What is account takeover fraud

With the increase in online transactions, account takeover (ATO) fraud happens more often. ATO occurs when a cybercriminal obtains the customer’s login credentials, gains access, and control to an existing account. These existing accounts could be bank, credit card, email, e-commerce, etc. After a successful ATO, the cybercriminal will then misuse these stolen credentials for unauthorised purchase of goods, fraudulent transactions, or extract and sell the account information. 

Some situations where cybercriminals leverage on for account takeover

     1. Data breaches

Cybercriminals can steal the login credentials through data breaches. When the usernames and passwords of the accounts are leaked, this makes account takeover easier for hackers. When the hackers obtain this account’s login details, there is a high chance that the user has another account which uses the same credentials. Hence, allowing the criminal to hack into and takeover more accounts. 

     2. Phishing

Phishing scams appear to be legitimate and in many forms such as emails, text messages, HTTPS, etc. Phishing attempts to convince users to click on the fraudulent link. When the user clicks on the link, he will be redirected to a fake website. 

For instance, a phishing email may impersonate a well-known bank. When the user clicks on the link or downloads an attachment, it will redirect him to a malicious website which steals the login credentials. 

     3. Malware 

Malware refers to intrusive softwares which is usually installed from untrusted sources. Some malware will then corrupt the computer system, while some malware allow hackers to access everything the user types. From this hackers can obtain the user’s login credentials. 

Impacts of an account takeover

ATO affects both customers and businesses. Customers are directly impacted by the fraud as they will notice that their accounts have been used for transactions which they did not conduct. The victims will be emotionally stressed and then contact the businesses hoping to receive a solution. Customers tend to blame the businesses’ poor security which allowed the ATO to occur. This will create a bad reputation for the business, a loss of customer trust, and eventually decrease in customers. Therefore, due to the seriousness of ATO, it is essential for businesses to protect their customers by having a strong and impregnated firewall. 

How to detect and prevent account takeover fraud from occurring

Businesses should abolish the usage of single-factor authentication, instead use two-factor or multi-factor authentication. This will reduce the risk of identity theft. 

Moreover, businesses need to conduct ongoing transaction monitoring to look out for suspicious transaction activities, such as a sudden increase in large customer transactions. Businesses could also leverage machine learning to conduct continuous monitoring.

Lastly, businesses could encourage customers to create strong passwords and notify them about any account changes. Whenever there is a change, an email could be sent to the customers for their verification. 

Learn how the Regtank Compliance Solution can help you and your business take preemptive measures to build a robust AML protocol and reduce the risk of frauds. 

Contact us at info@regtank.com for a demo!