Everything You Need to Know About Account Takeover Fraud

Account Takeover Fraud

Online retail fraud is evolving at an alarming rate. With the growth of digitization, online frauds have become more advanced and pervasive.

Fraud tools and strategies are becoming more sophisticated and systematized. It adds friction in the customer’s journey, reducing conversions and impacting customer loyalty and brand growth.

Account takeover fraud is a common fraud type. It occurs when a fraudster gains unauthorized access to a protected user account. They try to change information like login credentials and other personal details to make transactions in that account.

Account Takeover Fraud is rising exponentially over the past few years. It is a form of identity theft. The fraudster works strategically to invade a user’s account and make non-monetary changes to various account details.

They generally modify personally identifiable information (PII), request a new card, add an authorized user, and change the password. After they successfully execute these tasks, they carry out numerous unauthorized transactions. It can lead to financial loss and compromise customer relationships.

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ATO fraud can corrupt different account types such as government benefits, checking, savings, credit card, wireless phone contracts, and other e-commerce accounts. The fraudsters change the email, phone number, or password associated with an account.

By gathering data from a single account takeover scheme, they can take over additional accounts and cause further harm. ATO fraud is insidious, and hence companies and individuals need to have the right Account Takeover Protection strategy in place.

 Here are four things you need to know about account takeover fraud-

ATO Technique

Some of the most common techniques the fraudsters deploy to commit ATO fraud are:

  • Credential Stuffing/Card Cracking: The stolen account credentials, which consist of usernames and email addresses and the corresponding passwords, are used by fraudsters to gain unauthorized access. It is carried out through large-scale automated login requests. It is based on the assumption that most users reuse the same login credentials over multiple services.
  • Gift Card Fraud: Gift cards are popular tools for fraudsters. They use bots to scan through millions of online gift cards to find the gift card with sufficient balance. Weak Passwords: Some of the accounts have poor passwords, which are repeated often across various services. Some of the passwords have fewer than eight characters, making it easy for the bots to guess it.
  • Hacking: Brute-force attack is the most common type of Account Takeover Fraud. It uses an automated script that tries various password combinations. Then, they systematically check all possible passwords and passphrases to find the correct match.
  • Phishing: Phishing is a cyber attack, and it uses disguised email or messages to perpetrate the attack. Scammers use to trick you into giving them your personal information. It is a social engineering attack, tricking users into giving up data or access to systems.


While most of the accounts are susceptible to this crime, some of the common account types which encounter it are:

  • Financial: In Financial ATO, the fraudster attacks the funds and portfolios of customer accounts. They generally take over checking, savings, and credit card accounts.
  • Government Benefits: ATO is significantly corrupting government programs that provide financial help for individuals and organizations.
  • Retail: With the growth of e-commerce, fraudsters are gaining access to retail accounts to make unsolicited purchases and sell items fraudulently.

Account Takeover Fraud Impact

ATO fraud rates are increasing significantly in the last few years. Every year, individuals and businesses incur significant financial losses because of ATO. Besides enduring monetary losses, companies can also suffer damaged reputations and relationships. It can also lead to a higher rate of chargebacks, and hence it is a serious concern.

How to Prevent ATO Frauds?

  • Identity verification at the time of onboarding: The use of proper user verification at the time of onboarding helps to prevent ATO effectively. It enables the business to identify real and authorized user accounts and hinders the fraudsters from onboarding the business platform through fake user accounts.
  • Identity Authentication: Lack of proper authentication checks can trigger ATO fraud. Fraudsters apply social engineering and phishing to trick users into providing their information. Use of advanced authentication like 2-Factor Authentication and Biometric verification through Face verification to prevent ATO frauds. It helps to prevent unrecognized devices or IP address from accessing the account.
  • IP Bock-listing: If multiple login attempts generate from a single IP, use IP block-listing those IP addresses or domains that are known sources of spam.
  • Login Attempt Limits: You can limit the number of failed login attempts per user. Setting standards for login attempts can help to minimize spam login attempts significantly.
  • Device Tracking: Device tracking helps identify a device and collect data on it, linking suspect activity together and flag device and associated IPs as high risk.
  • WAF Configuration: Configuring a firewall helps protect accounts by filtering and monitoring HTTP traffic between a web application and the Internet. 
  • Sandboxing: It can isolate suspicious applications or accounts from critical system resources to mitigate ATO risks.

To Conclude:

There is a significant increase in digital fraud in the recent age of digitisation, specifically ATO fraud. It is threatening e-businesses, and hence companies need to follow real-time ATO fraud detection and prevention method.


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