Case Study: Preventing SMS OTP Bypass Attacks
Real-world analysis of SMS interception attacks targeting one-time passwords and effective mitigation strategies for financial institutions.
Executive Summary
In 2024, a major European financial institution experienced a series of unauthorized account access attempts exploiting SMS-based one-time password (OTP) vulnerabilities. Attackers leveraged SS7 protocol weaknesses to intercept authentication codes, resulting in attempted fraudulent transactions totaling €2.3 million.
Attack Timeline
- Attackers obtained customer phone numbers through phishing campaigns
- Performed IMSI lookups via compromised SS7 access
- Mapped customer locations and carrier information
- Identified high-value targets based on transaction patterns
- Initiated SMS interception using SendRoutingInfoForSM messages
- Redirected SMS traffic to attacker-controlled HLR
- Successfully intercepted OTP codes for 47 customer accounts
- Average interception time: 3.2 seconds
- Used intercepted OTPs to bypass 2FA authentication
- Initiated wire transfers to mule accounts
- Attempted cryptocurrency purchases
- Detection triggered after 12 successful compromises
Technical Analysis
Attack Vector Details
The attackers exploited the following SS7 vulnerabilities:
Attackers sent forged routing requests to redirect SMS messages intended for legitimate subscribers to attacker-controlled MSCs.
Temporary modification of Home Location Register entries to reroute all SMS traffic for targeted subscribers.
Fake location updates convinced the network that subscribers had roamed to attacker-controlled networks.
Mitigation Strategies Implemented
Immediate Response (Week 4)
Implemented real-time SS7 traffic filtering to detect and block suspicious routing requests.
- Blocked 98% of malicious SendRoutingInfoForSM attempts
- Reduced false positive rate to 0.3%
- Average detection time: 180ms
Transitioned from SMS-only OTP to hybrid authentication:
- TOTP authenticator apps (Google Authenticator, Authy)
- Hardware security keys (FIDO2/WebAuthn)
- Push notification-based authentication
- Biometric verification for high-value transactions
Long-Term Solutions (Month 2-3)
Machine learning models to detect anomalous authentication patterns, including unusual login locations, device fingerprinting, and transaction velocity monitoring.
Established direct communication channels with mobile carriers to report suspicious SS7 activity and implement network-level protections.
Launched awareness campaign educating customers about SMS security risks and encouraging adoption of more secure authentication methods.
Results and Impact
- ✓ 99.7% reduction in successful OTP bypass attempts
- ✓ Zero successful account compromises post-mitigation
- ✓ 73% of customers migrated to app-based authentication
- ✓ Average fraud detection time reduced from 4 hours to 12 minutes
- €2.1M in fraudulent transactions prevented
- €180K investment in SMS firewall infrastructure
- €95K annual operational costs for enhanced monitoring
- ROI: 11.7x in first year
Key Takeaways
1. Defense in Depth: Multiple layers of security controls significantly reduce attack success rates.
2. Real-Time Monitoring: Early detection is crucial for minimizing damage from SS7-based attacks.
3. User Education: Customers must understand the limitations of SMS-based security.
4. Industry Collaboration: Effective defense requires cooperation between financial institutions, carriers, and security vendors.
Recommendations for Financial Institutions
Immediate Actions
- Audit current authentication mechanisms and identify SMS-only dependencies
- Implement SMS firewall or SS7 monitoring solution
- Offer alternative authentication methods (TOTP, hardware keys, push notifications)
- Establish incident response procedures for suspected SS7 attacks
Long-Term Strategy
- Transition to FIDO2/WebAuthn for passwordless authentication
- Implement behavioral biometrics and risk-based authentication
- Develop partnerships with carriers for enhanced SS7 security
- Regular security assessments and penetration testing of authentication systems