SIM Swapping and Bank Fraud: The Growing Threat and How to Avoid It

Mobile phone fraud is a growing problem affecting both consumers and businesses. The lack of strict regulation on the sale of mobile chips allows criminals to acquire lines anonymously, facilitating activities such as identity theft, SIM theft, and unauthorized account access.

One of the main factors contributing to this problem is the lack of a mandatory identity verification system when purchasing a chip. In countries like Mexico, this situation has allowed extortion and fraud related to mobile phones to grow alarmingly. 

What is SIM swapping?

SIM swapping is a type of fraud where scammers duplicate a person's SIM card to gain control of their phone line. They use this line to intercept verification messages and access bank accounts and other digital services.

To achieve this, criminals impersonate the victim by contacting the telephone company, providing personal information such as IDs or passwords, which they previously obtained through deception, such as fake emails, fraudulent calls, or by exploring public information on social media. They may also have stolen sensitive data through malicious applications or fraudulent Wi-Fi connections.

The biggest risk of this fraud is the lack of physical verification when requesting a duplicate SIM card, as carriers often rely solely on personal information, making it easier for criminals to complete their scam if they already have this information.

The SIM swapping problem has escalated to the point where it has reached the Supreme Court of Justice. Clever criminals exploit this vulnerability to drain bank accounts, make fraudulent purchases, and even commit more serious crimes. The consequences for victims can be devastating, both financially and emotionally.

Under the presidency of Norma Piña, the First Chamber is reviewing key cases seeking to establish liability for telephone companies, whose poor handling of chip swaps has facilitated these crimes. This debate could set a precedent for the security protocols companies must adopt and the limits of liability for users and service providers in the handling of sensitive data.

Bank call fraud

Between February 2022 and June 2024, a total of 211,673 bank users filed electronic complaints through CONDUSEF. Of these, 31,311,000 (66,229) completed a survey. In this survey, 46,411,000 associated the fraud with their demand deposit accounts, and 33,311,000 with credit accounts.

Regarding fraud methods, 35.8% reported having been a victim of fraudulent phone calls that appeared to come from his bank, he received on 22.2% SMS or WhatsApp messages requesting bank details under the guise of suspicious charges, and 18.91% of the frauds were tricked by fake portals that appeared to be official. These three methods accounted for 76.91% of the frauds identified.

Fraudulent phone calls account for 43.2% of all electronic banking fraudAdditionally, cell phone-related fraud has increased by 15.11% in 2023, surpassing the number reported between February and December 2022 by 60.1% in 2023.

Regarding the location of those affected, 29.7% filed their complaint at Customer Service Units in Mexico City, while the State of Mexico (18.5%) and Jalisco (8.4%) also stood out.

This scenario underscores the growing threat of SIM swapping and mobile phone fraud, activities used by criminals to obtain the information needed to commit this type of fraud, which is increasingly affecting users in Mexico.

What is the KYC approach and how does it help prevent fraud?

The Know Your Customer (KYC) principle involves real-time identity verification, the use of multi-factor authentication, and constant activity monitoring. These measures protect not only end users but also operators and businesses in the sector.

Implement an approach of Robust KYC This could be key to reducing the risks associated with mobile telephony. Operators could ensure that each phone line is linked to a verifiable identity, eliminating the anonymity that criminals often exploit.

Technological solutions for a growing problem

Specialized companies, such as Tu Identidad, offer innovative tools for organizations to implement fraud prevention systems tailored to their needs. These solutions include biometric verification technologies, phone number validation, email validation, and even proof of address and government ID.

The future of secure mobile telephony

Regulating the sale of mobile chips and adopting KYC measures are fundamental steps to combat fraud and protect both users and businesses. It is essential that governments and organizations work together to implement these measures and ensure greater security in mobile communications.

At Your Identity, we are committed to providing the tools necessary for any company to implement effective identity validation systems, thus contributing to a more secure mobile ecosystem.

Contact us now and discover how to integrate this innovative technology into your operations.