USA Today: The Cost of Artificially Inflated OTP Traffic

AB Handshake was featured in an article from USA Today, published January 11, 2025. Written by Ethan Stone, the article explores the growing issue of artificially inflated OTP traffic (AIT), a shadow market exploiting one-time password systems. 

In the last half-decade, one-time passwords (OTPs) have become a cornerstone of digital authentication, offering a simple and effective way for brands and applications to verify registered users. Whether signing up for a social media platform, booking a vacation, or accessing a bank account, the process is all too familiar. The application sends an OTP via SMS, known as application-to-person (A2P) verification, and the user enters the code to complete a registration or transaction. However, behind the convenience lies a growing black market of fraudsters that exploit this trusted information, causing what’s known as artificially inflated traffic (AIT). As CEO of the leading fraud prevention organization AB Handshake, Nadejda Papernaia explains, artificially inflated OTP generation is costing businesses billions.

While the application-to-person OTP SMS market is projected to reach $43 billion by 2027, there is an undercurrent of fraudulent activity running parallel to this pillar of user acquisition in the digital world. Fraudsters have devised sophisticated registration bots to mimic real users, coded to flood companies’ systems with fake OTPs. Fraudsters profit from AIT by hijacking SMS traffic, as every message sent is at the expense of the companies they exploit. 

The SMS messages are genuine, sent on behalf of brands, but never reach genuine users. For the victimized businesses, the impact is severe as they incur direct losses through SMS delivery fees, and indirect losses related to distorted customer analytics, unnecessary application testing, and misguided acquisition strategies. Some analysts estimate that 20% of global OTP traffic was artificially generated by fraudsters in 2022, potentially costing brands billions of dollars in SMS fees alone. 

Clearly, the scale of AIT is staggering and affects the biggest brands in operation today. Nadejda expands on the problem, noting the mounting indirect losses that AIT causes. “Fraudulent traffic inflates registration numbers, which also disrupts the customer funnel,” she notes.

Due to bots requesting OTPs without follow-through in registration, developers and product managers are left grappling with inexplicable disparities between actual registered and paying users. These discrepancies often lead companies to costly goose chases. “Brands will try to investigate the functionality of their SMS operators, app development teams, payment gateways, and acquisition channels before they realize it’s a fraud,” Nadejda observes. Referring to marketing teams, fraudulent bot-generated accounts can lose companies hundreds of dollars per lead due to funneling resources toward fake users and skewing the real numbers. The problem does not end here. With a significant percentage of “active” users being found to be fake, a company's value and reputation come into question.

The relatively new phenomenon of AIT, around just five years old, often goes unnoticed by users and industry insiders. Many businesses are unaware of the extent to which artificially inflated OTP traffic undermines their operations due to the sheer complexities and inherent risks of telecommunication. With leading social media platforms claiming millions in losses a year due to unaccounted-for international SMS texts, Nadejda believes that the $1.15 billion figure is simply the tip of the iceberg. 

As the losses mount, the urgency to address AIT grows. That’s why AB Handshake hopes to reach the public domain as the fraud management company at the forefront of combating artificially generated OTP traffic. Through cutting-edge AI technology, AB Handshake provides a robust solution for SMS fraud detection and prevention for both mobile operators and brands. Through their AI Shield and end-to-end validation, businesses can ensure that they reach real users in real-time.

Before sending a message, brands go through AB Handshake’s API to validate the authenticity of their traffic. On the other hand, if suspicious activity is detected, the system can block the OTP request or introduce additional verification steps. This end-to-end approach both prevents fraudulent traffic and restores the usefulness of customer analytics and acquisition strategies.

AB Handshake’s AI shield has shown that as high as 60% of a brand’s OTP requests may be fraudulent. This early intervention can save companies thousands, if not millions, of dollars in SMS delivery costs. For large companies sending large volumes of international SMS traffic, the potential savings are massive, as AB Handshake enables brands to ensure their resources are directed toward real users rather than the pockets of fraudsters.

Reshaping the future of fraud prevention and management through innovative tools and robust methods, AB Handshake looks forward to restoring much-needed trust to the communication channels that the world relies on. “AIT affects many different industries, many different verticals. The biggest first step against this new kind of fraud is to educate companies about the extent of it,” CEO Nadejda Papernaia concludes. “Then, with our AI-powered precision detection and proactive monitoring capabilities, businesses can be assured real communication with their audiences.”

Learn more about AB Handshake’s innovative fraud prevention: 

• Enterprise Telecom Fraud in Focus: Challenges and Solutions
• AB SMS Security: Prevent SMS Fraud Comprehensively with AI and Cross-Validation Technology
• AB Handshake’s Solution to the Crisis of Artificially Inflated SMS Traffic