OTPs and 2FA have long been hailed as silver bullets for preventing account takeovers (ATOs).
However, 87% of organisations worldwide now face AI-enabled attacks on a daily or weekly basis, and specialised OTP bots are actively exploiting vulnerabilities in these security measures. To protect your business and customers’ accounts, you must be equipped to defend against evolving tactics.
Read on to learn how fraudsters use these bots to breach accounts, and discover the most effective ways to secure 2FA and stop OTP bots in their tracks.
What is Two-Factor Authentication (2FA)?
Two-factor authentication (2FA) is a security method that requires users to provide two different forms of authentication to verify their identity. Considered a type of multi-factor authentication (MFA), 2FA comes in several forms, including:
- Fingerprint recognition
- SMS codes
- Email codes
- Software tokens
- Hardware tokens
- Authenticator apps
- Phone calls
By requiring multiple forms of verification, 2FA makes it significantly harder for attackers to access accounts. Even if a cybercriminal compromises the account’s password, they would also need the second form of authentication. In a world where 29% of people have experienced at least one account takeover, this added layer of protection is increasingly recommended. However, 2FA now has a major vulnerability: OTP bots.
What is an OTP?
A One-Time Password (OTP) refers to a security mechanism that uses an authenticator app or other method to provide users with a unique, single-use code to access an account. This code expires after one use and cannot be reused. Typically, OTPs are delivered via SMS, email, or authenticator apps on smartphones or other devices. OTPs enhance security by eliminating risks associated with password reuse or leaks.
What are OTP Bots?
OTP bots are malicious, automated programmes designed to intercept, steal, or bypass one-time passwords used during authentication. These bots commonly rely on social engineering to trick users into handing over their OTPs, which hackers can then use to access protected accounts. Let’s examine how OTP bots undermine 2FA systems.
The Vulnerability of 2FA to OTP Bot Attacks
2FA remains one of the most widely adopted security measures to prevent account takeovers, and for good reason. Requiring two forms of authentication does significantly reduce the risk of cyberattacks. However, it is not immune to increasingly sophisticated techniques. As 2FA adoption has grown, criminals have intensified efforts to exploit weaknesses. The key issue: 2FA often relies on a single point of failure. If an attacker obtains the OTP, they can take over the account.
Types of OTP Bots
OTP bots come in a variety of forms, each designed to target specific weaknesses in different authentication systems. Here are the most common types:
- SMS interceptor bots: These bots exploit vulnerabilities in mobile phone networks to intercept OTPs sent via text. Many networks still rely on the outdated Signalling System No. 7 (SS7) protocol, which contains long-standing security flaws. These bots extract OTPs from intercepted SMS messages and send them to attackers in real time.
- Phishing bots: These malicious programmes automate phishing attempts, sending large volumes of emails or messages designed to trick recipients into revealing sensitive information like OTPs or passwords.
- Voice call bots: These bots make automated calls posing as trusted institutions (e.g., banks), requesting OTPs under the guise of “security verification”. Advances in AI have made these calls harder to distinguish from legitimate ones.
- Social engineering bots: Automated systems can also use psychological manipulation tactics and generative AI to trick users into revealing their OTPs. One particularly insidious form of this is MFA Bombing, or MFA Spamming, a social engineering cyberattack that uses 2FA against itself by repeatedly overwhelming the user with authentication requests. Eventually, the user is requested to provide authentication via another means in order to stop the notifications and “fix” the problem. This other means involves the user unknowingly sending their OTP directly to the hacker.
- SIM swapping bots: These bots facilitate SIM swap fraud by tricking mobile carriers into transferring a victim’s number to a SIM controlled by attackers, who can then intercept OTPs and other sensitive communications.
How Cybercriminals Use OTP Bots to Compromise Accounts
Gaining access to an OTP is just one step in a larger, coordinated attack. Here’s how cybercriminals typically operate:
Obtaining the OTP is merely the first step in any account takeover (ATO) attempt. Cybercriminals and fraudsters typically deploy a combination of advanced techniques alongside OTP bots to breach and assume control of user accounts. Below are the most common methods they employ:
Gathering Target Information
At the outset of an attack, cybercriminals concentrate on gathering personal data through various means, including data breaches, social engineering, and dark web marketplaces. Gaining access to victims’ email accounts is a primary objective, as it enables attackers to intercept OTPs, craft fraudulent communications, and gain entry to additional services.
Credential Acquisition
Login credentials are usually obtained via phishing campaigns, keylogging malware, or by exploiting the widespread reuse of passwords across multiple platforms. Research shows that up to 65% of individuals reuse passwords, and comprehensive lists of stolen credentials are readily available for purchase on the dark web.
OTP Bot Deployment
Once the attacker has acquired the necessary credentials and information, they must overcome one final hurdle: two-factor authentication. To do this, they deploy a suitable OTP bot based on the target’s specific authentication method. This might involve using large language models (LLMs) to generate persuasive phishing emails or AI-driven voice calls, or setting up bots tailored to intercept different types of authentication. These methods enable highly scalable, sophisticated attacks capable of bypassing OTP-based 2FA.
Initiating the Login Process
With the bot configured and the credentials in hand, the attacker begins the login process. By entering the stolen credentials on the target platform, they initiate the request for an OTP.
OTP Interception
The bot intercepts the OTP through one of several techniques, such as SMS message capture, phishing, or spoofed voice calls.
Automated OTP Submission
In real time, the bot automatically submits the intercepted OTP to the authentication platform before it expires, allowing the hacker to finalise the login.
Account Takeover
Once authenticated, the attacker gains full access to the compromised account. They will typically update contact details and change passwords to lock out the legitimate user, before proceeding with fraudulent transactions or data theft.
How Sift Prevents ATOs
Almost 30% of UK organisations now use AI for security. Whenever a security measure becomes commonplace, cybercriminals will find a way to get around it. This is why it’s so crucial to build a security infrastructure that’s dynamic and capable of responding to new threats in real time. Compared to what came before, 2FA was a great solution, but it’s not perfect.
With stolen credentials readily available on the dark web, this “silver bullet” is relatively easy to circumvent due to its single point of failure. To stay ahead of these evolving threats, it’s high time for organisations to embrace AI-powered security measures like Sift’s account takeover solutions.
Sift’s cutting-edge, AI-driven platform enables you to combat ATOs and transform your risk management into a revenue generation centre. Embrace the next generation of digital security with these powerful features:
- AI-powered risk assessment: Uses advanced AI/ML algorithms to detect fraud and prevent attacks in real time.
- User behaviour analysis: Identifies suspicious patterns that may indicate account takeovers.
- Adaptive authentication: Implements dynamic security measures based on risk level.
- Cross-platform protection: Secures various channels, including web, mobile, and API interfaces.
- Fraud network insights: Uses data from a global network to stay ahead of emerging threats.
- Real-time reporting: Provides actionable insights for quick response to potential attacks.
- Smooth integration: Easily incorporates into existing systems without disrupting user experience.
- Continuous learning: Evolves to address new account takeover tactics as they emerge.
For an example of what these features can do for a business in the real world, let’s look to Rently.
The global property tech company was facing a major problem with account takeover attacks and fraudulent activities were threatening the integrity of their platform. By implementing Sift’s account takeover solution, Rently automated fraud prevention, reducing ATO incidents by 65%, and eliminating six hours of manual review daily.
Learn more about the power of Sift’s AI-powered fraud detection to secure your business against ATO attacks by getting a free demo.
