| Lookout Blog October 3, 2012

October 3, 2012

Premium SMS Scams and How to Avoid Them


Lets face it: hackers exist, and they’re always discovering new ways to trick people into giving them their money. In Lookout’s recent State of Mobile Security 2012 report, we discovered there was a significant rise in premium SMS fraud, also known as Toll Fraud, since last year. Fraudsters have successfully stolen millions from consumers using this type of malware, so we’re going into detail to show the tricks of the Toll Fraud trade.

Legitimate premium SMS services can actually come in handy. If a user wants a particular type of content, like a ringtone or wallpaper, they can simply text a number (called a short code), get the content they want, and see the charge on their next phone bill. While the graphic above illustrates a legitimate process, hackers have found a way to corrupt the system. Premium SMS services present an opportunity for malware writers to make some serious cash by posing as fake content providers without your knowledge. This family of malware, called Toll Fraud, accounted for 79% of all Lookout threat detections. Here's how bad guys do it:

Now, Premium SMS regulations differ significantly across the globe, and lax regulatory policies in places like Russia make threat likelihood more significant. The U.S. requires double confirmation messages before approving a Premium SMS transaction, and domestic wireless providers won’t transfer funds until after a user has paid their phone bill. This poses a challenge for malware writers, but the threat is still out there. Download Lookout Mobile Security to protect yourself not just from Toll Fraud, but from all the types of malware we hunt down through our Lookout Mobile Threat Network. Comment below with your questions on Premium SMS fraud or anything else in the State of Mobile Security 2012 report.