How Does SMS Pumping Affect Your Business?

October 4, 2023 | By Reena Aggarwal (Guest Post)
Man texting in dimly lit room with Roomba vacuum cleaner

SMS or text messaging is a lucrative method for businesses to reach consumers.

Research data shows that 53.5% of business owners and marketing managers use text marketing. This is due to its high open and click-through rates compared to other channels.

And for 29%, text messaging is their preferred method to reach younger consumers.

But despite its convenience as a marketing and communication channel, text messaging is not free from exploitation by cybercriminals.

SMS pumping is a common telecommunication scam that cybercriminals use to generate revenue at the expense of businesses.

I’ll help you understand what SMS pumping is and how it can impact your business.

What is SMS Pumping?

SMS pumping, also known as SMS traffic pumping, is a type of fraud where cybercriminals take advantage of the SMS system connected to the forms on your website or app.

What the criminals do is insert premium-rate phone numbers into these forms.

These numbers charge significantly higher prices for SMS services than regular numbers. It inflates the amount your business pays to the mobile network operators (MNOs) associated with these premium-rate phone numbers.

In some cases, the cybercriminals could be working with a rogue MNO to generate funds. In other cases, the cybercriminals may illegally access the MNO’s systems and network and the MNO could be unaware of these fraudulent activities.

The SMS system that supports two-factor authentication (2FA) tends to be the most targeted. This system allows users to request a one-time password (OTP) or link to their mobile phone for authentication.

What Effects Does SMS Pumping Have on Your Business

SMS pumping can slow down the growth of your business, create a negative customer experience, and even lead to complicated compliance problems.

1. Financial Losses and Budget Overruns

SMS pumping leads to exorbitant bills for the SMSes sent to premium-rate phone numbers.

If you had budgeted for telecommunication expenses using regular rates, this unexpectedly high cost can cause financial strain and destabilize business operations.

And the worst part is that you’ll be paying for traffic that brings in no returns. Instead, SMS pumping eats into your revenue.

Take X (formerly Twitter), for instance. According to Elon Musk, the company lost $60 million per year from SMS pumping.

Elon Musk tweet about SMS pumping

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Image via X

Such financial losses hold back your growth. They hinder your financial capability to invest and allocate finances to strategic business initiatives.

2. Service Interruptions

SMS pumping causes an influx of SMS traffic that can jam your messaging infrastructure.

The overload on your business’s telecommunication resources can lead to delays in time-sensitive SMSs or even complete service outages.

In addition, you may need to pause your SMS service for a while as you resolve the matter. This means your real customers will have a hard time reaching you.

Customers are bound to get frustrated with the service outages and delays, leading to a decline in customers’ loyalty, high customer churn, and negative customer reviews.

A drop in your business’s credibility is also a very likely scenario, which leads to low acquisition rates.

You’re also more likely to experience a poor response in your ecommerce marketing efforts like ambassador marketing and referral programs.

All these have negative implications on the growth of your business.

3. Distraction From Your Business’s Core Activities

Dealing with the consequences of SMS pumping takes your attention off core business needs.

It disrupts your business from its normal operations as you investigate the root cause of the hike in SMS traffic and increased messaging costs.

Instead of directing your resources toward your business’s strategic priorities, you have to direct them toward addressing customers’ complaints and handling service interruptions.

In addition, you’ll have to implement additional security measures to prevent future disruptions. This leads to more diversion of resources from your core business activities.

This affects productivity and efficiency across various departments, hindering progress towards the business’s goals.

4. Loss of Digital Trust

A research study by DigiCert, Inc. found that a failure in your digital security can reduce customer loyalty.

The study indicated that 47% of consumers have stopped buying from a brand after losing trust in its digital security.

The research also shows that 84% would consider switching to another brand if they lost digital trust in a business.

Being a victim of SMS pumping erodes consumers’ trust in your ability to conduct secure and reliable digital transactions and interactions.

It makes customers:

  • Less likely to share their information and make online purchases
  • Less forgiving of negative incidents. Customers who have no trust in your brand are less forgiving when your brand makes mistakes or faces temporary setbacks

Besides, if customers lack confidence in the security of your payment processes, they’re more likely to abandon their shopping carts, leading to lost sales.

If customer data is compromised as a result of the SMS pumping attack, it could result in compliance violations and have legal and financial consequences.

The Payment Card Industry Data Security Standard (PCI DSS), for instance, has strict data protection standards for businesses that store, process, or transmit cardholders’ data.

PCI DSS expects these businesses to implement tight security measures to adequately protect their infrastructure.

Violations of these standards, such as a security breach, can result in financial penalties of up to $500,000 per incident.

More legal complications can also crop up with your service SMS provider.

If the extra SMS traffic and costs lead to a violation of the contract and billing terms, you could be involved in lengthy and expensive court battles.

How You Can Protect Your Business from SMS Pumping Attacks

SMS pumping can attack businesses of any size or industry.

You can reduce your brand’s vulnerability by prioritizing solid security measures. One of the most effective measures you can take is investing in a powerful and secure SMS marketing platform like Mobile Text Alerts.

Also, ensure that your business marketing and outreach assets, especially your website forms are secure. You can use a secure online form builder like Jotform. Here’s a Jotform review by Attrock that goes into detail about its capabilities.

Finally, monitor your SMS traffic continuously, and investigate unusual patterns such as spikes in messages. This can help you tackle attacks promptly.

Conclusion: Protect Your Business from SMS Pumping

SMS pumping can have far-reaching and negative impacts on your business, especially its:

  • Long-term growth potential
  • Reputation
  • Finances
  • Relationship with customers

Working with a powerful texting solution and building secure forms are some of the effective ways to safeguard your business against fraudulent activity. Keep track of your SMS traffic and respond to any anomalies quickly.

Author Bio - Reena Aggarwal

Reena is Director of Operations and Sales at Attrock, a result-driven digital marketing company. With 10+ years of sales and operations experience in the field of e-commerce and digital marketing, she is quite an industry expert. She is a people person and considers the human resources as the most valuable asset of a company. In her free time, you would find her spending quality time with her brilliant, almost teenage daughter and watching her grow in this digital, fast-paced era.

Social connects: LinkedIn, Twitter

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