Scam Texts Are Creating a Friction Tax for Retailers

Why It Matters

The loss of trust in SMS directly reduces retailers’ conversion channels and adds hidden costs, while the industry’s trust‑restoration efforts could safeguard billions in e‑commerce sales.

Key Takeaways

• FTC reports $470M lost to smishing in 2025, a five‑fold rise
• Retail SMS open rates fell after a 50% increase in scam texts
• GCH’s modernized Short Code Registry adds vetting to protect brand messages
• Short codes generate less fraud, but higher entry costs keep them premium
• Emovid’s video verification adds human‑origin proof to curb AI‑driven scams

Pulse Analysis

The smishing epidemic has moved from a niche nuisance to a systemic risk for U.S. e‑commerce, which now exceeds $1.4 trillion in annual sales. FTC data shows a five‑fold jump in text‑based fraud losses since 2020, and a 50 % surge in scam messages last year has turned the once‑trusted SMS channel into a liability. Consumers, wary of phishing, are deleting even legitimate alerts, creating a "friction tax" that reduces click‑through rates, hampers order confirmations, and ultimately depresses retailer revenue.

In response, telecom leader GCH Technologies is overhauling the U.S. Short Code Registry, introducing mandatory brand vetting and a centralized source of truth for business‑to‑consumer messaging. By raising the entry barrier and enforcing continuous monitoring, the revamped registry aims to restore the premium reputation of short codes, which historically experience far lower fraud rates than other channels. This security upgrade not only protects brand integrity but also preserves the lock‑screen real‑estate that retailers rely on for instant customer engagement.

Beyond SMS, verification innovators like Emovid are adding a visual, human‑origin layer to digital communications. Their platform delivers asynchronous video messages tied to verified identities, making it significantly harder for AI‑generated scams to impersonate brands. Companies can adopt a two‑tier strategy: reserve video‑based verification for high‑value or sensitive interactions while treating standard texts as potentially untrusted. As trust in text messaging wanes, such multi‑factor approaches will become essential for safeguarding the consumer journey and maintaining conversion rates in a fraud‑heavy landscape.