Cloud Security Podcast22 Jul 2025

Understanding a $10B Fraud Vector in Cloud-Native Workflows

A $10 billion fraud vector is currently exploiting a common feature in many cloud-native applications: the SMS verification flow. This isn't a traditional breach. Instead of stealing data, adversaries use bots to trigger costs that are quietly absorbed into your company's operational budget, often showing up as an inflated cell phone or marketing bill.

We spoke to Frank Teruel, COO at Arkose Labs about how this fraud works at a technical level and why modern, automated cloud workflows can be a perfect hiding place for these costly attacks. He also shares a story of how a single cloud container was hijacked, costing a company half a million dollars in compute costs for crypto mining over one weekend.

This is a critical conversation for anyone working in cloud security, DevOps, and engineering who wants to understand the financial risks embedded in the very architecture of their applications.

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If you are interested in AI Cybersecurity, you can check out our sister podcast -⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ AI Cybersecurity Podcast

Questions asked:

(00:00) The $10 Billion Invisible Threat(02:40) Frank Teruel’s Journey into Digital Identity(03:35) Why Identity Remains a Weak Spot for Cybersecurity(05:35) The Evolution of SMS Fraud(07:20) The "$5M Surprise Bill" Story(08:55) What is SMS Toll Fraud?(11:19) Does WAF Catch SMS Fraud?(12:49) Cloud vs. On-Prem: Is One Safer From SMS Fraud?(14:00) Does Single Sign-On Help With This?(15:55) How a Gaming Attack Becomes a Bank Heist(24:54) How AI is Weaponized for Cloud Attacks(25:35) The $500k Cloud Bill from a Hijacked Container(31:18) The Attack Vectors Cloud Teams Underestimate(35:30) What Are "Smart Bots"?(36:46) Where to Start Building a Program Around Fraud?(40:16) Fun Questions: Grandkids, Cooking & Music

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