What Is Account Takeover Fraud?

Account takeover or ATO is a form of identity theft and online fraud. It occurs when a bad actor assumes control of a legitimate account. The malicious third party gets access to the user’s account credentials, enabling them to steal funds or information. ATO fraud can damage businesses and individuals alike. It can involve any online account, including social media, eCommerce, and online banking accounts. Once the attacker takes over a targeted account, it enables them to transfer funds, deplete loyalty points and gift cards, use stored credit cards, plant malware, steal corporate data, submit fraudulent credit applications, and commit acts of cyber-terrorism. 

E-commerce sites are experiencing higher rates of ATO fraud attacks than other fraud types. The impact of ATO and the consequences businesses face are endless. But, some of the main consequences include increased customer transaction disputes, increased chargebacks, customer churn, erosion of customer trust, and brand damage. For eCommerce businesses, chargebacks tend to have an irreparable impact. For the fraudulently purchased goods, they need to refund the legitimate client even though they won’t be able to retrieve the product. It can thus eat into their financial health and compromise profits. 

Thus, businesses require account takeover prevention solutions to keep the brand image, finances, and customer trust intact. The typical targets for ATO fraud include:

  • Customer Accounts (eCommerce).
  • Social Media Profiles.
  • Email Accounts.
  • Online Banking Accounts.
  • Business models that deploy password-protected areas.

How is an account takeover attack performed?

The account takeover fraud lifecycle typically consists of the following steps.

  • An unauthorized third-party gets hold of personal data, login credentials, phone numbers, or emails. Usually, from the dark web, they purchase agreement the unsolicited information or use other online attacks to access the data. 
  • The bad actor can log into a legitimate account if the data is user and service-specific. They may also deploy automated systems to identify the right fit for large volumes of credentials. It is also known as credential stuffing.
  • Once the attacker identifies the valid credentials for the user account, they try to modify account information, such as PINs, passwords, emails, phone numbers, and more. After they take over a customer’s account, they either fraudulently log in to extract value or sell the login credentials to others.

Methods used in ATO fraud

  • Phishing: It remains one of the most leveraged methods that allows attackers to perpetuate highly targeted attacks and enable mass data collection. Phishing scams tend to impersonate trusted and known brands or individuals. Using nudges and emotional appeals, they seek to persuade legitimate users to click on links redirecting them to a malicious site that may harvest their credentials. Email, text messages, and social media messaging services are commonly used phishing methods.
  • Credential Stuffing: Attackers conduct credential stuffing through the purchase of leaked credentials or by using automated systems to test combinations. They may also gain information to get unauthorized access to multiple accounts, assuming that users tend to reuse their credentials across different websites. But, if the site deploys an authentication process, like the use of a fingerprint and one-time password, it helps effectively check into the credential stuffing attacks. Attackers also use credential cracking when they have usernames but not passwords. They use brute-force attacks, phishing, or other forms of attacks to identify passwords.
  • Man-in-the-Middle Attacks: In this type of attack, fraudsters position themselves between the user and the financial institution. They do this to intercept, edit, send, and receive communications without attracting notice themselves. For instance, they may set up a malicious Wi-Fi network in a public location. As users connect to the public hotspots, they may unknowingly transfer their payment data through the fraudulent network. 
  • Social Engineering: It includes a set of complex and sophisticated actions that prompt the users to willingly provide their sensitive personal data. Some of the social engineering methods include quid pro quo vectors, pretexting, or scareware.

What is an ATO fraud prevention solution?

Adopting an ATO fraud prevention solution helps companies and financial institutions identify when a user exhibits abnormal or potentially fraudulent behavior. It provides insights and agility to interact securely with visitors who sign in to their digital platforms. The solution offers full, 360° visibility into their activity before, during, and after a transaction. Continuous monitoring is key to detecting signs of ATO fraud before it begins.

The AI-powered system helps effectively monitor the various actions on an account to identify behavioral patterns that indicate the ATO fraud possibility. It thus enables businesses to determine when a customer may be under attack. It must also assess risk-based data like location. If the customer is accessing account information from various locations within a short time lapse, the account may be potentially compromised. 

Leveraging additional authentication can help check the growth of ATO fraud. The intelligent Adaptive Authentication feature in the ATO prevention solution is the way to go. Once the system detects abnormal behavior, it can block the process entirely or challenge it with multi-factor authentication (MFA). Thus, the user will have to provide a fingerprint biometric or a facial scan to authenticate the transaction. 

To Conclude:

Account takeover fraud can hamper companies’ growth and revenue. Adopting an ATO prevention solution is thus crucial to its fraud prevention strategy.

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