How SMS Fraud Works and How To Guard Against It

With Twitter disabling text message two-factor authentication, I thought it’d be fun to do a deep dive into how SMS fraud works and how app developers can guard against it.

It’s a fascinating story of perverse incentives, short-sighted regulation, and technical ingenuity.

Let’s dig in!

Premium Numbers

To start, let’s recap Twitter’s recent announcement:

"Effective March 20, 2023, only Twitter Blue subscribers will be able to use text messages as their two-factor authentication method. Other accounts can use an authentication app or security key for 2FA."

In plain English, this simply means that only users of the paid version of Twitter will get a code sent to their phone during login.

The key to understanding SMS fraud is understanding that some numbers are premium. If you want to call or send an SMS to this number, it’ll cost you some money — typically tens of cents — and the owner of the number gets a portion of those tens of cents for themselves.

Owners of these phone numbers typically offer legitimate services that cost money to supply and offer value to their users, such as televoting, dating, and tech support.

However, these numbers can be gamed for easy profit.

SMS Fraud

A bad actor, let’s call him Bob, gets hold of several premium phone numbers[1]. Bob could be a hacker or could be a mobile phone network operator gone bad.

Bob finds a web service that will send text messages to his premium phone numbers. These messages could be two-factor authentication codes, one-time passwords, or any other text message sent to the user as part of the service (e.g., partiful.com sends event reminders via SMS).

Bob finds a way to make the service send thousands of SMSs to his premium phone numbers. This might be very easy. The front-end service might be easy to manipulate, and the back-end endpoints might be unprotected and easy to reverse-engineer.

Even worse, many services use a standardized endpoint for sending SMSs. This makes it vastly easier for Bob to find sites to attack. For example, if the service uses a third party for authenticating users and sending out 2FA or OTP codes, such as Auth0, then the endpoint for sending SMSs is mostly known: all Bob needs to do is to figure out a way to discover the Auth0’s ID for a web service (fairly easy, since the web service’s front-end makes a request containing this ID), and then they can attack all sites that use that third party service.

Finally, Bob makes the service send thousands of SMSs to his premium phone numbers. The web service loses, and Bob profits.

Guarding Against SMS Fraud

There’s no one silver bullet to prevent SMS fraud. But here are a few ideas that could work:

• If using a third-party service to authenticate users, such as Auth0, you could obfuscate the endpoint used to send SMSs. Whilst this won’t prevent an attack outright, it does make it much harder to discover that an attack is possible.

Similar to how a bike thief targets the easiest-to-steal bikes, a good hacker would move onto web services that are easier to hack. My hunch is that this approach would work well enough for the long tail of apps.    

• Block all requests from IPs that originate in cloud providers, fraudulent ISPs, or are otherwise sketchy. This should be fairly simple to implement — many services exist that allow you to rate the quality of an IP address — and would probably be very effective.
• Add IP-based rate-limiting to the endpoint that sends out an SMS to block Bob’s attack. If set up correctly, this won’t affect legitimate users. However, this only works against a simple attack. If Bob architects his attack to send requests from a variety of IP addresses — a distributed attack — then this wouldn’t work.
• Only send an SMS to a specific phone number a small number of times before blocking that phone number for a cool-off period. We could do this on the front end, but if Bob is determined, he could figure out the backend endpoint to attack instead. Blocking the phone number on the backend is harder: it requires keeping a record of phone numbers and their recent login attempts[2].    
• Force the user to solve a CAPTCHA before sending them an SMS. Whilst this approach works well at blocking attackers — solving the CAPTCHA is hard and expensive to do at scale — it does degrade the user’s experience of the service.
• Identify and block premium rate phone numbers using libphonenumber. Whilst this seems promising, I don’t know how reliable the data is and how effective this approach is.
• Only send text messages to paid accounts. This is the approach Twitter has gone with. It’s not a bad option, but as you can see from the list above, there are many other approaches you could take.
• Block mobile phone network operators with a high number of fraudulent users. This would block clearly bad network operators but wouldn’t work well if the network has many legitimate users.
• Use WhatsApp to send messages instead. WhatsApp is free, unlike SMS, but not all users across the world use WhatsApp[3].    

A good solution would make use of enough of the approaches above, prioritizing time investment and effectiveness until the attackers move onto easier targets.

I’ve got some personal experience implementing the above measures, and I have a story or two to share about how my team handled the fallout. But that’s a story for another time…

Blocking SMS Fraud at the Source

This brings me to my final point:

IMO, Twilio — a dominant SMS API — has a huge opportunity to offer SMS fraud protection as a (free?) add-on to their standard APIs.

Since Twilio has data on fraudulent phone numbers and carriers across all their accounts, Twilio is in the unique position to block bad numbers and carriers *fast* — before they become a big issue for multiple web services.

Twilio can even detect invalid phone numbers outright using Silent Network Auth — a next-generation authentication mechanism — and it feels like this utility ought to be *shared* between their users.

I’d love to hear any other thoughts, ideas, and approaches folks have used — please share by writing a comment below, and we can all learn.

That’s it for now — protect those endpoints, and have a great week!

There’s an excellent discussion on HackerNews.

[1] Note that these premium phone numbers don’t even need to work: they don’t need to be connected to a SIM card that is working and registered to a phone. As long as they can be routed, they can be used in this attack.

[2] I’m curious if there’s a good data structure and algorithm to make this efficient and work at scale. Please share if you know of one!

[3] Credit to @csharpminor on HN for their suggestion.