Account takeover (ATO) incidents have surged, posing a significant threat to businesses across all industries. A recent study revealed that ATO fraud has risen by over 300% for online merchants yearly, underscoring the urgency for robust security measures. 

Account takeover fraud leads to financial losses and damages a company's reputation, eroding customer trust. Businesses must consider implementing a fraud prevention solution to detect and prevent account takeover attacks. In this post, I'll cover what account takeover fraud is, how it works, and ways businesses can prevent ATO attempts. 

What is account takeover fraud?

Account takeover (ATO) fraud occurs when an unauthorized party gains access to a user's online account, often through stolen login credentials. This breach compromises personal and financial information, enabling the attacker to conduct fraudulent activities under the guise of the legitimate account holder.

How fraudsters take over accounts

Understanding fraudsters' sophisticated strategies to execute account takeovers is crucial for developing an effective defense. Let's take a step-by-step look at how they execute a successful ATO attempt.

Gaining access to login credentials

Attackers use a variety of methods to trick victims into revealing personal information. Some examples include: 

• Brute force attacks happen when fraudsters use automated programs to try numerous passwords in a short period of time, with the hopes of finding the right one. This approach is especially effective against accounts with weak passwords and re-used passwords, and against businesses that don’t use robust security measures like account lockout policies or multifactor authentication (MFA). 
• Phishing for information through deceptive emails or text messages that send users to fake websites, where they then enter in their login credentials. 
• Credential stuffing, where fraudsters take stolen login details from a data breach and try accessing other websites using the information. (This is why you should never re-use passwords across different services.)
• Malware that can spy on your computer activity, including keystrokes, to steal passwords or even gain total control of your system. 
• Social engineering to manipulate people into spilling secrets or breaking security rules. 

They also exploit data breaches, accessing vast amounts of login details exposed from insecure databases, which sets the stage for widespread account takeover fraud. 

Launching a targeted attack

Once attackers acquire credentials, they often use brute force or credential stuffing attacks. They attempt multiple password combinations until they gain access or exploit security weaknesses such as outdated software or unpatched vulnerabilities to bypass mechanisms like multifactor authentication (MFA). These tactics enable unauthorized entry into accounts, allowing attackers to execute fraudulent activities or steal sensitive information.

Maintaining control & covering tracks

Once an account takeover attack is successful, fraudsters often change account passwords and security questions to lock out the legitimate user while shielding their presence through methods such as a VPN. These techniques ensure they can continue exploiting the compromised accounts undetected.

How do account takeover attacks impact business?

For customers, dealing with an ATO attack is incredibly stressful and can be time-consuming. It could be days or weeks before they get refunded for unauthorized purchases or regain access to their compromised accounts. But repercussions extend beyond just individual victims. 

Compromised accounts damage brand reputation & impacts the bottom line

Financial loss is just one negative fallout of ATO fraud. Companies who fail to protect their customers also suffer from reputational damage and broken customer trust, which can take a long time to recover from, potentially further impacting future revenues. 

As we covered in a previous blog post, the financial and legal consequences of an account takeover attack can be substantial. For example: 

• Marriott, which suffered an undetected data breach from 2014-2018, unknowingly exposed the personal and payment details of up to 500 million guests. The attack led to multiple lawsuits, on top of a $23.8 million GDPR fine. 
• More recently, Snowflake made the news when the company shared that data from roughly 400 organizations had been compromised. Snowflake is currently subject to a class-action lawsuit and Senate investigation. Customers affected include well-known names like AT&T, Santander Bank, and Ticketmaster.

Red flags that could indicate an ATO attack

Being able to quickly identify account takeover attempts is critical for businesses to prevent or mitigate potential damage. Some red flags to keep an eye out for include: 

• Unusual account activity. Unusual activity that may indicate an account takeover attempt includes multiple failed login attempts, sudden changes to account details, and login attempts from another location far from a user’s typical IP address. 
• Abnormal transaction patterns. Transactions that significantly deviate from a user’s typical behavior, such as a number of high-value transactions in a short period of time or making purchases in unusual locations, can indicate that an account may be compromised. 
• Multiple account lockouts. When a large number of users report being locked out of their accounts within a short timeframe, it could be a sign of a large-scale ATO attack attempt.

Why is account takeover protection important?

With nearly 30% of U.S. adults saying that they were victims of ATO fraud in 2023, it's clear that account takeover protection is crucial for businesses to help safeguard both customer and company data and financials.

By implementing account takeover detection and prevention measures, businesses protect their reputation and maintain customer trust and loyalty, in addition to avoiding potential financial losses and expensive lawsuits.

How can businesses protect against account takeover fraud?

Preventing account takeover fraud requires a multi-faceted approach. Here are five suggested prevention strategies. 

Implement strong password policies

Enforcing robust password policies, including mandating complex passwords that combine letters, numbers, and symbols, and require regular updates, significantly reduces the risk of unauthorized access by making it more challenging for attackers to guess or crack passwords.

Set rate limits on login attempts

Implementing rate limiting on login attempts restricts the number of guesses an attacker can make within a given timeframe, significantly reducing the effectiveness of brute force attacks to crack passwords. This security measure deters attackers by increasing the time and effort required to breach accounts, protecting user accounts from being compromised.

Use advanced authentication methods

Advanced authentication methods, such as multi-factor authentication (MFA), security tokens, and app-based authentication, introduce an additional layer of security by requiring users to provide two or more verification factors to gain access. 

This significantly reduces the risk of account takeovers, even if a password is compromised, by ensuring only the legitimate user can authenticate through something they know, have, or are.

Sandboxing

Sandboxing isolates potentially malicious activities within a secure, controlled environment, preventing attackers from accessing or compromising critical systems and sensitive data during an account takeover attempt. This containment strategy ensures that any threat posed by suspicious code or applications is neutralized before it can inflict damage or breach security parameters.

Use an account takeover solution 

Specialized account takeover solutions that use machine learning and behavior analysis can accurately detect unauthorized access attempts by quickly analyzing patterns and deviations from normal user behavior. This proactive approach enhances security by identifying and responding to threats in real time and minimizes false positives while accurately identifying legitimate users.

How an account takeover solution like Fingerprint prevents ATO

An effective account takeover (ATO) prevention solution doesn't need to be intrusive to users. Learn how device intelligence solutions enable businesses to protect against fraud while offering a seamless customer experience.  

Behavioral analytics

Behavioral analytics monitors user actions to detect deviations from normal activity patterns, identifying unusual behavior that may indicate an ATO attempt. This enables organizations to implement proactive defense measures, such as triggering additional authentication checks or alerting security teams, to prevent unauthorized access before any damage can occur.

Device fingerprinting

Device fingerprinting involves collecting specific information about a user's device, such as the operating system, browser type, IP address, and more, to create a unique identifier for that device. This identifier is then used to detect anomalies in access patterns, such as attempts to access an account from an unrecognized device, helping to prevent unauthorized entries by flagging or blocking these attempts.

Smart Signals

Fingerprint's Smart Signals, combined with Fingerprint’s industry-leading visitor ID accuracy, enable businesses to proactively detect and prevent sophisticated fraud attempts by providing real-time, actionable insights. This technology ensures a seamless experience for trusted users while effectively identifying and mitigating fraudulent activities.

Reducing false positives

ATO solutions employ machine learning algorithms to analyze user behavior patterns over time. When ML models are fed high-quality data, they can more accurately distinguish between legitimate and suspicious activities, and minimize false positives.

Additionally, leading ATO solutions incorporate multi-factor authentication challenges selectively for activities that significantly deviate from the norm, ensuring legitimate users experience minimal roadblocks while upholding high-security standards.

Integrations

Fingerprint's device intelligence platform enhances business security by integrating cloud services for robust bot detection and protection across web and mobile applications. Fingerprint integrates with numerous services to enable real-time device fingerprinting, leveraging unique device identifiers to identify and mitigate fraudulent activities accurately, thus safeguarding digital identities and transactions.

Prevent ATO attacks while ensuring seamless user experience with Fingerprint

Fingerprint device intelligence stands as a crucial barrier against account takeover (ATO) attacks by providing a highly stable and accurate visitor identifier. Its sophisticated device intelligence platform offers businesses an unparalleled layer of protection, minimizing the risk of fraud while enhancing user trust.