Combatting ATO Fraud

What is account takeover (ATO) fraud?



A great deal of daily life occurs online, lending itself to a vulnerability to cybercriminals.  In a survey by Statista in 2022, nearly half of those surveyed had experienced a cyber-attack and 4 out of 5 board of directors surveyed believed their organization was at risk of a “material cyber-attack.” Sometimes a cyber-attack may be minor, however, in the worst-case scenario, a cybercriminal may take over your banking profile or acquire your credentials, leading to a time-consuming and potentially financially harmful experience.

Article at a glance:

  • ATO involves cybercriminals gaining unauthorized access to user accounts, leading to potential fraud and misuse of personal information.
  • Large customer databases, online transactions, user behavior, and sophisticated attacks pose significant risks.
  • Integrating identity verification APIs, robust behavior analysis and risk scoring is critical for bolstering security. Two-factor authentication, real-time alerts, and user risk profiling can offer additional layers of protection.
  • Adopting proactive measures, including cutting-edge technologies, is essential for combating ATO effectively. Ongoing awareness and adaptability are vital to staying ahead of evolving cyber threats in the dynamic cybersecurity landscape.

Understanding account takeover

Account takeover and online account takeover are the acts of a cybercriminal gaining unauthorized access and control of a user account. Usually, access is achieved by stealing login credentials from a user. Then, the criminal changes account settings and, most often, conducts fraudulent activity under the guise of the victim’s information. With so much of today’s daily life happening online, cybercrime has become extremely prevalent. Criminals are increasingly taking advantage of ecommerce platforms and social media to steal vulnerable users’ login information. These criminals use many methods to steal information, including financial account takeover. Some methods include may include:

  • Phishing – Fraudulently sending emails and messages pretending to be reputable companies to gather personal information of individuals.
  • Credential stuffing– A cyber attack where a list of compromised data is used to attempt to get access to a system.
  • Social engineering – Talking a user into revealing personal information that allows the criminal access into accounts.

Gaining access to any personal account or identity theft creates an opportunity for cybercriminals to use account takeover fraud to exploit for financial gain.

Don't fall victim to ATO fraud

How you may be vulnerable to account takeover

Account takeovers represent a significant security challenge, and understanding the various avenues through which they can occur is crucial for robust defense strategies. There are eight critical ways these types of organizations are particularly vulnerable:

  • Large customer databases
  • Online transactions

The extensive customer databases maintained by e-commerce companies and financial institutions are only protected if adequately secured. Due to the sensitive personal and financial information in financial institutions and ecommerce databases, they are a prime target for cyber hacking. The use of online transactions by ecommerce and financial institutions allows for numerous entry points for criminals to attempt ATO.

  • User behavior

Financial institutions and ecommerce platforms only have a certain amount of control over user behavior. Often, users do not follow the strongest security practices, reuse passwords across multiple accounts, choose weak passwords, or fall victim to phishing attacks. All these user actions put the financial institution and ecommerce platform at risk of attackers compromising accounts.

  • Sophisticated attacks

More sophisticated attacks such as phishing, credential stuffing, and social engineering can often bypass security measures.

  • Regulatory requirements
  • Third-party services
  • Legacy systems

Both financial institutions and ecommerce platforms must comply with regulatory requirements, standards, and data protection laws. When these regulations are not followed, institutions and companies can face regulatory fines and penalties while allowing for criminal vulnerabilities. Many ecommerce companies and financial institutions use third-party services and payment processors to conduct daily business. These third-party services may have vulnerabilities unknown to the company/institution, and attackers exploit these vulnerabilities to access user accounts. Organizations still using legacy systems or outdated security measures are more vulnerable to ATO attacks.

  • Phishing targets

Phishing campaigns go after employees at financial institutions or ecommerce companies, attempting to compromise those employees’ credentials to gain access to the internal system.

Digital identity services

7 Great ways to detect and respond to account takeover

As the internet continues to evolve, the security of online accounts has never been more important. Fortunately, several effective strategies and best practices exist for identifying potential account takeovers and implementing swift, effective responses.

1) Identity verification

By integrating identity verification APIs into authentication and user management systems, ecommerce platforms and financial institutions add necessary protections to their systems. Integrated security is critical for account takeover protection. Using powerful identity verification services confirms legitimate customers and clients are accessing the system and providing real user information like names, phone numbers, and addresses.

2) Behavior analysis

Tracking patterns and detecting anomalies by monitoring user behavior provides critical information that suggests fraud or criminal activity. Ecommerce companies and financial institutions must track users’ login patterns, account creation, and transaction activities to watch for any deviation from the regular pattern. The ability to identify risk patterns is crucial for account takeover prevention.

3) Risk scoring

To maintain security, companies must assign risk levels to user accounts and certain user activities—clients and activities with a higher risk score trigger additional scrutiny and monitoring. The ability to trigger specific security measures for high-risk scores protects the user experience for low-risk score accounts. It pinpoints the behaviors and customers that pose a genuine risk.

4) Two-factor authentication (2FA)

Today’s sophisticated digital practices make two-factor authentication a critical extra layer of security. 2FA is necessary to prevent bank account takeover.

5) Real-time alerts

Security teams and automated systems need to know when a risk is present, and the ability to know as soon as the risk arises is crucial. Real-time alerts allow these teams and systems to tell when suspicious activities or high-risk users are detected immediately.

6) User risk profiling

Understanding the risk associated with a specific user allows more rigorous security measures and monitoring to focus on that profile. Creating these user profiles based on data insights for SaaS enables financial institutions and e-commerce businesses to pinpoint monitoring and security measures accurately. Banks and companies are better equipped for ATO detection by accurately understanding a user’s risk.

7) Compliance and reporting

The data and reporting features provided by identity verification providers assist ecommerce platforms and banks in complying with legal and regulatory requirements. When ATO incidents and data breaches occur, having accurate and regulation reports ready makes the process less challenging and ensures no legal penalties or fines are imposed. Online activities dominate our lives. ATO poses significant threats, from personal inconvenience to severe financial fraud. Ecommerce companies and financial institutions, central to our online transactions, face vulnerabilities that cybercriminals exploit through large customer databases, online transactions, user behavior, and other sophisticated attacks. As technology advances, so do the tactics of cybercriminals. Individuals and organizations must remain attentive using updated security practices. Businesses and institutions contribute to a safer online environment by implementing powerful security measures and staying informed about emerging threats. As we navigate the dynamic realm of cybersecurity, ongoing awareness and adaptability will be vital in staying one step ahead of cyber adversaries.

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