In 2023, the global banking sector faced staggering losses amounting to $485.6 billion due to cybercrime and fraud. A significant portion of these losses stemmed from social engineering tactics, where fraudsters manipulate individuals into divulging personal information, passwords, and one-time passwords (OTPs). This surge in deceptive practices led to a 150% increase in Account Takeover (ATO) fraud globally, resulting in substantial financial damages.
What is account takeover and why is it a billion-dollar problem? How does it occur and what are the consequences? More importantly, what can businesses do to prevent it?
In this article, we will explore ATO attacks and touch upon advanced defense strategies for this fraud.
What is Account Takeover
Account takeover is a cyber attack where a perpetrator gains access to and takes control of someone’s online account without permission. Another term for account takeover is account hijacking. This occurs when the attacker obtains the account’s password, PIN, or OTP. Common methods used include phishing and malware.
When an account takeover happens, the attacker can steal the victim’s personal information, conduct transactions in their name, and even drain their bank account. Account takeover attacks can cause both financial and privacy-related losses for users.
Some signs that your account may have been compromised include receiving notifications about suspicious activity. Here are some warning signs:
Signs of an Account Takeover Attack
1. Login Notification from an Unknown Location or Device
If you receive a login notification from a location or device you don’t recognize, even though you haven’t accessed your account, it could be a sign of an account takeover attempt. These notifications are typically sent by security systems to alert you of login attempts from unfamiliar locations or devices.
Such notifications often include a prompt to enable two-factor authentication (2FA). If you receive one, immediately enable 2FA and change your password or PIN to secure your account.
2. Changes in Personal Information and Suspicious Activity
You may suddenly notice that certain account settings have changed without your knowledge. This could include:
- Your email address or phone number being changed
- Your password being updated
- Notification settings being altered
Be cautious, as unauthorized changes to your credentials are a common sign of an account takeover.
Additionally, you might notice unusual activities in your account, such as transactions you never made or messages sent from your email or phone number without your knowledge. These activities are strong indicators that an attacker has gained access to and is controlling your account.
To prevent further damage, regularly monitor your account settings. If you detect any unauthorized changes, immediately reset your password or PIN to regain control.
3. Unable to Log into Your Account
If the password or PIN you regularly use is no longer accepted, your account may have been taken over. It is likely that the fraudster has already changed your login credentials to block your access.
In this case, immediately initiate the account recovery process by selecting the “Forgot Password” option. If you are still unable to regain access, contact customer support as soon as possible for further assistance.
How Account Takeover Fraud Happens
1. Credential Stuffing: Exploiting Weak and Reused Passwords
Many users reuse passwords across different websites. Attackers take advantage of this by using stolen credentials from past data breaches to attempt logins on multiple sites. With automated bots, they test thousands of username-password combinations, hoping that victims have used the same credentials elsewhere.
Use unique, strong passwords for each account and enable multi-factor authentication (MFA) for added security.
2. Phishing Attacks: Tricking Users into Revealing Credentials
Phishing is a social engineering attack where fraudsters trick users into revealing their login credentials. This often involves fake emails or messages that appear to be from trusted institutions like banks, online services, or even employers. These messages direct victims to look-alike login pages, where they unknowingly enter their usernames and passwords, handing them over to cybercriminals.
To prevent this, always verify the source of an email before clicking links. Look for spelling errors or unusual URLs, and avoid entering login details on unknown sites.
3. Malware Attacks: Infecting Devices to Steal Passwords
Hackers deploy malware to steal authentication data directly from a user’s device. Malware can be disguised as legitimate software or hidden in email attachments, malicious ads, or free downloads.. Once installed, malware can record keystrokes (keyloggers), extract passwords saved in browsers, or intercept login sessions.
Never try downloading software from untrusted sources, use reputable antivirus software, and keep all applications up to date.
4. Session Hijacking with Stolen Cookies
Cookies are small pieces of data stored in your browser to keep you logged in to websites. Attackers can steal these cookies and use them to take over an active session, bypassing the need for a password. If an attacker gains access to session cookies, they can log in as the victim without needing their credentials.
5. Man-in-the-Middle (MitM) Attacks: Intercepting Login Credentials
In a Man-in-the-Middle (MitM) attack, hackers position themselves between the user and a legitimate service to intercept sensitive data, including login credentials and session cookies.
Hackers set up fake Wi-Fi networks in public places, allowing them to eavesdrop on user traffic. Then they exploit poorly secured websites (those without HTTPS encryption) to capture login credentials. In some cases, they alter the communication between the user and the legitimate service, redirecting them to a fake website without their knowledge.
Always use secure Wi-Fi connections and avoid logging into sensitive accounts over public Wi-Fi unless using a VPN (Virtual Private Network).
Industries at Elevated Risk of Account Takeover
1. Multi-finance
The multi finance sector includes businesses that provide financing for vehicles, housing, and personal loans. These institutions handle large volumes of financial transactions, making them attractive to fraudsters looking to illegally access funds or approve fraudulent loans.
Attackers use account takeover to gain control of customer accounts and apply for loans using stolen identities. Cybercriminals may also exploit weak authentication systems to approve fraudulent financing applications under fake or stolen credentials.
Once an account is taken over, fraudsters can redirect loan disbursements to their own accounts, leaving the legitimate customer responsible for unauthorized debt.
2. Online Lending
The online lending industry has experienced rapid growth due to the convenience of digital loan applications and instant approvals. However, this same speed also makes it easier for fraudsters to exploit vulnerabilities.
Attackers use stolen credentials to take over borrower accounts and apply for loans in their name.
Because online lending platforms rely on automated verification, hackers use deepfake videos, synthetic identities, and stolen documents to bypass security measures.
Fraudsters may also alter loan terms or change disbursement details to reroute funds to their own accounts.
3. Banking
Banks are one of the most frequently targeted industries for account takeover because they provide direct access to personal and corporate funds. Cybercriminals leverage stolen credentials to initiate unauthorized wire transfers, withdraw money, or change account settings.
Fraudsters commonly use phishing attacks to steal banking credentials and gain access to customer accounts. Once inside, they manipulate online banking services, transferring funds to money mule accounts before victims or banks can detect the fraud.
Account takeover is also used in business email compromise (BEC) schemes, where attackers impersonate executives or vendors to trick employees into making fraudulent payments.
Consequences of Account Takeover
The impact of ATO is multifaceted and severe:
- Financial Losses: Unauthorized transactions can deplete individual and corporate accounts, leading to significant monetary losses.
- Data Breaches: Compromised accounts can result in the exposure of sensitive information, leading to identity theft and privacy violations.
- Reputational Damage: Organizations suffering from ATO incidents may lose customer trust, adversely affecting their brand image and customer retention.
- Operational Disruptions: Addressing ATO incidents diverts resources and can disrupt normal business operations.
Account Takeover Prevention
Given the financial, emotional, and reputational risks associated with account takeover, it is crucial to understand how to prevent it. Two-factor authentication (2FA) using OTP is still widely considered the safest method to prevent account takeover. However, with advancements in technology, OTP is no longer secure.
Instead of protecting users, OTP has become an entry point for fraud through social engineering attacks. So, what is the best way to prevent account takeover?
The answer lies in device authentication and facial authentication. Here’s how each method works:
1. Device Authentication
Since account takeover fraud can be carried out from any device, it is essential to ensure that an account can only be accessed from a single trusted device. This is the core principle behind device authentication.
With device authentication, the device used to register an application account is verified by the system, ensuring that the account can only be accessed from that specific device.
VIDA provides a device authentication solution called VIDA PhoneToken. When a user downloads an application, PhoneToken automatically links to their device, ensuring that account access is only permitted from that registered device.
This technology works by embedding Public Key Infrastructure (PKI) into the device. For users, logging in remains the same as usual. However, for fraudsters, accessing your account from their device becomes impossible.
2. Facial Authentication
Facial authentication (or biometric authentication) verifies a user’s biometric data—such as face, fingerprint, or retina, on their device. This authentication method ensures that only the rightful account owner can access their account.
VIDA has introduced VIDA FaceToken, a facial authentication solution that combines face matching and liveness detection. FaceToken directly links a user’s biometric identity to their device, providing an additional layer of security against account takeover fraud.
Account takeover is a serious cybercrime that can have severe consequences, including financial losses, emotional distress, and reputational damage. As digital transactions continue to evolve, it is critical to ensure that your accounts remain secure.
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