AB Handshake’s Solution to the Crisis of Artificially Inflated SMS Traffic

The threat of Artificial Inflation of SMS Traffic (AIT), which looms over enterprises, is the latest hot topic among SMS experts. Over the past year, many tech giants have experienced severe AIT attacks, demonstrating an urgent, industry-wide need for effective anti-fraud measures.

AB Handshake’s recent research suggests that around 6% of all SMS traffic is flagged as AIT, and the fraud type continues to grow in volume and severity. For top brands, the percentage of generated traffic may reach between 30% and a staggering 60%. In this article, we’ll explore the growing threat of AIT and propose a solution to mitigate it.

What is AIT?

Here’s a brief description of how this fraud scheme works:

AIT exploits application-to-person (A2P) SMS messages that deliver one-time passcodes (OTPs) for verifying users’ phone numbers during sign-up or login.

Fraudsters generate fake A2P SMS traffic by creating a massive number of bot accounts on an enterprise’s app or website. These bots fill the system with a high volume of OTP requests. Since each SMS sent has a cost, fraudsters generate illegitimate revenue from this fraud method through a partnership with rogue SMS service providers or operators.

This type of fraud can be incredibly damaging to businesses, not only resulting in financial losses but also through reputational damages and erosion of customer loyalty and trust.

How does AIT affect enterprises?

As mentioned previously, the impact of AIT on enterprises is hard to understate. One of the most noticeable effects is the increased cost of customer acquisition. Where marketing budgets should have been spent on acquiring active users with real buying power, businesses are instead forced to waste their funds verifying inactive bot accounts and paying for fake users.

Another negative consequence of AIT on enterprises is the artificial boosting of conversion rates. Bots can also sign in with generated OTPs — the sign-in as a consequence of an OTP is considered a conversion for the enterprise, which in normal situations, would be a positive thing. However, the sudden spikes in the metrics are misleading — the number of real paying users doesn’t increase, causing the average revenue per user to drop, and consequently, the enterprise to be left with unfairly misrepresentative statistics.

On the other hand, if bots don’t sign in, the conversion rate falls below average. Subscribers may receive unsolicited OTP messages due to disrupted fraud chains, further inflating the number of registration failures. Consequently, and in a bid to alleviate business stresses caused by clearly worsening metrics, enterprises may wrongfully adjust their marketing campaigns and product strategies, stagnating their business growth and further wasting resources. 

Let’s take a closer look at the challenges associated with combating AIT — including difficulties in detection and a lack of regulation.

Why is AIT so difficult to deal with?

We’ve already established that bots may sign in with generated OTPs, artificially increasing registration and conversion rates, and consequently, misguiding the victims of AIT. This fraud type will persist and fraudsters will continue to reap financial reward if businesses continually choose to ignore artificially generated traffic. Moreover, it’s up to brands alone to detect and prevent AIT, as the entire chain of operators inadvertently benefits from generated traffic.

Because artificially generated OTPs are almost indistinguishable from genuine A2P SMS traffic, accurate detection of this fraud requires advanced tools. Blind blockages of OTP requests, for example, will likely disrupt real users’ registration and validation processes, potentially sabotaging customer satisfaction.

Another complication is the current landscape of the SMS industry itself. SMS is one of the most expensive OTP delivery channels, and A2P SMS rates are constantly increasing — this fact alone attracts more and more fraudsters. Notably, artificially inflated SMS traffic becomes more prevalent after a specific price point, where the benefits simply become too attractive for fraudsters to ignore. Severe market competition might cause rogue vendors to go below the market SMS price and generate fake traffic to subsidize the SMS cost to win a tender, seemingly facing no repercussions while pushing genuine, well-intentioned operators out of the market.

The most alarming part is that standardized legal practices recognizing the issues related to artificially inflated traffic are yet to be developed. And since artificial inflation of traffic currently falls outside the scope of common SMS agreements, resolving related disputes is exceptionally challenging. There’s no quick fix to this problem, but one thing is for sure — the industry desperately needs an effective solution.

AB Handshake’s solution — SMS AI Shield

AB Handshake’s AI Shield is a highly accurate and comprehensive fraud management system. To contribute to the security of the telecom industry and combat the rising threat of AIT and other types of SMS fraud, AB Handshake announces the release of an SMS version of the highly successful AI Shield. This tool’s machine learning algorithms continuously train on live SMS traffic in all regions where AIT is prevalent, ensuring unmatched accuracy of real-time fraud detection:

●   Accuracy — 99.995%
●   False Discovery Rate — 3%
●   False Positive Rate — 0.001%

With accuracy metrics well above the industry benchmark, AB Handshake’s SMS AI Shield is a groundbreaking addition to the global fight against AIT, also capable of protecting enterprises from all SMS fraud-related losses.

Benefits of SMS AI Shield:

The SMS AI Shield is a powerful solution that provides businesses with advanced tools necessary for protecting their operations and customers from AIT and other types of SMS fraud. Due to AI-powered automation, the solution will reduce existing costs and, through its ability to seamlessly integrate with existing security infrastructure, will improve the overall stability of its users' services.

Thanks to AB Handshake’s SMS AI Shield, enterprises will be protected from generated traffic no matter what region the attacks come from. The tool’s precise detection accuracy ensures that only malicious traffic is blocked — with legitimate OTP requests left unaffected, ensuring real users will receive their SMS OTPs without disruption.

SMS AI Shield enhances security for current users and makes user authorization and engagement cost-effective. By leveraging AI technology, the SMS AI Shield streamlines the authentication process,  not only protecting your business and its assets but also fostering trust and confidence among your user base. Furthermore, it provides proof of payment withholding, offering you concrete evidence in case of any disputes or discrepancies, providing you with an additional layer of revenue protection.

Integration options:

There are two ways that SMS AI Shield can be integrated into your security ecosystem:

1. Cloud-based
2. On-premises

AB Handshake provides a seamless integration process — choose the option that best suits your business needs. Alternatively, we offer a fully functional proof of concept implemented via Event Detail Records (EDR) analysis with no CapEx, internal installation, or maintenance needed.

The SMS AI Shield leverages multiple parameters included in EDRs to analyze and interpret your traffic patterns, providing an accurate estimation of the percentage of generated traffic. This data-driven approach ensures a rigorous analysis, empowering you to make well-informed decisions about your business’ SMS traffic security.

A fully automated anti-fraud system for SMS

AB Handshake’s SMS AI Shield is a comprehensive, automated solution that offers immediate time and cost savings for our clients from day one. With SMS AI Shield in place, enterprises can rest assured knowing that fraudulent SMS messages will be automatically blocked, eliminating the need for manual intervention.

Additionally, the SMS AI Shield empowers our clients with complete control over blocking policies via an intuitive, user-friendly interface. Businesses can effortlessly customize their blocking policies to meet specific requirements. This includes setting up and editing blocklists, allowlists, and threshold-based rules. It’s worth noting that any active blockages can be swiftly reversed in just two clicks, ensuring flexibility and ease of management.

Eliminate AIT with AB Handshake

Effectively combating artificially inflated traffic necessitates the use of advanced anti-fraud tools capable of accurately differentiating between generated traffic and legitimate A2P SMS. The wider the adoption of dedicated solutions by enterprises, the faster this fraud scenario will become obsolete.   

Luckily, AB Handshake has already developed a solution that is fully capable of accurately preventing AIT, resulting in substantial cost saving for enterprises and reduced user acquisition expenses. SMS AI Shield offers robust protection against all prevalent SMS fraud types, including AIT. Its flexibility and ease of use enables businesses to automatically block generated SMS traffic in real time, saving precious time and human resources that can be directed towards improving your services.