What is SMS traffic pumping & how does it impact businesses?

SMS traffic pumping is a fraudulent scheme where attackers artificially inflate SMS traffic to generate revenue. This scam exploits the way SMS-based authentication works, forcing businesses to pay for fake SMS messages while fraudsters profit.

1. Attackers trigger large volumes of SMS-based authentication requests using bots.
2. The authentication system sends one-time passcodes (OTPs) via SMS to the attacker's controlled phone numbers.
3. These phone numbers are linked to fraudulent telecom providers that share revenue with the attackers.
4. Businesses end up paying for every fake SMS, leading to massive financial losses.

🚨 Financial Losses:

• Companies lose millions of dollars annually due to inflated SMS costs. In response, many organizations are adopting AI-driven platforms like Clerk Chat SMS contact center to optimize SMS usage and lower costs.
• Twitter (now X) lost $60 million per year due to SMS pumping fraud.

🛑 Security & Fraud Risks:

• Attackers exploit vulnerabilities in authentication systems.
• Increased fraudulent activity weakens trust in SMS-based authentication.

⚠️ Operational Burden:

• Businesses must detect and block fraudulent traffic, adding complexity and costs.
• Genuine users experience delays due to spam-filtered OTPs.

📉 Poor User Experience:

• Legitimate users may not receive OTPs due to overloaded networks.
• Authentication failures lead to login frustrations, increasing drop-off rates.

🔹 Rate Limiting & Geo-Blocking: Restrict SMS requests per user and block suspicious regions.
🔹 Fraud Detection Tools: Monitor authentication traffic for unusual patterns.
🔹 Switch to Passkeys: Passkeys eliminate SMS-based authentication altogether, removing the attack vector and reducing authentication costs by up to 90%.

Unlike SMS OTPs, passkeys use cryptographic authentication, making them:
✅ Phishing-resistant
✅ Cost-effective
✅ Immune to SMS fraud & pumping attacks

For businesses seeking stronger security and cost savings, passkeys offer a future-proof authentication solution.