Why you can’t build "artificially inflated traffic" protection in-house: the case against DIY SMS fraud prevention

The Case Against DIY SMS Fraud Prevention

The rise of SMS fraud, particularly artificially inflated traffic (AIT) or SMS pumping fraud, poses a significant challenge for businesses relying on SMS for user verification. Bad actors exploit weaknesses in one-time passcode (OTP) flows by generating massive volumes of fraudulent messages, driving up costs, and exposing vulnerabilities in messaging infrastructures. Many companies believe that building an in-house solution can mitigate the problem, but this approach often proves inefficient and risky.

How is AIT changing?

• Sophistication of Attacks: Fraudsters use more sophisticated methods to simulate legitimate user behavior, making distinguishing between fraudulent and genuine traffic harder.
• Low-volume fraud: Fraudsters use small-scale attacks that can accumulate significant costs and security risks. Traditional fraud systems, which are calibrated to identify large-scale patterns indicative of fraud, may find it harder to detect.
• Unsuspecting Regions: Fraudsters exploit vulnerabilities in countries with no significant history of fraud. This approach can be particularly effective because a lack of preparedness leads to slower reaction times and less vigilance.
• Global Expansion: As businesses expand globally, they become targets for fraud in more regions, each with its own challenges and types of fraud.
• Use of VoIP and Virtual Numbers: Virtual numbers and VoIP services are being used more and more to generate large volumes of traffic, as they can be more difficult to track and control than traditional mobile numbers.
• Automation and Bots: Using automated scripts and bots to generate traffic has become more advanced, allowing fraudsters to operate at scale with minimal manual intervention.
• Regulatory Changes: In some regions, changes in regulations and carrier policies are affecting how SMS traffic is managed and monitored, which can impact the prevalence and methods of fraud.
• Carrier Complicity: In some cases, smaller mobile network operators (MNOs) may be complicit in fraud schemes for financial gain, which complicates detection and mitigation efforts.
• Adaptation to Security Measures: As businesses implement two-factor authentication (2FA) and one-time passcodes (OTPs), fraudsters adapt their methods to bypass these controls.

Twilio: Specialized expertise you can’t replicate

Fraud prevention may seem as simple as setting up geo-permissions that prevent messages from being sent to regions you don’t operate in or using other basic filters, but fraudsters are constantly evolving. Their tactics grow more sophisticated with time, and keeping pace requires an in-depth understanding of communication protocols, messaging routing, and fraud detection algorithms.

Twilio employs a dedicated data science team that studies fraud patterns across global networks. They leverage machine learning algorithms to detect anomalies before they escalate into large-scale attacks. Unlike a reactive in-house approach, Twilio offers tools to proactively identify fraudulent behavior patterns, such as identifying disposable phone numbers or messages displaying non-human behavior. The algorithms aren’t just looking for spikes in message volumes; they are designed to detect more subtle, long-term tactics.

The power of global scale

One of the challenges in preventing AIT fraud is managing SMS traffic across different regions with varying regulations. AIT fraud often exploits international telecom loopholes, routing messages through lesser-regulated countries to inflate costs.

Twilio’s broad customer base and direct relationships with global carriers give it unparalleled visibility into SMS patterns across millions of customers. Combined with machine learning algorithms, this line of sight helps Twilio Verify Fraud Guard instantly identify traffic anomalies invisible to a business relying solely on its own data.

Building an in-house solution that can scale globally would require forging relationships with numerous telecom carriers, constant monitoring, and ongoing maintenance. Twilio has already established these connections, allowing businesses to benefit from a fraud prevention system with global reach.

Navigating complex regulatory requirements

SMS fraud prevention isn’t just about technology but also compliance. Building an in-house solution requires careful attention to data protection laws, anti-fraud regulations, and telecom rules across multiple countries. Failing to comply with these regulations could expose your business to legal risks and fines.

Twilio offers built-in compliance measures, helping businesses navigate the complex regulatory environment while safeguarding against fraud. This removes the burden of compliance from your team, allowing them to focus on your core business.

The true costs of DIY SMS fraud prevention

Many businesses are tempted by the perceived cost savings of building an in-house AIT fraud prevention solution. However, the upfront and ongoing costs are often underestimated. Developing a system involves hiring specialized employees, building a global infrastructure, and designing robust monitoring systems. After launch, a DIY system to mitigate fraud would be a resource-intensive operation, requiring continuous development and expertise to evolve rapidly with new fraud trends. This resource requirement takes away crucial time from developers who could have spent time growing their business.

According to Forrester’s Total Economic Impact study, businesses that partner with Twilio for fraud prevention see significant cost savings, with more than $900,000 avoided loss from fraud and 95% reduced time for fraud prevention labor.

Choose the right partner

Twilio's Verify Fraud Guard is specifically designed to protect businesses from AIT fraud. Twilio Verify Fraud Guard is backed by 100% guaranteed protection from SMS Pumping Fraud ( terms and conditions apply). Verify Fraud Guard has blocked $62.7M in explicit savings for Twilio customers1. Using tools like the Lookup SMS Pumping Risk Score, businesses can detect suspicious behavior in real time. Combined with additional parameters like geo-permissions and rate limiting, Twilio ensures a comprehensive approach to fraud prevention.

What’s Next?

Interested to know more about Twilio Verify and SMS pumping fraud prevention? Check out the Twilio Verify API documentation.

1 - Internal data from June 2022 to October 01, 2024

Catie is a Principal Product Marketing Manager at Twilio where she works with the User Authentication & Identity Team on Verify and Lookup. Catie has worked with a variety of SaaS and tech companies across telecommunications and identity intelligence industries.