by cybercriminals that generates large volumes of fake traffic through apps or websites to exploit organisation’s revenue streams. It is a rising problem for the telecoms industry, and according to a report by ENEA and Mobilesquared around 5% of all international A2P traffic is believed to be AIT, costing companies $2.4 billion in the last two years.  

The consequences of AIT are far-reaching and have the potential to cause irreversible damage to the reputation of SMS as a communications channel. The focus for the industry must be on restoring trust by shifting the focus back on legitimate traffic.

SMS Under Attack

AIT is a growing and high-risk threat in the messaging ecosystem. It works by deploying a bot or emulator that will complete countless registrations for an organisation’s service. These bots can sign in with generated OTPs (One Time Passwords) which artificially inflates conversion rates above the expected level.

 As artificially generated OTPs are almost indistinguishable from legitimate A2P SMS traffic, it is difficult to detect this type of fraud. If an organisation was to blindly block OTP requests, this would cause disruption to real users’ registration and validation attempts and reduce customer satisfaction.

 With the global messaging market anticipated to reach a total value of ​$35 billion​

by 2025, according to Mobilesquared​, the industry must ensure it is putting proactive measures in place to enable accurate traffic delivery and effectively eliminate fraud. If SMS is associated as a channel synonymous with excess charges and fraud, those who use it will look for alternative channels to reach their customers, redirecting revenues to ones they view as more reliable.

Enabling Trust and Transformation

Ensuring the long-term future of SMS requires action from right across the ecosystem. In today’s challenging telecoms environment, tackling AIT and other forms of SMS fraud are high on the agenda for organisations looking to optimize their business messaging operations. To ensure they can remain competitive and deliver messages with confidence, they need proper systems in place for traffic validation. 

Authoritative numbering data will help towards building a strong foundation for restoring trust in telecoms. Deploying the right data solution allows organisations to check that numbers belong to a valid number range, are in the correct format and allocated to a provider. This enables organisations to determine the validity and routing of a number before OTP responses are sent out.

A simple way that organisations can achieve this is by deploying Global Number Range or Mobile Number Portability (MNP) data. This helps verify the accuracy and validity of numbers before other, more complex checks occur – contributing to building trust and safeguarding users’ data.

The rise of AIT and other instances of SMS fraud is an issue that is also being recognised and addressed on an industry level. For example, the Mobile Ecosystem Forum’s (MEF) trust in messaging standard and working group aims to introduce best practice and strategies to restore trust on a multinational basis, along with similar working groups within other industry bodies such as the i3Forum.

Collaboration and knowledge sharing will be a core part of moving SMS forward and combatting fraudulent activities within the channel. Implementing solutions and guidelines for improving trust, reducing fraud and ensuring trusted identity across messaging will all be pivotal to ensure a successful future for the channel.

Securing the Future of SMS

Fraud in the telecommunications industry is not going anywhere. Organisations must ensure they are being proactive in the fight against this growing issue in SMS to reduce the impact on the channel’s long-term reputation.

Access to flexible, high-quality number validation datasets allow organisations to filter out fraudulent data to focus on real customers with optimised routing and pre-validation. Ultimately, trust is crucial and collaborative efforts across the industry will ensure the continued success of SMS as a communications channel for businesses.

About Eli Katz

Since launching XConnect in 2005, Eli Katz, CEO, and Founder of XConnect has helped the telecoms ecosystem overcome critical barriers to growth with authoritative and accurate numbering datasets. He plays an instrumental part in helping industry players restore trust in communications through reliable and cost-effective phone number intelligence.

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Categories: Industry Viewpoint · VoIP

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