How to Protect Your Business from Account Takeover Fraud

By Bojana Petrinovic, Fraud Operation Regional Lead
How to Protect Your Business from Account Takeover Fraud

The FBI cited that cybersecurity crime exceeded $10.3 billion in the United States last year. Not only do these thefts have a negative monetary impact, they also result in the loss of goods and services, as well as an erosion of customer loyalty. And in the first quarter of 2023, account takeover attack rates increased to 427% versus all of 2022. Account takeover (ATO) refers to unauthorized access to user accounts and passwords by fraudsters, who gain control of account data for financial gain. Account takeover is ranked as the second biggest fraud threat in 2023.

Merchants and their customers can become targets of fraudsters, making it crucial to take proactive measures. To protect against account takeover, it is essential that an enterprise invest in data protection measures that include both the implementation of safeguards and the education of employees and customers.

Various Types of ATO Fraud

Account takeover fraud consists of a bad actor gaining access to legitimate and trusted accounts that belong to both business and individuals. Once fraudsters gain control, accounts can be used for fraudulent activities. Here are some examples:

  • Data breaches: stolen data that may include usernames, email addresses, passwords, personal information, etc.
  • Credential stuffing: using stolen data to gain access and control over accounts.
  • Phishing attacks: tricking individuals to reveal personal information by clicking on links in received emails from what they think is legal source.
  • Malware: software made with intention to take control over a user’s device.
  • Social engineering: fraudsters exploiting individuals’ social media accounts to gain data or account control.

ATO is often associated with identity theft. But there is a difference. Account takeover refers to the hijacking of an account that belongs to someone else. Identity theft refers to opening a new account with someone’s stolen identity information. Account takeovers can happen to both corporations and individuals. Identity theft typically happens only to individuals.

How to Protect Yourself from Account Takeover

Educating customers on safe data storage practices and implementing security measures can help prevent unauthorized access. Here are some specific recommendations:

  • Educate your customers on how to protect data. Educate your customers on safe data storage practices. Being informed on all risks and protection tools and practices will increase data protection.
  • Collect legitimate customer data that can be validated. This includes a verified IP address, personal biometric information, and much more. A business can also implement a security mechanism for a trusted session. One common approach is to use a one-time password (OTP) or a challenge-response mechanism.
  • Add more layers of validation. Implementing multi-factor authentication adds an extra layer of protection against unauthorized access. For instance, users should combine something they know (password, PIN) with something they have (phone, token), and something unique to them (fingerprint, voice, face recognition). Engaging more steps of verification will decrease possibility of unauthorized account access by fraudsters using new and more sophisticated tools.
  • Stay on top of emerging tools that fraudsters use to compromise accounts. Fraudsters continue to adapt their tactics using generative AI, machine learning, deepfakes, and more to override protection. Businesses also need to be agile and faster in implementing new technologies.
  • Consider bot prevention: Implement CAPTCHA or other bot prevention techniques to make it more difficult for a fraudster to access your customers’ accounts and take them over. Monitoring sudden increases in validated transactions can trigger the implementation of bot prevention measures.

Monitor Signals that May Indicate Risk

Monitoring behavior risks is crucial for account protection. Risk signals often arise from things like suspicious account activities, irregular changes in payment instrument data, or violations of terms and conditions. Utilize machine learning and AI tools to help detect anomalies and provide real-time engagement with fraud analysts to prevent account takeovers. Continuously improving the risk engine through feedback and labeling account compromises enables faster detection of ATO and enhances customer trust and satisfaction.

Ultimately, preventing account takeovers is vital for businesses to protect their finances, customer relationships, and brand reputation. By partnering with Centific, organizations can leverage their expertise and robust IT solutions to mitigate the risks associated with ATO and ensure the security of their accounts and data.

Learn about our digital safety solutions and contact us to learn more.