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Telcos declare SMS ‘unsafe’ for bank transactions

The lobby group for Australian telcos has declared that SMS technology should no longer be considered a safe means of verifying the identity of an individual during a banking transaction.

Communications Alliance chief executive John Stanton, representing the interests of mobile providers Telstra, Optus and Vodafone, took the extraordinary step of of declaring the technology insecure in the wake of numerous reports of Australians being defrauded via a phone porting scam first uncovered in Secure Computing magazine.

“SMS is not designed to be a secure communications channel and should not be used by banks for electronic funds transfer authentication, Stanton told iTnews this week.

Today, SMS authentication is used by three of the four largest Australian retail banks as a preferred mode of second-factor authentication for transactions to unfamiliar accounts.

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