With every passing day, cyber threats are growing in variety and sophistication. SIM swap is one such development that hackers deploy to account takeover fraud. But, what is a SIM swap?

As the name suggests, SIM swap fraud involves hackers hijacking legitimate phone numbers by using forged IDs or deceptive tactics to gain unauthorized control over a customer’s number.

Unlike traditional phishing or malware attacks, SIM swap fraud doesn’t require breaking into a company’s internal systems. Instead, fraudsters manipulate mobile carriers into transferring control of a phone number to a new SIM card.

Once they have access, they can intercept SMS-based two-factor authentication (2FA) codes, reset ID passwords, and compromise critical accounts without the customer’s knowledge.

Understanding how SIM swap fraud works and how to prevent it is crucial to protecting your customers, their accounts, and their money or saved cards.

In this article on SIM Swap Fraud, we’ll break down:

• The mechanics of SIM swap fraud and how attackers exploit vulnerabilities
• Key warning signs to help businesses detect suspicious activity early
• Actionable strategies to strengthen authentication and security measures
• Best practices to educate customers and employees on fraud prevention

Let’s dive in.

How Does SIM Hijacking Work?

SIM hijacking is a deceptive technique cybercriminals use to take over phone numbers and gain unauthorized access to sensitive accounts.

Don’t be misled by the terms SIM swapping and SIM hijacking. They are both the same and can be used interchangeably. 

SIM swapping primarily works by exploiting weaknesses in mobile carrier procedures and their user authentication systems. 

A typical SIM swap fraud works in stages described below:

1. Social engineering the target’s personal information
2. Impersonating the victim based on the personal information
3. Manipulating the telecom service provider using impersonation
4. Taking over the account

Step 1: Social Engineering

Social engineering is an umbrella term used to cover all malicious activities, including human interactions and online snooping a fraudster may commit to unearth personal information about an individual.

Personal information includes full name as in IDs, primary contact number, date of birth, and even details of financial transactions. Once this is collected, they proceed to impersonate the victim.

Step 2: Impersonating the Victim

Using the stolen personal details, the fraudster impersonates the victim and contacts their mobile service provider. They cite reasons like device lost, lost SIM card, damaged SIM card, etc. to secure a duplicate SIM card. 

Step 3: Manipulating the Telecom Service Provider

Most telecom service providers have basic checks in place to ensure that duplicate or replacement SIMs are not provided leniently. They ask for personal information to authenticate the request, which the fraudster has secured. 

In some cases, the fraudster may collude with insider personnel to share information or bypass critical security checks. As a result, they can deactivate the victim’s original SIM and activate a duplicate under their control.

Step 4: Account Takeover

Once the fraudster has control of the victim’s phone number, they intercept OTPs sent via SMS for online banking, digital wallets, email, and even social media accounts. The interception is mainly done to reset passwords to online financial accounts or to make unauthorized wire transfers to the fraudster’s account.

The Many Vulnerabilities that Lead to SIM Swap Fraud

Quite often, there are vulnerabilities originating within and outside the telecom provider that lead SIM swaps. Ina  way, the user’s negligence in safeguarding their private information could also result in this fraud.

Some of the plausible vulnerabilities are:

• Weak KYC (Know Your Customer) processes followed by telecom providers. Some mobile operators rely on easily and publicly accessible personal details (like birthdate or address) for authentication, making social engineering attacks effortless.
• Excessive reliance on SMS authentication as primary security measure, instead of setting up secondary security measures. ‍
• Leaked, stolen, or misplaced customer data available from the dark web and even from ID copies provided by the customer for availing services like hotel stays.

SIM swap incidents have become daily news in the Indian subcontinent. 

• In one devastating incident, cyber fraudsters managed to swindle 4.65 Crore INR by impersonating a Malad-based businessman’s phone number and using it for unauthorized transactions.
• In the US, a Maryland woman lost $17K in a SIM swap fraud. 
• In another case, a man lost $21,000 from his bank of America account in a SIM swap scam. 

It is safe to assume that nobody is immune to a SIM swap fraud. It is necessary to proactively monitor warning signs and take steps to protect one’s own finances, or in the case of a business, its reputation too.

Key Warning Signs to Detect Suspicious Activity Early

There are specific signs that can give away that your device is being targeted for SIM swap.

Sudden Loss of Mobile Network Connectivity

When a SIM swap occurs, the original SIM is disabled, which means that the victim’s SIM stops getting reception and becomes defunct. It is not possible for two SIMs with the same number to be active simultaneously.

Multiple Failed Login Attempts on Customer Accounts

Fraudsters often try to use credential stuffing (where they try login credentials stolen from data breaches) once they have access to the victim’s phone number.

Unusual Requests to Change Account Information

Attackers often change recovery email addresses or phone numbers immediately after a successful SIM swap to prevent victims from regaining access to their accounts. Emails or in-app alerts indicating any of these changes are a surefire warning sign of a SIM swap in progress. 

New Device Logins from Unusual Locations

Many fraudsters use location spoofing using VPNs to mask their real-time location while accessing stolen accounts. Device logins in from unusual locations that the user otherwise doesn’t use is a telltale sign of SIM swap and account takeover.

Missed OTPs or Security Messages

If a fraudster successfully hijacks a victim’s number, OTPs and security alerts are diverted to the new SIM, allowing the attacker to reset passwords and authorize transactions unnoticed. Missed OTPs and security measures and unable to access accounts usually mean that account takeover is complete. 

Unauthorized Financial Transactions

Attackers often act fast after hijacking an account, transferring funds to mule accounts or making unauthorized purchases before detection. In the case of social media accounts, they post scam content to deceive the victim’s followers into sending money or sharing personal information.

New SIM Request or Authorization Requests on Telecom Provider Logs

Most telecom providers allow users to monitor their account activity through mobile apps. The user dashboard usually provides a section where approved services for which the number is being used or authorized for is listed. Any addition or removal of services from this list indicates suspicious activity. 

Ultimately, preventing SIM swap fraud requires strengthening the weakest links in the chain, which is, most often, the user. These steps could help with that. 

Proactive Steps to Minimize Risk

To proactively digit SIM swap fraud, you should proactively monitor for warning signs and also implement proactive measures:

• Strengthen Identity Verification: Use biometric authentication or knowledge-based security questions that fraudsters cannot easily bypass.
• Enable Multi-Factor Authentication (MFA): Think beyond SMS OTPs. Consider adopting app-based authentication (e.g., Google Authenticator and Microsoft Authenticator).
• Create Awareness: Conduct awareness campaigns about the risks of SIM swap fraud and how to protect personal information.
• Collaborate with Telecom Providers:  Work closely with mobile network operators to verify and flag suspicious SIM swap requests.

Why is SMS or OTP-Based Authentication Failing?

Globally, regulatory bodies are urging banks and financial institutions to move away from SMS-based One-Time Password (OTP) authentication due to its growing security vulnerabilities. 

For instance, the Saudi Arabian Monetary Authority (SAMA) has explicitly highlighted the risks in its Authentication Control Requirements (Section 4.4, Clause g). The requirements state that SMS-based authentication should not be the primary authentication method for banking transactions.

This shift is driven by the increasing cases of SIM swap fraud, phishing attacks, and SMS interception techniques that we have discussed above.

There are several other reasons that justify this move by SAMA and other global authorities. 

1. Vulnerability to SIM Swap Fraud

We now know for a fact that due to existing vulnerabilities in the telecom industry, SIM swap frauds are easy to commit by fraudsters. To create a safe environment for individuals and businesses to carry out their digital transactions, OTP-based authentication may not be the ideal long-term solution. 

2. Risks of Phishing and Social Engineering

Fraudsters often trick users into revealing OTPs through phishing emails, fake websites, or scam calls impersonating bank representatives. Since SMS OTPs rely on biometric user action, they are susceptible to human error and manipulation.

3. SMS Interception Attacks

Advanced cybercriminals exploit system vulnerabilities to intercept SMS messages. They even deploy malware-infected apps to hijack devices or even use location spoofing to mislead authorities. 

4. Regulatory Push for Stronger Authentication

Regulatory bodies like SAMA in Saudi Arabia and RBI (Reserve Bank of India) in India, and the European Banking Authority (EBA) now recommend stringent authentication mechanisms like:

• App-based authentication (e.g., Google Authenticator, Microsoft Authenticator)
• Biometric authentication (Device fingerprint, Behavioral Biometrics)
• Hardware security keys (FIDO2, YubiKey)
• Push notifications instead of SMS OTPs

Fighting Sim Swap Fraud: How Can Businesses Stay Ahead?

For businesses, the challenge of mitigating SIM swap fraud is manifold. They have the pressure to provide a smooth and seamless user experience while protecting their customers. Considering that need, these measures could help counter SIM swap threats.

• Transition to app-based or biometric authentication for sensitive transactions.
• Implement Multi-Factor Authentication (MFA) measures beyond SMS-based verification.
• Monitor for SIM swap attempts and alert users when a SIM change is detected.
• Educate customers about the risks of SMS-based authentication and promote safer alternatives.

Bureau is an end-to-end platform for compliance, identity decisioning, and fraud prevention. Our Device Intelligence and Behavioral Biometrics arm businesses with the necessary intelligence fight back against SIM Swap. Device Intelligence gives you location where a session is originating from, which risk assessment and fraud prevention teams can use to create FRM rules. Behavioral Biometrics can also help you identify even minor anomalies in user behavior. Combined intelligence from these can help you implement strategic friction and inform you to take action against suspicious activity, caused due to SIM swap and other fraud MOs.

Frequently Asked Questions

What is SIM Hijacking?

SIM hijacking, also known as SIM swap fraud, is a cyberattack where fraudsters transfer a victim’s phone number to a new SIM card, allowing them to intercept OTPs, reset passwords, and gain unauthorized access to accounts.

How to tell if you've been SIM swapped?

You may have been SIM swapped if you suddenly lose mobile network connectivity, stop receiving OTPs or security alerts, or notice unauthorized access to your financial accounts.

How do fraudsters perform a SIM swap attack?

Fraudsters gather personal information through phishing, social engineering, or data breaches and then impersonate the victim to convince mobile operators to issue a new SIM card in their name.

What happens after a fraudster hijacks a SIM?

Once a fraudster gains control of a phone number, they intercept OTPs, reset passwords, access financial accounts, steal funds, and lock the victim out of their accounts.

Is SIM swap fraud common in India?

Yes, India has seen several high-profile SIM swap fraud cases, with fraudsters using stolen personal data and telecom vulnerabilities to target individuals and businesses.

What should I do if I suspect SIM swap fraud?

Immediately contact your mobile provider to regain control of your number, change passwords for critical accounts, enable multi-factor authentication, and report the fraud to your bank and authorities.

How can businesses prevent SIM swap fraud?

Businesses can reduce the risk by implementing app-based authentication instead of SMS OTPs, partnering with telecom providers for SIM swap alerts, and educating customers about security risks.