Is your business relying on two-factor authentication (2FA) such as one-time passwords (OTPs) to defend against the increasing sophistication of modern cybercriminals? OTPs and 2FA have been hailed as silver bullets for stopping account takeovers (ATOs). However, 52% of organizations are now facing AI-enabled attacks on a daily or weekly basis and specialized OTP bots are actively exploiting the flaws in these security measures. To protect your business and customers’ accounts, you must be prepared to defend against evolving tactics. Read on to learn how fraudsters are using these bots to attack accounts, and discover the best way 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 authentication forms to verify their identity. Considered a form of multi-factor authentication (MFA), 2FA comes in a few different forms, including:
- Fingerprint recognition
- SMS codes
- Email codes
- Software tokens
- Hardware tokens
- Authenticator apps
- Phone calls
By requiring multiple forms of authentication, 2FA makes it significantly harder for hackers to break into accounts. Even if a cybercriminal compromised the account’s password, they would also need the other form of authentication. In a world where 29% of people have experienced at least one account takeover attack, this additional layer of security is increasingly recommended to protect online accounts. However, 2FA now has a weakness: OTP bots.
What is an OTP?
“One-Time Password” (OTP) refers to a security mechanism that uses an authenticator app to verify users by providing them with a unique, single-use code for account access. This code expires after one use and cannot be used again. Typically, these passwords are delivered via SMS, email, or through authenticator apps on smartphones and other devices. OTPs are designed to enhance account security by removing the risk of a password being compromised due to leaks or password reuse.
What are OTP Bots?
OTP bots are malicious, automated programs designed to intercept, steal, or bypass one-time passwords used in authentication processes. These bots rely on social engineering attacks to trick users into sharing their OTP so that hackers can use them to break into accounts. Let’s discuss how OTP bots are capable of breaking 2FA security.
The Vulnerability of 2FA to OTP Bot Attacks
2FA is one of the most widely used security measures to prevent account takeovers, and for good reason. Requiring 2 forms of authentication does, in fact, effectively mitigate the risks of cyberattacks. However, it is not immune to sophisticated attacks. As 2FA’s popularity has increased, criminals and hackers have redoubled their efforts to find new ways to break through its defenses. They have exposed a major flaw within the armor of 2FA; this digital security measure relies on a single point of failure. If the attacker can obtain the OTP, they can use the code to take over the account.
Types of OTP Bots
OTP bots come in a number of forms, with each designed to target specific vulnerabilities in different authentication systems. Let’s take a look at these varieties and how they function so you can understand how to build effective countermeasures:
- SMS interceptor bots: These bots exploit weak points in mobile networks to intercept SMS messages containing OTPs. The problem here is that mobile networks continue to rely on Signaling System No. 7 (SS7) protocol, a standard with highly-publicized vulnerabilities that have never been patched. By exploiting outdated security protocols in mobile networks and the lack of encryption in SMS transmissions, these bots are able to extract the OTP and send it to the attacker, often in real time.
- Phishing bots: These are forms of malicious software (malware) that automate the process of phishing attacks by sending out large volumes of phishing emails or messages with the goal of deceiving recipients into divulging sensitive information like passwords, credit card numbers, or personal data.
- Voice call bots: These bots use automated voice calls to impersonate legitimate services and collect OTPs from unsuspecting users. As AI has advanced, automated phishing voice calls have become increasingly convincing and difficult to detect. The voice call will usually attempt to impersonate a bank or service provider that “needs the OTP for security purposes.”
- 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 automate requesting SIM card transfers to gain control of a victim’s phone number and intercept OTPs. In an attack like this, the victim’s carrier is tricked into switching the user’s phone number to a SIM card in the possession of cybercriminals. This causes all calls and SMS messages to be sent to hackers instead of the owner of the account.
How Cybercriminals Use OTP Bots to Compromise Accounts
Getting the OTP is only the first step in any account takeover attack. Cybercriminals and fraudsters use a cocktail of sophisticated techniques in tandem with OTP bots to breach and take over accounts. Let’s take a look at the most common methods:
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Gathering Target Information
To begin an attack, cybercriminals often focus on collecting personal data through various means, including data breaches, social engineering, or purchasing from dark web markets. Accessing victims’ emails is a priority for hackers, who can use them to create fake messages, intercept OTPs, and log into accounts.
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Credential Acquisition
Attackers obtain login credentials through phishing, keylogging, or by exploiting password reuse across multiple platforms. Up to 65% of people re-use their passwords across a number of accounts, and comprehensive password lists are fairly affordable and easy to obtain on the dark web.
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OTP Bot Deployment
With the right credentials and information in their possession, the hacker now faces one final obstacle: 2FA. To overcome this, they will use AI to set up the appropriate OTP bot based on the target’s authentication method. For example, they might use advanced LLMs to generate convincing phishing messages or deepfake phone calls or configure automated bots tailored to specific authentication methods. These techniques allow for more sophisticated, scalable attacks that can bypass OTP-based two-factor authentication.
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Initiating the Login Process
With the bot prepared, and the credentials acquired, the attacker only needs to begin logging in to start the attack. Using the stolen credentials, they trigger the OTP request on the target platform.
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OTP Interception
The bot then intercepts the OTP using a specific method (e.g., SMS interception, phishing, or voice call spoofing).
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Automated OTP Submission
In real-time, the bot then immediately submits the intercepted OTP to the target platform before it expires, ensuring the hacker can complete the login process.
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Account Takeover
Upon successful authentication, the attacker gains full access to the compromised account. Typically, they then alter contact details and change passwords to lock out the rightful owner of the account before carrying out fraudulent transactions.
How Sift Prevents ATOs
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 organizations 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 center. 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 behavior 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.