Understanding SMS Pumping Fraud: How It Works and How to Prevent It

What is SMS Pumping Fraud?

Businesses worldwide rely heavily on SMS messaging for critical security functions such as one-time passwords (OTPs), user verification, and transaction alerts. While this technology enhances security protocols and protects user accounts, it has also become a lucrative target for malicious actors exploiting this for financial gain. One growing attack type is SMS pumping fraud, also known as artificially inflated traffic (AIT), SMS toll fraud, or international revenue share fraud (IRSF). This technique can silently deplete a company's financial resources, particularly affecting companies operating on an international scale.

SMS pumping fraud is a sophisticated attack where perpetrators artificially inflate the volume of traffic sent to websites and app touchpoints protected by SMS authentication. This leads to exorbitant messaging costs without any legitimate user engagement. Fraudsters achieve this by collaborating with unscrupulous telecom operators who share a portion of the revenue generated from the inflated SMS traffic.

The mechanics of SMS pumping involve a multi-layered approach. Initially, fraudsters identify companies that lack stringent safeguards in their SMS-sending mechanisms—particularly those that dispatch OTPs or verification codes without robust limits. Exploiting these vulnerabilities, they deploy automated scripts or bots to generate an overwhelming number of requests for OTPs or verification codes. These requests are directed to specific phone numbers under the fraudster's control.

This collaboration is mutually beneficial for the fraudsters and the complicit telecom operators. The operators, often based in countries with minimal regulatory enforcement, agree to share a portion of the revenue from the surging SMS traffic. As a result, the targeted company unwittingly sends out thousands—if not millions—of SMS messages, incurring substantial costs without any corresponding increase in legitimate customer interactions.



The impact on businesses can be devastating. Financially, companies may face inflated SMS bills up to millions per month. The increased load can also strain technical infrastructure, affecting service quality for genuine users. The global nature of SMS pumping complicates detection and mitigation efforts because fraudsters exploit international networks and masking technologies. This makes it difficult for companies to distinguish fraudulent activities from legitimate global user engagement, especially when considering potential expansion markets and the need to maintain service accessibility.

While it might seem logical for SMS service providers to combat SMS pumping actively, the reality is more complex. These providers profit from the volume of messages sent through their platforms, creating a potential conflict of interest. Implementing stringent anti-fraud measures could reduce their revenue, which may explain the insufficiency of protections offered.

Consequently, the responsibility of safeguarding against SMS pumping largely falls on the businesses themselves. The most effective way to do it is to detect fraudulent traffic before it can trigger bogus SMS codes being sent.

How to Stop SMS Pumping Fraud

To prevent significant financial losses, businesses must protect their user touchpoints from bogus or malicious traffic to proactively prevent SMS pumping fraud. For example, user logins and account registrations need real-time security checks that differentiate between legitimate user activity and malicious traffic before costly SMS authentication codes are triggered.To achieve this accurately, it requires a range of essential fraud prevention and bot detection measures.

Implementing rate limiting and velocity controls is a fundamental step. By setting thresholds on the number of SMS messages sent to a single phone number within a specific timeframe, companies can prevent the rapid-fire requests characteristic of SMS pumping attacks. Monitoring the frequency of OTP or verification code requests helps promptly identify and mitigate suspicious activities.

Phone number verification is also critical. Verification APIs allow companies to assess phone numbers' legitimacy in real time, examining factors such as line type and carrier information. Evaluating the reputation of a phone number can reveal past associations with fraudulent activities, enabling informed decisions about processing SMS requests.

In addition, assessing IP address reputations helps identify and block high-risk requests. Detecting proxies and VPNs—standard tools for masking fraudulent activities—enhances the ability to discern legitimate users from potential fraudsters. Device fingerprinting adds another layer of security by assigning unique identifiers to devices interacting with the company's systems, aiding in the detection of multiple fraudulent requests originating from a single source.

Monitoring user behavior through analytics is paramount. Analyzing interaction patterns can reveal anomalies indicative of fraud. Setting up alerts for unusual activities, such as sudden spikes in SMS requests, enables swift responses to potential threats. Geolocation checks further enhance security by verifying that a user's claimed location aligns with their IP geolocation and the country code of their phone number.

How IPQS Can Help Protect Against SMS Pumping

Businesses need advanced solutions to safeguard their SMS communications effectively. IPQS offers comprehensive tools to detect and prevent SMS pumping, providing robust protection through various technologies.

IPQS's Phone Number Verification solution enables businesses to verify phone numbers in real time, ensuring the authenticity of each number before sending out SMS messages. This service identifies details of each phone number, checking critical aspects such as line type identification—determining whether a number is mobile, landline, or VoIP—which is crucial because fraudulent activities often utilize certain line types more than others. Additionally, the API provides carrier information, identifying the telecom operator associated with the number, which helps in spotting numbers linked to high-risk regions or operators known for lax security.

Beyond phone number verification, IPQS offers a Proxy, VPN, and TOR Detection Service that enhances security by identifying if an IP address is associated with methods commonly used by fraudsters to mask their identities and locations. By using a database of known proxy and VPN IP addresses, IPQS provides real-time detection of such activities. This data allows for accurate risk assessments, helping businesses block, flag, or allow a connection. Implementing this service enables companies to detect high-risk traffic on the user touchpoints that are commonly targeted for SMS pumping attacks.

IPQS's solutions also extend to Device Fingerprinting. By assigning unique identifiers to devices interacting with a website or app, IPQS helps detect anomalies such as devices generating an unusually high number of requests—indicative of automated scripts or bots used in SMS pumping. Monitoring past activities associated with a device provides context for risk assessments, enabling businesses to recognize when a single device is used to create multiple fraudulent requests, even if IP addresses change.

Understanding the geographical origin of requests can also help prevent SMS pumping. IPQS provides detailed geolocation data to help you verify that user-provided location data matches IP geolocation and phone number country codes. Identifying high-risk regions known for fraudulent activities allows companies to implement tailored security measures, such as blocking or scrutinizing requests from specific countries or regions.

For businesses seeking to protect their assets and maintain trust with their customers, partnering with a leader in fraud prevention like IPQS is a strategic move. By leveraging IPQS's expertise and cutting-edge technologies, companies can safeguard their communications channels, financial resources, and reputation. This will enable them to strike the delicate balance of maintaining high user security without letting the fear of SMS pumping compromise their defense.

For more information on how IPQS helps protect businesses from SMS pumping fraud, request a demo with one of our team of experts today.