Account takeover fraud is a type of fraud where an unauthorized third party gains online access to an account and makes unauthorized changes. After making changes, they carry out several transactions that lead to monetary loss. This article discusses accounts that are vulnerable to account takeover fraud, the consequences, detecting account takeover fraud, and how to prevent it. Let’s dive in.
Accounts vulnerable to account takeover fraud
Account takeover fraud can affect basically any account. The most vulnerable ones are:
- Credit card accounts.
- Savings accounts.
- Checking accounts.
- Government benefits accounts.
- E-commerce accounts.
- Store loyalty rewards.
- Wireless phone contracts.
This type of fraud can harm institutions in many ways. Here are a few:
- Reputational damage
If your institution is prone to account takeover fraud, it can lead to having a bad reputation. Consequently, customers won’t want to associate themselves with this institution.
- Monetary loss
When fraudsters gain access to customers’ accounts, they can withdraw thousands or even millions in dollars, resulting in a huge financial loss for the institution.
- Loss of business
Most times, customers whose accounts are affected due to fraud will choose to close their accounts altogether. Consequently, the institution loses business.
- Transaction disputes
When some customers learn that an institution is prone to fraud, they will dispute transactions. Therefore, the institution will spend a lot of time and money investigating the disputed transactions.
Why is detection difficult?
Most institutions find it difficult to detect and prevent account takeover fraud for several reasons. For starters, account takeover fraud is a relatively new type of fraud. Most fraudsters use bots to imitate usual login activities, making it difficult for institutions to flag transactions as suspicious.
Financial institutions also try to maintain a good relationship with their customers by not interfering with their spending. Consequently, they fail to detect suspicious activity.
Additionally, most activities that fraudsters use to gain access to various accounts take place throughout the day. This includes changing phone number details, email details, or even changing the password. Most customers conduct these activities daily, so it may be difficult to tell which actions are legitimate and which ones aren’t.
How to prevent account takeover
- Limit the number of times a customer can attempt to log in before you lock the account.
Most fraudsters try to log in to an account several times before they are successful. Therefore, limiting the number of login attempts can help prevent account takeover.
- Train your employees.
Employees play a significant role in preventing fraud. You should train them to easily discern accounts that have been compromised and fraudsters’ phishing attempts.
- Blacklist IP addresses of known fraudsters.
Most times, fraudsters use the same IP addresses in takeover fraud attempts. Therefore, it would help if you blacklisted IP addresses that fraudsters have used in the past.
- Use account takeover prevention software
Various account takeover prevention software is available on the market. The software detects account takeover attempts and notifies you of the same.
- Use a Web Application Firewall
Most Web Application Firewalls (WAF) can detect fraudsters’ attempts to take over accounts. Therefore, you should consider installing them.
Institutions need the right tools and processes to detect and prevent account takeover fraud. The tools should have the ability to detect suspicious activity in real-time and flag them down. You also need to understand normal account activity comprehensively. This way, you can easily discern abnormal account activity and take the necessary action before the fraudsters are successful.
At Enformion, we focus on fraud prevention and mitigation. Our experts will guide you every step of the way. Contact us today to start your free trial and learn to prevent account takeover fraud.