How Serious are Account Takeover Frauds

Businesses have to deal with threats from all angles, and account takeover is one of the most serious threats posed today.

In fact, in 2022, account takeover attacks have increased by a monumental 131%. Furthermore, in the Javelin ID Fraud Study published this year, it was revealed that 22% of adults in the United States have been victims of account takeover. This represents 24,000,000 households!

With that being said, in this blog post, we’re going to delve deeper into just how serious account takeover fraud is and some of the steps your business can take to stay protected.

What is account takeover (ATO) fraud

Account takeover, often shortened to ATO, is a type of identity theft whereby cybercriminals take ownership of someone’s online account by using stolen usernames and passwords.

There are many different approaches that can be used to gather this information, from phishing attacks to social engineering.

Cybercriminals will utilize bots to automatically access social medial, finance, retail, and travel websites, where they test username and password combinations. Eventually, the hackers will have a list of verified credentials, which they can use to sell to other hackers or to abuse accounts.

How serious are account takeover frauds

Account takeover is very serious, and it’s something that all businesses need to worry about. Once a fraudster gains access to your online account, they will steal your identity, drain your bank accounts, or scam your contacts.

For instance, scammers could take over your…

• Online shopping accounts, such as Amazon, to make fraudulent purchases on e-commerce websites and steal your card numbers.
• Online banking accounts to take out fraudulent loans, break into your financial services, or steal your money.
• Email accounts to find your personal information or request password resets for other accounts you hold online.
• Social media accounts to run scams on your followers or impersonate you.

If this were to happen to your business accounts or your customers’ accounts due to a breach, the impact could be disastrous. This is why you need to make a dedicated effort to safeguard your business so that you don’t become the next victim of such an attack.

Account takeover is especially severe in financial businesses

In financial companies, ATO is more serious because it can result in theft, and a person’s financial accounts can be compromised. Your industry always needs to be considered when determining which cybersecurity methods are going to be the most effective.

How serious account takeover is from a legal perspective

Account takeover can result in serious knock-on effects for businesses, especially from a legal perspective, as you can face regulatory fines for failed compliance.

This is because all businesses have a legal and moral responsibility to ensure that their client’s data is safeguarded. If you fail in this responsibility, you can be subject to monetary fines and even prison time.

There are also severe legal implications for the person whose account has been taken over, especially if the cybercriminal uses their details for criminal activities, which is often the case.

Understanding the impact of ATO fraud on your consumers and business

Naturally, the fact that a fraudster uses legitimate credentials to log into an account means that ATO fraud is not easy to spot.

If a consumer has had their account taken over, they may find that they’re locked out when they try to access their account. They may be unaware that their account has been taken over until they look at a card statement that has unauthorized transactions on it. Their personal data may have also been compromised as a consequence.

Reputational and financial losses for businesses

If your business has experienced a breach whereby someone’s account has been taken over, you could be subject to a whole host of reputational and financial losses.

• Reputation and your brand may suffer, as you could find yourself being accused of a data breach, even if this hasn’t been the case. This can result in further lost business, fines, and negative publicity.
• You may experience a loss of future revenues, and you could lose existing customers. After all, if a customer has had their account taken over, they may lose trust in your business and assume that you’re not taking the appropriate measures to protect them.
• Higher chargeback fees may have a negative impact on the company’s reputation, resulting in higher decline rates from issuers. Furthermore, you may find that you face penalty measures from card schemes. Your overall decline rate can also be impacted. This is because when a hacker tries to use a stolen card or card-on-file credentials, it’s likely the issuer will recognize this and prevent it. However, this doesn’t help your business in terms of keeping fees down and keeping issuers happy going forward.
• You may end up experiencing chargebacks whenever a fraudulent transaction is made. Most businesses know just how much of a hassle chargebacks can be and how they can result in significant losses for the business. This may mean that companies need to bear the expenses linked with disputing the chargeback and processing it. Inventory losses and customer refunds can add a monetary impact.

Understanding how account takeover fraud happens

What makes account takeover so dangerous is that there are many different ways it can happen. Examples include:

• Targeted attacks – Fraudsters will typically target certain accounts they know are valuable. In gaming and social media, for example, there’s an expensive market for what is known as accounts with a short, rare handle, or OG accounts. To target such accounts, fraudsters rely on SIM-swapping attacks or spear-phishing techniques, otherwise known as targeted phishing.
• Exploiting security vulnerabilities – This happens when unpatched security vulnerabilities are used to get unauthorized access to a system. For instance, Server Side Request Forgery (SSRF) and Cross-Site Scripting (XSS).
• Credential stuffing – This is when fraudsters automate attacks using login details they have purchased from a leaked database. Cybercriminals will typically use bots to facilitate such attacks.
• Purchased credentials – Whenever there’s a significant data breach, it means a proliferation of account takeover attempts are guaranteed to follow because of account details being sold in bulk at a cheap rate on the darknet.
• Opportunistic attacks – Finally, this happens when a fraudster stumbles across someone’s login details without even trying. This could happen by pure chance or accident. Alternatively, it could be something more sophisticated, for instance, as a consequence of a mass phishing email campaign. It could be due to malware, such as a key logger, brute force, or a password that was easy to guess.

How can you prevent account takeover

Now you have a better understanding of what account takeover is, let’s take a look at some of the steps you can follow to prevent account takeover at your business.

• Implement a method for checking for compromised credentials – You need to ensure you’ve got some sort of monitoring system in place so that you’re continuously looking for compromised credentials. This will enable you to act quickly if something doesn’t seem right.
• Set rate limits on login attempts – You can set rate limits based on the behavior of your users. This includes limits on IPs, usernames, and passwords, as well as limits on the use of VPNs, proxies, and other factors.
• Install effective ATO prevention software – As ATO is a very real threat, advanced security companies have developed software to help businesses combat this. Leveraging tools like this help to keep your business protected.
• Setup notifications for any account changes – Whenever a change is made to a user’s account, such as a password change or a change to their personal information, they should receive a notification of this. If they haven’t made the change, they will be able to take instant action.

You simply cannot ignore the threat of account takeover fraud

When you take all of the points mentioned above into account, it’s not difficult to see why account takeover fraud is something all businesses need to take seriously.

It doesn’t matter how big or small your company is, the threat of account takeover fraud is real, and you need to do everything in your power to make sure this doesn’t derail your business.

Follow the tips and advice we have provided above to prevent account takeover at your business.