SmishingNot Even Your Phone Is Safe from Fraudsters!

How SMS Phishing (or “Smishing”) Scams Impact Merchants, Trigger Chargebacks, & Damage Your Brand

Ever come back from vacation with an inbox full of hundreds of emails? How many of them do you open and actually read?

If you answered “all of them,” you’re in the minority. On average, less than a third of emails are opened. That’s bad news for any scammer who relies on you to interact with their spam email for their ploy to work. It’s partly for this reason that sophisticated bad actors are increasingly turning to texts as a vector for phishing instead.

Recipients open a whopping 98% of text messages. Legitimate texts from friends, one-time security codes used for multi-factor authentication — and yes, even malicious messages — are viewed basically indiscriminately.

In this article, we take a closer look at SMS-based “smishing” attacks. We discuss how they work, how they impact your business, and how you can respond if you find yourself ensnared in an attack.

What is Smishing?

Smishing

[noun]/s • miSH • əng/

Smishing is the fraudulent practice of using fake text messages in an attempt to steal confidential information, such as passwords or credit card numbers.

Smishing is a portmanteau of “SMS” and “phishing.” As the name implies, it’s a kind of phishing attack, but instead of targeting victims through emails or websites, smishing relies on mobile (SMS) text messaging. It’s just one more way for fraudsters to turn technology against both consumers and businesses. 

Some smishing messages are obviously scams. For example, imagine that a person you’ve never met, and who has no connection to you, sends you a text asking for a “favor.” The favor involves restricted personal or company information such as credit card numbers. It’s an obvious scam, and few people would fall for that.

Other fraudsters are sneakier. The sender is realistic; for instance, they’re posing as a coworker, or a manager from another department. The request is in the voice of the person they’re impersonating, too. If it’s worded carefully, the message may convince you that it’s authentic.

How Do Smishing Attacks Work?

Smishing attackers can target virtually any instant messaging channel. SMS-based attacks are most common, but bad actors can also infiltrate your Whatsapp, Facebook Messenger, Google Chat, and even Microsoft Teams apps.

Basically, any platform that allows a sender to communicate one-on-one with a recipient is fair game for a smishing attack. A scammer will typically employ one of three tactics:

Common Smishing Attack Tactics

Both businesses and consumers can be victimized in smishing attacks. Consumers, for example, may face scenarios like:

How Criminals Impersonate Your Business in Smishing Campaigns

Apart from being a customer security issue, smishing attacks can also harm your brand identity. In fact, attackers may directly exploit the trust that you’ve built with your customer base to increase the success rate of their scams.

This reason is precisely why merchants are prime targets for impersonation. In short: customers are conditioned to trust communications from brands they recognize.

When a consumer sees a text from a familiar brand, their guard goes down, making them more likely to click a link or download a file than they would if the message came from an unknown number. Piggybacking on your reputation means that scammers can bypass the recipient’s skepticism and increase click-through rates.

Here are a few examples of how a fraudster can use your good name to launder their scam:

Ways That Smishing Can Impact Your Business

Suffice to say, the fallout extends far beyond a single fraudulent transaction when scammers successfully impersonate your business. The long-term impact on your reputation can be devastating and lead to consequences like:

When customers receive fake texts, they may understandably panic. This leads to a deluge of inbound calls and support tickets. Tragically, your support team may become overwhelmed answering questions about messages you didn’t even send.

Smishing attacks are emergency scenarios. When they happen, they pull your attention away from other aspects of your business and lead to operational strain. This results in a backlog that delays legitimate orders and strains internal resources.

When customers are scammed by a text bearing your name, they subconsciously associate that betrayal with your business. They may become hesitant to open legitimate marketing messages or transaction alerts in the future, which stymies your ability to communicate with them.

Victims of fraud are often unaware that a third party was responsible; they simply know they lost money interacting with “your” message. Frustrated, they may leave one-star reviews on public platforms and blame your business for “scamming” them or having poor security.

Disgruntled victims may take their complaints to Twitter, Facebook, and Instagram to warn others about “your” scam. These complaints, which may go viral, can tarnish your public image and scare away prospective customers who may associate your brand with fraud.

A customer who falls victim to a smishing attack using your branding is less likely to shop with you again in the future. The negative emotional experience attached to the financial loss may instead drive them to migrate to competitors they perceive as safer.

Adding insult to injury are the legal and compliance headaches that may arise as a result of a smishing attack. You may be legally required to notify all affected parties, for instance. And, because each jurisdiction has different laws regarding timelines and methods of notification, the resulting legal burden can be costly and complex.

If regulators determine that the smishing attack was successful due to lax security protocols on your end, you could face heavy fines. Compliance frameworks like GDPR or CCPA have strict penalties for failing to protect consumer data.

Warning Signs Your Business May Be Targeted

Proactive detection is your best defense against the downstream effects of smishing. By identifying an impersonation campaign early, you can warn your customers before they fall victim, preventing the wave of fraud losses that typically follow.

Red flags that indicate criminals could be impersonating your brand and conducting smishing campaigns include: 

• Fraud Alerts From Your Payment Processor: Your payment processor may notice the anomaly before you do. A sudden notification regarding velocity limits or unusual purchasing patterns is a trailing indicator.
• A Sudden Increase in Customer Complaints: Your support team receives multiple reports of strange texts or requests for clarification on offers you aren’t running, it could be an indicator of a live smishing campaign.
• Customers Questioning Charges: Customers claim they already paid a “delivery fee” or “verification charge” via a link sent to their phone. This was likely done on a spoofed site.
• Social Mentions of Suspicious Texts From “Your” Business: Customers may turn to social media to verify suspicious messages before clicking. Watch for a spike in mentions asking “Is this real?” accompanied by screenshots of text messages bearing your logo.
• Unusual Spikes in Account Takeover Attempts: If your system flags a surge in failed login attempts or successful logins from unusual geolocations, attackers could be testing the data they just stole.

Real-World Smishing Data: Statistics & Case Studies

Let’s be clear: smishing is not a hypothetical threat. A single scam can cost you thousands of dollars. For many victims, these losses are permanent, irreversible, and devastating.

Below, we've outlined a few high-profile examples to help illustrate the problem in practical terms:

Nebraska Woman Loses $14,000 to Smishing Scam

In April 2025, an 83-year-old woman received a text message from a scammer posing as a representative from the victim’s bank. The fraudster claimed to have detected unauthorized activity on the victim’s credit card. The victim was then persuaded to resolve the issue by transferring over more than $14,000 to the scammer through a Bitcoin ATM.

How to protect yourself: If you get a text about suspected fraudulent activity on a debit or credit card, never call that number back. Go online, look up your bank’s official toll-free number, and dial that number instead. Always place an outbound call to your bank; never accept inbound calls from anyone claiming to be a bank representative.

Facebook Smishing Scam Costs Pennsylvania Man His Retirement Savings

In June 2024, a 70-year-old Pennsylvania resident was contacted by a scammer on Facebook. Purportedly named Libby Collins, the fraudster repeatedly reached out via the social media platform.

Although the man initially ignored her, he eventually gave in, sending the scammer $2,000 for a supposed investment. Later, the fraudster returned the money, saying that the investment didn’t work out. This manipulative action was done to gain the man’s trust; after all, if it were a scammer, why would they return the money? The answer is that the scammer was after a much bigger payoff.

The victim eventually sent the scammer $161,000 in funds; the totality of his life savings. Then, the fraudster vanished. According to LancasterOnline, the man was part of a long-term scam that dealt more than half a million dollars in losses to seven different victims. Now destitute, the victim was forced to move out of his Pennsylvania apartment, sell his Volkswagen Jetta, and relocate to Thailand to make ends meet.

How to protect yourself: Do not send money to strangers you meet on the internet, no matter how convincing their stories may be. Be skeptical and recognize that any attempts to gain your trust are likely manipulative. If you engage, the final result will invariably be the same: the scammer makes off with your money and leaves you empty-handed.

Smishing Scam Results in $2 Million Cryptocurrency Theft

In January 2025, New York Attorney General Letitia James filed a lawsuit against a network of smishing scammers in an effort to recover cryptocurrency stolen by the bad actors.

The scammers, who posed as employers hiring for remote roles, sent fraudulent text messages to victim job applicants. According to the Associated Press, victims were presented with the opportunity to earn money by reviewing products. “But in order to begin earning money, victims were told they had to open cryptocurrency accounts and had to maintain a balance equal to, or greater than, the price of the products they were reviewing.”

Although the victims were told that they would get their cryptocurrency back, plus commissions, they received neither — with the scammers disappearing after pocketing the illicitly-obtained cryptocurrency. According to the lawsuit filed against the scammers, seven victims across New York, Florida, and Virginia were targeted. One victim lost over $100,000, while a woman in Florida lost more than $300,000 to the scam.

How to protect yourself: Remember the old adage: if an offer sounds too good to be true... that’s because it is. If someone reaches out to you with a great offer, but you need to perform some convoluted transaction before you can have the job, prize, etc., then assume it’s a scam.

How Big of a Problem is Smishing?

Smishing already poses a huge threat, but that threat is growing as people spend more time communicating on their devices. In some cases, it may even work better than conventional phishing. This is true for a variety of reasons:

How to Identify Smishing Attempts

One of the most important steps in smishing protection is to recognize some of the warning signs. For businesses, this means making sure your staff is aware of some of the triggers.

Obviously, none of these conclusively prove that a message is fraudulent. But, when taken together, they might be cause for closer examination:

1. Suspicious Sources: Legitimate companies and established businesses typically text using a shortcode; a five or six-digit number that doesn’t designate where the call is from. Regular numbers or unknown caller IDs point to a smishing attempt.
2. Non-Standard Links: The goal of most smishing is to get the victim to click a link to a facsimile website. So, as a rule, it’s best to never follow unsolicited text links. Even if a text seems legitimate, you’re better off contacting the alleged company via phone or email.
3. Extreme Urgency: Smishers want you to believe that immediate action is required. They’ll often claim that, without an immediate response, your account will be closed or legal action will be taken against you. Stop for a moment and consider if the immediacy makes sense.
4. Spelling/Grammatical Errors: Multiple spelling errors could indicate a non-professional source. Awkward sentence structure may mean English is a second language for the sender; since a good share of fraud originates from outside the US, this should be a red flag.
5. Asking for Private Information: No legitimate, professional institution will require usernames, passwords, financial details, transaction amounts, or internal company information being sent via text or SMS.
6. Emotional Messages: Smishing masters will often try to play on people’s emotions with bogus stories of a family member’s plight. They may claim to be calling from prison or a hospital with a realistic-sounding story to make a request for money.
7. Unexpected Prize or Gift Offers: “Random giveaways” are clear warning signs of possible smishing activity. Fraudsters often offer some benefit or reward; gift cards, for example. They only need a credit card number for shipping or handling.

What to Do When Your Brand is Impersonated: A Smishing Action Plan

When you discover your brand is being used in a smishing campaign, speed is the name of the game. A rapid response can help minimize customer financial losses which can in turn reduce your exposure to subsequent chargebacks. In the immediate aftermath of an attack:

• 1. Document everything: Immediately capture screenshots of the fake texts, record the URLs of the phishing sites, and log the phone numbers sending the messages for evidence.
• 2. Alert your customers through official channels: Send a legitimate email or place a banner on your website warning customers about the scam to prevent further clicks.
• 3. Report to relevant authorities: File a complaint with the FTC and the FBI’s Internet Crime Complaint Center (IC3) to create an official record of the crime.
• 4. Contact your payment processor: Inform your acquirer about the attack so they can help adjust your fraud filters and prepare for potential disputes.
• 5. Notify social media platforms: If the scam is spreading via apps like WhatsApp or Messenger, report the abuse to the platform operators immediately.
• 6. Work with domain registrars to take down fake sites: Identify the host of the phishing URL (using a WHOIS lookup) and submit an abuse report to have the malicious site suspended.

You’ll also want to reach out to your customers without causing mass panic. Send a clear, calm notification explaining that a scam is circulating. In your message, detail exactly what the fake message looks like, and reiterate that your company will never ask for sensitive data via text. Prepare a template FAQ for your customer service team so they can provide consistent, reassuring answers to worried callers.

Depending on the severity of the attack, you may also want to file official criminal reports with local and federal cybercrime agencies. While immediate justice is rare, providing law enforcement with detailed logs, IP addresses, and malicious URLs can help them build cases against bad actors, whether they act alone or in concert with other scammers as part of a fraud ring. That said, manage your expectations; the primary goal of police involvement is to establish an official record that may help shield you from liability and make it easier to win insurance claims down the line.

Defending Your Business Against Smishing Attacks

Defense requires a dual approach: hardening your internal systems to prevent employee compromise on one hand and educating your customers to recognize threats on the other hand. To protect your business internally, consider:'

• Regular Employee Training: Conduct mandatory security awareness training that specifically teaches staff how to recognize smishing attempts on their work devices.
• Multi-Factor Authentication (MFA): Enforce MFA for all business accounts so that attackers cannot access your system, even if an employee’s password is stolen via text.
• SMS Firewalls and Filtering: If you issue company mobile devices, employ enterprise-grade SMS firewalls that automatically block messages from known malicious sources and unverified numbers.
• Sender ID Verification: Register your alphanumeric Sender ID with mobile carriers to ensure that only authorized messages can appear on recipient phones under your brand name.
• Mobile Device Management (MDM) Policies: Use MDM software to restrict the installation of unapproved apps and enforce security configurations on all employee smartphones.
• Incident Response Procedures: Create a specific playbook for smishing incidents so that your security and communications teams know exactly who to contact and what to say when an attack occurs.
• Regular Security Audits: Periodically test your defenses by simulating smishing attacks against your own employees to identify vulnerabilities and gaps in training.
• Proactive Customer Education Campaigns: Regularly remind customers via newsletters and social media about common scams and the specific ways your brand will (and will not) communicate with them.
• Clear Communication About Contact Methods: Explicitly state on your “Contact Us” page that you will never request passwords, credit card numbers, or 2FA codes via text message (or email).
• Consistent Branding in Legitimate SMS: Ensure your actual marketing texts use a consistent tone, Verified SMS checkmarks (where available), and a recognizable short code so customers can distinguish real messages from fakes.
• Authentication Methods Customers Can Verify: Encourage customers to use your official mobile app for notifications, which provides a secure, verifiable channel that SMS cannot match.
• Fraud Monitoring and Alert Systems: Deploy tools that trigger automatic verification steps in response to anomalies in customer behavior, such as a login from a new device immediately followed by a high-value purchase.
• Device Fingerprinting and Fraud Detection Tools: Use backend technology that analyzes device attributes to flag and block transaction attempts coming from devices known to be associated with fraud.

The threat from smishing continues to grow, and that probably won’t change. But, there is no better tool to use against smishing than education. You need to teach yourself, as well as your employees, to identify, report, and negate smishing threats.

Of course, there’s a lot more to fraud prevention than identifying smishing attacks. True fraud prevention and risk mitigation require a more comprehensive approach. If you’d like to know more, contact Chargebacks911® today.

Next Chapter

Phishing Emails

Read More