So, what are disposable phone numbers? These are virtual phone numbers that are not permanently assigned to a specific individual or device. Anyone can purchase a temporary number from a service provider online. It is not tied to a physical SIM card or phone line contract. Users of these phone numbers can receive SMS or calls via the provider’s app or website. We’ll go into the various reasons below why people would need to use disposable phone numbers and why you should beware of disposable phone numbers.
Why do people use disposable phone numbers?
Subscribing to online services can sometimes result in receiving spam through SMS or emails for several reasons. Phone numbers can also be used to track purchase or browsing patterns for online shoppers. Hence, the use of disposable phone numbers by privacy-minded folks or those who hate spam in whatever form.
It is possible to terminate or change the virtual number once it starts to receive spam if people are using these numbers. Some may even regularly change their numbers to avoid being tracked by online services.
When signing up for online services or platforms that require a phone number verification, users are still able to receive calls and text messages without revealing their actual phone number.
Risk of disposable phone numbers
While there are legitimate uses for disposable phone numbers, fraudsters also use them to conduct fraudulent purchases online and send out scam messages. Some websites use SMS One-Time-Passcode (OTP) to conduct identification verification before allowing a customer to make purchases. If the fraudster is using a disposable phone number, he or she can easily receive the SMS OTP and “verify” their identity.
The existence of disposable phone numbers has introduced a new dimension to the fraudulent order detection process. Most merchants will be unable to easily verify if the phone number being used is a temporary virtual number. As a result, they will experience much higher fraudulent order rates and stand to suffer major financial losses.
Due to the anonymous nature of disposable phone numbers, they are great for criminals to conduct their businesses. Law enforcement agencies will need to spend more time and effort, just to track the malicious individuals.
Ways to mitigate the risks
Online merchants need to be alerted when fraudsters use disposable phone numbers during the ordering process. It is advisable to perform additional verification measures such as email verification, address verification or multi-factor authentication.
As a rule, first-time purchases by a particular user (who can be identified by either email address, phone number or IP address) should invite thorough scrutiny of the user details given in the order. Merchants can also monitor transaction patterns such as many purchases within a short period of time (velocity checks) or abnormally huge order amounts.
Using a fraud screening solution works best when integrated into the online shopping cart. An automated solution can perform a very comprehensive screening of the order details. Details such as the IP geolocation vs. the shipping or billing address are a good way to unveil possible fraud.
With a system such as the FraudLabs Pro Fraud Screening service integrated into the order process, velocity checks are performed on all transactions. In addition, the blacklists being used can quickly sniff out habitual fraudsters by their emails, phone numbers, credit cards used and so much more.
Disposable telephone numbers certainly can give legitimate users some measure of privacy, thus enabling them to hide their activities from others. Unfortunately, criminals also benefit from the easy availability of disposable phone numbers. The same privacy shield afforded to legitimate folks can also obscure the nefarious activities undertaken by the bad actors.
As with all things, there will always be pros and cons when it comes to disposable phone numbers. Luckily for online merchants, they can rely on FraudLabs Pro to secure their website shopping carts from frauds. FraudLabs Pro does a great job of detecting and blocking orders using disposable phone numbers. Merchants using FraudLabs Pro can just sit back and relax as fraudulent orders are automatically rejected or marked for manual review.
Merchants not currently using FraudLabs Pro should note that there is a free Micro plan to screen up to 500 orders per month. They should, at the very least, use the free FraudLabs Pro plan to help weed out bad orders.