OTP bots explained: What they are and how to stop them

With a staggering 427% increase in blocked account takeover attempts in early 2023, OTP bots have quickly become one of the most pressing security concerns in the digital world. 

These automated tools are designed to intercept and bypass one-time passwords (OTPs) used in multi-factor authentication (MFA), making traditional security measures almost obsolete. 

To stay ahead of these threats, it’s crucial to understand how OTP bots operate, who they target, and the best practices for stopping them. In this article, we’ll cover all these points and provide actionable strategies to help you safeguard your accounts.

What are OTP bots?

OTPs are unique, short-lived codes generated to verify a user's identity during login or sensitive transactions. They are typically sent via SMS, email, or a dedicated app. 

OTPs are usually used in two-factor and multi-factor authentication. They provide an additional layer of security by requiring users to enter a unique, time-sensitive code in addition to another authentication factor, such as a password. This means that even if an attacker knows a user's password, they would still need the OTP to gain access, making unauthorized access more difficult.

However, OTP security is not foolproof. Hackers and cybercriminals have developed OTP bots to exploit this system. 

OTP bots are automated programs designed to bypass the additional security provided by OTPs. These bots automate and scale the process of capturing and intercepting these codes, turning what was once a secure layer of authentication into a vulnerable point that attackers can exploit.

How do OTP bots work?

OTP bots work in a few different ways. To achieve their goal attackers might use phishing, social engineering, SIM swapping, and malware.

Phishing

The attacker creates a fake website that closely resembles a legitimate site, such as a bank’s login page. The user is then lured to this site through deceptive emails, messages, or ads that appear to be from a trusted source. Once on the fake site, the user enters their login details and the OTP, believing they are interacting with the legitimate service.

At this point, the OTP bot captures both the login credentials and the OTP in real-time. The bot then immediately relays this information to the attacker, who uses it to log into the user’s real account, often within seconds. 

Social engineering

OTP bots often use social engineering techniques to manipulate users into revealing their OTPs. 

For example, a user might get a call from someone who sounds just like their bank’s representative, urgently telling them there’s an issue with their account that needs immediate attention. The person on the other end of the line might seem legitimate, and in the rush to secure their account, the user might not think twice before handing over their OTP. 

Unfortunately, this is exactly what the attackers are counting on. Once they have the OTP, they can use it to access the account, leaving the victim vulnerable to unauthorized transactions.

Some advanced attacks leverage AI and Large Language Models (LLMs) to enhance the realism of social engineering tactics. 

For instance, an AI-powered OTP bot can pull details from your past interactions or even from a victim’s social media activity to make the scam more believable. During a phone call, these bots can carry on a conversation that sounds just like a real customer service representative, responding in real-time with natural, convincing dialogue.

SIM swapping

Another method involves SIM swapping, in which the attacker convinces a mobile carrier to transfer the victim’s phone number to a new SIM card under their control. 

Once they have the number, the attacker receives all OTPs directly, allowing them to bypass any SMS-based two-factor authentication without needing to interact with the victim.

Malware

Attackers can trick users into installing OTP bots on their phones or computers through various deceptive tactics, often involving social engineering or malware disguised as legitimate software. 

Once the OTP bot is installed on the user’s device, it operates silently in the background. The malware is typically designed to read incoming SMS messages or monitor clipboard activity if you’re copying and pasting OTPs. Whenever an OTP is received, the bot captures the code and sends it back to the attacker in real-time. This allows the attacker to use the OTP to access secure accounts without the user’s knowledge.

Primary purposes of OTP bots

OTP bots are primarily used for:

• Account takeovers: The most direct use of OTP bots is in account takeovers. Once an attacker has both the login credentials and the OTP, they can gain full access to the victim’s account, whether it’s a bank account, email, or social media profile.
• Financial fraud: With access to bank accounts or payment services, attackers can conduct unauthorized transactions, transfer funds, or drain accounts. OTP bots make it easier to bypass the additional security checks that financial institutions typically implement, leading to significant financial losses for victims.‍
• Credential stuffing: In credential stuffing attacks, attackers use large databases of stolen usernames and passwords to try to gain access to multiple accounts across different platforms. When they encounter accounts protected by MFA, OTP bots capture the necessary OTPs, allowing the attacker to continue their automated attack. This can result in the compromise of numerous accounts in a very short period.

The impact of OTP bots

Some of the real-world consequences of OTP bots are:

• Security breaches: OTP bots allow attackers to bypass multi-factor authentication and gain unauthorized access to sensitive information. This often results in data breaches, identity theft, and the exposure of confidential data.
• Financial losses: These attacks cause direct financial losses through unauthorized transactions and account takeovers. Indirect costs include the expenses associated with fraud investigations, legal fees, and potential fines. 
• Reputation damage: A successful OTP bot attack can severely harm the reputation of individuals and organizations, leading to a loss of trust and customer confidence. This erosion of trust can result in long-term damage, affecting customer retention and the ability to attract new clients.
• Regulatory penalties: In some jurisdictions, businesses that fail to protect their customers' data adequately might face regulatory penalties. These can include fines, sanctions, or even enforced changes in how they manage and protect user data.
• Operational disruption: OTP bot attacks can cause significant operational disruption, especially if they target critical systems or infrastructure. Businesses might need to shut down affected systems, implement emergency security measures, and deal with the aftermath of the attack.

How do you stop OTP bots?

There are some tools and strategies that can help us defend against OTP bots:

• Strengthen 2FA mechanisms: Switch from SMS-based OTPs to app-based authentication methods like Google Authenticator or Authy. These apps generate OTPs on the device itself, making them less vulnerable to interception through SIM swapping or phishing. You can also consider using hardware tokens (e.g. YubiKey) for OTP generation. These tokens are physical devices that generate OTPs and are highly resistant to attacks. 
• Use behavioral analytics: Behavioral biometrics analyze how users interact with their devices (e.g. typing speed, mouse movement patterns) to detect anomalies that could indicate bot activity. This layer of security can add a hurdle for OTP bots trying to mimic legitimate users.
• Use adaptive Multi-Factor Authentication (MFA): Adaptive MFA assesses the risk level of a login attempt by considering factors such as the user’s location, device, and behavior. If anything seems suspicious, additional verification steps are required. This can help prevent OTP bot attacks by making it harder for bots to successfully log in, even if they have intercepted an OTP.
• Use CAPTCHA and bot detection tools: CAPTCHAs, particularly those using image recognition or puzzles, are designed to be difficult for bots to solve, thereby blocking automated login attempts. You can also use bot detection tools to analyze traffic patterns and differentiate between human users and bots. 
• Educate users: Users should be trained to recognize phishing attempts and understand the risks of sharing personal information or OTPs with unverified sources. Regular awareness campaigns, phishing simulations, and clear guidelines on how to handle suspicious requests can empower users to act as the first line of defense against these types of attacks.
• Monitor and respond to threats: Threat monitoring systems can detect unusual login patterns, such as multiple failed attempts or logins from unfamiliar locations. A rapid response protocol should be in place to address detected threats, including temporarily locking accounts, prompting additional verification steps, or alerting users to suspicious activity. 
• Limit OTP validity: Many OTP bots rely on capturing OTPs quickly and using them before they expire. Shortening the validity of an OTP can minimize the time an attacker has to exploit it. This makes it much harder for them to successfully carry out an attack, especially if additional security measures, like adaptive MFA, are in place.

Next steps

Are you worried about OTP bots compromising your apps? WorkOS has the tools you need.

• Automatic bot detection: WorkOS constantly scans for malicious activity, blocking bots before they become a problem. Radar enhances AuthKit with powerful security features to protect your application from abuse, fraud, and attacks. It automatically detects authentication patterns that indicate malicious or suspicious behavior and includes built-in preventions like bot detection, brute force and credential stuffing, impossible travel, and unrecognized device. In addition to these detections, devs can set custom rules to allow or deny authentication to specific devices, users, domains, or IP ranges. This enables a myriad of use cases, such as restricting sign-ins to a corporate IP range, allowing certain users to bypass detections that are false positives, or banning iPods from using your app.
• App-based Multi-Factor Authentication (MFA): Strengthen your security with MFA, which works with apps like Authy and Google Authenticator, which are much more secure alternatives to SMS-based OTPs. AuthKit will make the necessary API calls to handle first-time configuration of users’ MFA factors automatically and validate one-time codes as part of the authentication flow. If you’d prefer to build and manage your own authentication UI, you can do so via the User Management Multi-Factor API.‍
• Detailed audit logs: Audit Logs are a collection of events that who is accessing what in real-time so you can quickly spot and respond to suspicious behavior.

Check out WorkOS Radar today.