Account Takeover (ATO) Fraud – What it is and how to prevent it

In today’s digital age, safeguarding online accounts is crucial. Account Takeover (ATO) fraud is a common threat in which malicious attackers obtain unauthorized access to user accounts, resulting in financial losses and compromised personal data. This article covers several variables of ATO, analyses common attack methods, and provides strategies for preventing such situations.

What is ATO and why does it matter? 

ATO occurs when cybercriminals gain illegal control over a legitimate user’s account, whether it be banking, email, or social media, without the account holder’s consent. Once access is gained, attackers can siphon funds, steal sensitive data, or engage in more fraudulent activities. The consequences are significant, impacting both individuals and businesses through financial and reputational damage. 

Which industries are more susceptible to account takeovers? 

Banking and financial services (e.g. retail banks, investment platforms, fintech apps) are particularly vulnerable to account takeovers due to easy access to funds and sensitive financial information. Online marketplaces or e-commerce (Amazon, Shopify, eBay) are also frequently targeted by fraudsters trying to make unauthorized purchases. Healthcare (hospitals, insurance companies, patient portals) is at risk due to sensitive medical records and billing information. Social media and streaming services are also popular targets for credential resale and identity theft. Cryptocurrency exchange and online gaming/gambling are also very vulnerable to theft of digital assets and in-game fraud. 

How do cybercriminals take over accounts?  

Understanding the strategies used by cybercriminals is crucial in developing effective security measures. Typical methods include: 

• Phishing and Social Engineering 

Attackers create deceptive emails or text messages that appear to come from trusted sources. These messages trick individuals into revealing their login credentials or personal information by directing them to counterfeit websites that closely resemble legitimate ones.  

• Credential Stuffing 

Cybercriminals use automated tools to test large numbers of stolen usernames and passwords across various platforms. Given that many individuals reuse passwords, a single compromised credential can provide access to multiple accounts. 

• Malware and Keyloggers 

Once installed on a user’s device, malicious software, often delivered through harmful downloads or email attachments, can monitor keystrokes or extract saved credentials, sending this information back to the attacker. 

• Man-in-the-Middle (MitM) Attacks 

Attackers can intercept communication between a user and a service, capturing login details and other sensitive data. This is often done over insecure or public Wi-Fi networks. 

 Warning signs – how to spot an account takeover attack 

Early detection of ATO can mitigate potential damage. Users and organizations should remain alert for signs of: 

• Unrecognized Account Activity: Transactions or changes that are not initiated by the account holder. 

• Unauthorized Password Change: Notifications of password resets or changes that the user did not perform. 

• Altered Contact Information: Modifications to email addresses or mobile numbers associated with the account without the user’s consent. 

• Login Alerts from Unfamiliar Locations or Devices: Access attempts from locations or devices that are inconsistent with the user’s typical behavior. 

How to protect yourself and your business from ATO fraud  

Implementing strong security measures is crucial in safeguarding accounts from unauthorized access. Key strategies include: 

• Multi-Factor Authentication (MFA) 

Using multiple forms of verification, such as passwords combined with biometric data or one-time codes, enhances security. This extra layer of security makes unauthorized access much more difficult. 

• Strong Password Policies 

Encourage the use of complex, unique passwords for each account. Regularly updating passwords and avoiding reuse across different platforms can help prevent credential-based attacks. 

• Identity Verification 

Verify accounts by confirming the identity of real individuals through document verification and biometric checks. This helps reduce the risk of synthetic identity fraud from the start and to make sure that your users are genuine. 

However, identity verification beyond onboarding is even more critical for ATO. Reverification with biometric checks can be done especially when users perform sensitive actions, such as password resets, high-risk transactions, or when reactivating an inactive account, after a breach, and more. 

• User Education and Awareness 

Regular training programs can help users identify and avoid phishing attempts and other social engineering tactics. Awareness is a crucial line of defense against ATO.  

• Continuous Monitoring and Anomaly Detection 

Use advanced fraud detection systems to monitor user behavior in real-time. These systems can identify deviations from established patterns, which may indicate unauthorized access. 

• Secure Network Practices 

Advise users to avoid accessing sensitive accounts over public or unsecured networks. Using Virtual Private Networks (VPNs) can add an extra layer of security. 

• Regular Software Updates and Patch Management 

Updating systems and applications ensures that identified vulnerabilities are addressed promptly, reducing the risk of exploitation by attackers. 

What to do if your account has been compromised?  

Organizations play an important role in preventing ATOs. Effective measures include: 

• Implementing Risk-Based Authentication 

Tailor authentication requirements to the risk level of each login attempt. For instance, request additional verification for access attempts from unfamiliar locations or devices. 

• Utilizing Advanced Fraud Detection Tools 

Implement solutions that analyze user behavior and transaction patterns to detect anomalies that may indicate fraudulent activity. Early detection allows for quick response to potential threats. As mentioned before, organizations can initiate reverification when there is a signal. 

• Enhancing Communication Protocols 

Create clear channels to notify users of any changes to their accounts, such as password resets or updates to contact information. Prompt notifications allow users to act quickly if unauthorized changes occur. 

• Conducting Regular Security Audits 

Regularly reviewing security policies and practices helps identify and fix vulnerabilities. This ensures defenses stay strong against evolving threats.  

Stay vigilant and proactive against ATO fraud  

Account takeover fraud is a major challenge today, with cybercriminals constantly evolving and improving their attack techniques. However, the risks can be significantly reduced through a combination of user vigilance, strong security practices, and organizational commitment to advanced protective measures. Proactive efforts in education, authentication, and monitoring are essential for safeguarding sensitive information and maintaining trust in online interactions.