How To Protect Your Business From Toll Fraud

Business fraud can take many forms. Learn what toll fraud is and how you can protect your business with Cledara.

March 8, 2023


The best product teams go out of their way to keep their users’ accounts safe. But, what if those security mechanisms backfire, costing your company thousands of dollars? Your use of phone authentication could leave you vulnerable to toll fraud. 

However, there are ways to prevent this type of business fraud.

In today’s blog post, we’ll discuss:

  • What toll fraud and SMS pumping are
  • How toll fraud works
  • 5 best practices to protect your business from toll fraud

Let’s get started!

Two-Factor Authentication Business Fraud

When it comes to phone verification or two-factor authentication (2FA), we often see two types of attacks:

  • Toll fraud
  • SMS pumping

Both attacks inflate your app’s traffic with the goal of making money. However, it’s worth mentioning that it doesn’t imply stealing information. 

Let’s see what it’s all about.

What Is Toll Fraud?

Toll fraud is a form of telecommunications fraud that involves the unauthorized use of a company's phone system to make long-distance calls. While it may seem innocuous at first sight, it can lead to significant financial losses. In fact, according to the Communications Fraud Control Association (CFCA), toll fraud caused $6.69 billion in losses in 2021.

In simple words, toll fraud happens when someone has access to your phone system and they artificially generate high-volume calls to premium international numbers (i.e. high-cost numbers). As a result, you get a costly telephone bill, and fraudsters take a cut of the revenue generated from these calls.

Fraudsters accomplish this by finding deployments of two-factor authentication (2FA) with access to telecommunications networks. In many cases, toll fraud goes undetected until the malicious activity scales and becomes financially significant.

Even large communication platforms, such as Twilio have failed to safeguard companies from toll fraud. Especially, considering how sophisticated these attacks tend to be. 

What Is SMS Pumping?

Did you know that fraudsters can exploit your 2FA text messages? Similarly to toll fraud, scammers can force your platform to send thousands of SMS to various mobile phone numbers owned by a particular mobile network operator (MNO). This is usually referred to as “SMS pumping”. 

Often, the term “toll fraud” is used as an umbrella term that includes both fraudulent phone calls and SMS pumping. That’s how we’ll use the term throughout this article.

How Does Toll Fraud Work?

There are two scenarios where these types of fraud occur:

  • There is a revenue-sharing agreement between the MNO and the fraudsters that make the MNO complicit in the scheme
  • Fraudsters exploit MNOs without their knowledge

The second scenario involves smaller MNOs getting paid by larger MNOs for subscribers and traffic, so scammers can create fake companies and promise large traffic volumes. An MNO may be unconcerned with the source of the traffic and support the fraud.

Toll fraud can affect any company with a voice application. In most cases, it occurs through:

  • Voice verification code spamming
  • SMS verification code spamming

Let’s explore each one.

Voice Verification Code Spamming

Some companies offer a 2FA phone call option, in case users have trouble receiving text messages. These systems usually allow international calls, and scammers can take advantage of this. Fraudsters often exploit voice verification features and launch automated attacks.

Through abusive account creation and complex automation, fraudsters can request up to thousands of verification phone calls. The result? An uncommonly high phone bill for your company and thousands of dollars for the attackers. 

SMS Verification Code Spamming

Fraudsters can request thousands of fake verification text messages from your platform. Nevertheless, this scheme is not very lucrative unless the phone numbers come from long-distance locations where SMS messages are highly-priced. 

To carry out these schemes, the perpetrators will need to create accounts on your platform. So, you’ll be particularly vulnerable if you offer a free trial or plan.

How Does Toll Fraud Take Place?

Here’s how toll fraud works, step-by-step:

  1. Scammers get access to virtual phone numbers, allowing them to place outbound calls.
  2. In order to find holes in the network, fraudsters place short-duration calls to test numbers, which are provided by international premium rate resellers.
  3. Upon reaching a test number, the scammer purchases an International Premium rate number from the reseller.
  4. Once an attacker purchases a number, they arrange for it to receive dozens of concurrent calls. Including your 2FA phone calls.
  5. Fraudsters are paid by mobile networks in accordance with a revenue-sharing arrangement.

Now you know how toll fraud occurs. So, let’s take a look at how you can prevent it from affecting your business.

5 Best Practices to Prevent Toll Fraud 

All in all, your best defense against toll fraud is to implement a combination of security measures to limit a scammer’s access to your calling & messaging capabilities. Fraudsters monetize these attacks in multiple ways, but you can prevent the most common schemes through a handful of strategies.

We recommend:

  • Adopting SaaS management software
  • Implementing robust bot detention
  • Setting international calling restrictions
  • Implementing rate limits
  • Reviewing your call logs regularly

Let’s take a closer look.

Use SaaS Management Software

With a robust SaaS management software platform, you can have a virtual card to pay for your customer engagement platform, setting a hard limit on your phone spending. So, if toll fraud does happen, it will quickly hit your card limit, which will prevent fraudsters from making further attempts.

Implement Robust Bot Detection

Toll fraud is only profitable when done at scale. So attackers will create tons of user accounts. And they'll probably do it automatically. So, to become less vulnerable to toll fraud, you can:

  • Strengthen your implementation of CAPTCHAs 
  • Request users to verify their email before activating 2FA

Although these small changes in your UX may introduce some friction for legitimate users, they can help deter automated, at-scale attacks.

Set International Calling Restrictions

This type of fraud can be prevented by limiting certain users' access to international numbers. For example, some companies only enable international calling for a limited number of countries. For the rest of the world, you can offer other 2FA methods, such as:

  • Email verification
  • 2FA tools

Implement Rate Limits

A good way to prevent this type of fraud is by limiting fraudsters’ ability to generate a large volume of traffic in a short period of time.

For instance, you can limit:

  • SMS or calls per second/minute/day
  • Call duration
  • Concurrent calls

In fact, you can set rate limits by:

  • User
  • IP
  • Device identifier

Although rate limits may not completely prevent fraud, they can hinder your attackers’ plan so much that they decide your app’s not worth exploiting.

Review Your Call Logs Regularly

By regularly reviewing your call logs, you can detect any suspicious activity and take action before it becomes a problem. This will also give you an overview of the types of calls you’re currently making. That way, you can better understand how your resources are being used and identify potentially malicious activity.

Protect Yourself from Business Fraud With Cledara

There’s no doubt that toll fraud can have a significant impact on your finances. Fraudsters can make multiple unauthorized phone calls through sophisticated techniques, leaving you with a large, unexpected, and wrongful expense.

To protect yourself from toll fraud, it's important to take preventative measures, such as using Cledara.

Cledara is a SaaS management platform that allows you to:

  • Set individual virtual cards for each of your software subscriptions
  • Set an expense limit for each of your virtual cards
  • Get a centralized view of all your subscriptions
  • Identify unnecessary software and unsubscribe with one click
  • Prevent shadow IT
  • Get 2% cash back on your subscriptions
  • And more

Curious? Book a demo and try Cledara today.

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