Vulnerabilities of SMS OTP
SMS-based One-Time Passwords (OTPs) have long been a staple in multi-factor authentication (MFA) processes. However, their security has significant and well-documented vulnerabilities. Studies highlight that SMS OTPs are susceptible to various types of cyber-attacks, including:
SIM Swapping
Attackers can hijack a victim’s phone number by tricking the mobile carrier into transferring the number to a new SIM card, thus intercepting OTPs sent via SMS.
Man-in-the-middle attacks
In unsecured network environments, attackers can intercept SMS messages containing OTPs.
Phishing attacks
Users can be tricked into revealing OTPs to attackers through deceptive schemes like email phishing, spearphishing (where someone is personally targeted), smishing (SMS phishing), vishing (voice calls finding out personally identifiable information) or using social media to tease out information.
The Consequences of Sticking with SMS OTP
User Trust and Security Compromised
When SMS OTP fails, it directly impacts user trust. Every breach and incident of unauthorized access due to compromised OTPs undermines confidence in the service provider’s security measures. This erosion of trust can lead to customer churn, as users seek more secure alternatives.
Operational Inefficiencies
Reliance on SMS OTP introduces operational inefficiencies. Delays in OTP delivery can frustrate users, leading to increased support calls and decreased satisfaction and defection to your competitors. AIT, or Artificially Inflated Traffic is a big problem for enterprises who get charged for SMS OTPs to bots or numbers/users that don’t exist.
Consider also that many SMS OTPs may not get delivered or might be filtered by the Mobile Network Operator as spam; users may encounter problems with no-signal areas or roaming difficulties.
Financial and Legal Implications
The financial implications of compromised SMS OTPs can be severe. Businesses may face direct financial losses from fraud, regulatory fines for failing to protect user data, and the costs associated with remediation and customer compensation. Legal repercussions can also arise, especially in jurisdictions with stringent data protection regulations.
