Is industry inertia keeping SIM-swap fraud alive?

Issue 8 2021 Security Services & Risk Management

SIM-swap fraud has been around for decades and according to the latest SABRIC figures, incidents increased 91% year-on-year when looking at digital banking fraud across all platforms. But why, with all the advancements in technology, are we still dealing with this relatively unsophisticated, but rampant fraud type?


Lincoln Naicker.

Lincoln Naicker, product owner at Entersekt, explores how we could lower our risk to this perennial and costly threat. “The most important thing to recognise is that SIM swaps have a very important part to play in the mobile network industry. Mobile network operators (MNOs) sit at the centre of an extended ecosystem and impact many other sectors, not least of all the financial one. And although there has been a seismic shift in the technology in mobile apps and other digital channels, the SIM has remained fairly unchanged.”

Naicker points out that SIM-swap fraud remains a largely manual process with social engineering at the heart of most of the criminal efforts. Another big problem is that, at the moment, clients will be asked to challenge a SIM swap after the fact, rather than the MNOs proactively reaching out to the client to verify that the SIM-swap request actually came from them before proceeding.

“The US regulator is leading the charge in changing this and is proposing new requirements for phone carriers to authenticate a person’s identity before transferring their number to a new phone. This is timeous because Covid-19 has amplified digital and mobile banking and with over 90% smartphone penetration, we are all beholden to mobile networks for our digital financial lives.”

Naicker says there may need to be better local regulation to effect change, although he is quick to point out that the current method is low-friction and offers MNOs a better customer experience.

“MNOs want to keep the customer experience as smooth as possible. If you put too many roadblocks in the path of the cellphone owner, they may simply migrate to another provider and so the incentive to add additional security layers is not immediately obvious. However, when it comes to reputation, SIM-swap fraud will eventually impact your bottom line,” he warns.

A collective solution may be the answer

Minimising SIM-swap fraud requires a multi-layered solution. Naicker believes that the first issue that needs addressing is how MNOs onboard customers.

“We need greater cooperation between the MNOs when it comes to onboarding. The verification process should be augmented using other technologies such as voice biometrics. If all players could agree on better security at this early stage, we would already have made progress,” he says.

The second piece to the puzzle lies with organisations’ ongoing reliance on SMS one-time passwords (OTPs). Naicker says SMS OTPs are not secure and fraudsters know this.

“We have seen dramatic results at companies where we have helped them remove SMS OTPs as part of their authentication offering. We should remember that the industry rolled out SMS OTPs when we realised that username and passwords were not sufficient. But now we know that SMS OTP should not be used for anything tied to personal or financial information. It’s simply not secure enough,” Naicker states.

He acknowledges that this cannot happen overnight and suggests that, in the shorter term, companies can augment the authentication process with SIM-swap detection technologies or use mobile apps that rely on device integrity.

Finally, Naicker suggests that beyond industry cooperation, our regulators need to look at introducing guidelines and standards that will address SIM-swap fraud at the entry point.




Share this article:
Share via emailShare via LinkedInPrint this page



Further reading:

ArxTech: Over 30 years of evolving security solutions for South Africa’s toughest challenges
Security Services & Risk Management Integrated Solutions
[Sponsored] For over 30 years, a Centurion-based company has helped shape how security technology is designed, deployed, and supported in South Africa. Originally known as CellSecure, it now operates as ArxTech.

Read more...
Don’t Miss the Exclusive Launch of the AirXpress 3 SCBA
Security Services & Risk Management
Be the first to experience the all-new AirXpress 3 Self-Contained Breathing Apparatus (SCBA), designed and manufactured by MSA, and brought to you by PSA Africa.

Read more...
Transform WhatsApp chaos into real-time security intelligence
Security Services & Risk Management
The HYDRA AI security intelligence software plugs into existing guard chat groups to automatically convert voice notes, photos, and texts into structured, real-time security data and insights.

Read more...
SABRIC Annual Crime Statistics 2024
News & Events Security Services & Risk Management Residential Estate (Industry)
SABRIC has released its Annual Crime Statistics for 2024, reflecting a significant decline in financial crime losses, but also warning of the growing threat posed by artificial intelligence (AI) in fraud schemes.

Read more...
Health, safety, and environmental eLearning
Training & Education Security Services & Risk Management
SHEilds is a global leader in health, safety, and environmental eLearning, delivering internationally recognised qualifications such as NEBOSH, IOSH, IEMA, and ProQual NVQs.

Read more...
See crime stopped in seconds
Products & Solutions Security Services & Risk Management
Fog Bandit, a leader in security fog, is bringing its instant crime-stopping technology to Securex Cape Town 2025. Experience the innovation trusted worldwide to protect retailers, warehouses, and high-value sites.

Read more...
SA’s private security industry receives multi-million USD investment
News & Events Security Services & Risk Management
South Africa's private security sector has attracted significant international attention, with the world’s largest tactical flashlight manufacturer, Nextorch, announcing a major investment in its local operations, Nextorch Africa.

Read more...
Vetting people in security estates
iFacts Security Services & Risk Management Residential Estate (Industry)
In today’s security-conscious South Africa, estate management’s responsibility extends beyond gates and patrols; it involves ensuring that every resident, staff member, and service provider upholds the community’s safety standards.

Read more...
View from the trenches
Technews Publishing SMART Security Solutions Editor's Choice Integrated Solutions Security Services & Risk Management Residential Estate (Industry)
There are many great options available to estates for effectively managing their security and operations, but those in the trenches are often limited by body corporate/HOA budget restrictions and misunderstandings.

Read more...
IVA AI Pro Visual Gun Detection
Products & Solutions Surveillance Security Services & Risk Management Residential Estate (Industry)
Bosch has announced the launch of the IVA AI Pro Visual Gun Detection analytics based on deep learning. It is designed for automatic detection and classification of people and brandished firearms.

Read more...










While every effort has been made to ensure the accuracy of the information contained herein, the publisher and its agents cannot be held responsible for any errors contained, or any loss incurred as a result. Articles published do not necessarily reflect the views of the publishers. The editor reserves the right to alter or cut copy. Articles submitted are deemed to have been cleared for publication. Advertisements and company contact details are published as provided by the advertiser. Technews Publishing (Pty) Ltd cannot be held responsible for the accuracy or veracity of supplied material.




© Technews Publishing (Pty) Ltd. | All Rights Reserved.