Cloud Security Podcast Understanding a $10B Fraud Vector in Cloud-Native Workflows
Jul 22, 2025
Frank Teruel, COO at Arkose Labs, specializes in digital identity and fraud prevention. He discusses the alarming rise of SMS toll fraud, a $10 billion issue where bots exploit cloud workflows, causing unexpected operational costs. Teruel shares a striking story of a cloud container hijack that resulted in half a million dollars lost to crypto mining. The conversation emphasizes the need for enhanced security measures within digital environments and the critical role organizations play in combating this sophisticated fraud.
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SMS Toll Fraud Exploitation
- SMS toll fraud exploits SMS verification flows by generating traffic that incurs cost but doesn't involve data theft.
- This fraud often goes unnoticed by security but shows up as inflated marketing or cell phone bills months later.
Identity Complexity Drives Fraud
- The identity landscape is dynamic and complex with many versions and trust levels that differ by service risk.
- Low barriers and fake online identities increase exploitation opportunities for fraudsters.
WAFs Can't Detect SMS Toll Fraud
- Web Application Firewalls cannot detect SMS toll fraud since the initial flows appear human and legitimate.
- Device identification and behavior analysis are essential to detect bot-driven SMS toll fraud.