What Is Account Takeover Fraud (ATO)?

Chances are, you know of someone or at least heard of someone who has had their account hacked. Or maybe you’ve been an unlucky victim of this type of fraud.

Whether it’s a social media profile, bank account, or email, Account Takeover Fraud (ATO) is more than just an inconvenience. When fraudsters have access to these digital accounts it can lead to financial loss, compromised personal data, and significantly tarnished reputations.

The impact of ATO also extends to advertisers, who depend on digital integrity for their campaigns. Join us as we take a closer look at this rising type of fraud and how to prevent it.

Account Takeover Fraud 101

The experts at PingIdentity define ATO as: “A form of identity theft where fraudsters overtake an online account and pose as real users.”

This can be anything from social media accounts and gaming profiles to email or even bank accounts. Once in control, these fraudsters can exploit these accounts for financial gain, data theft, and other criminal activities. It’s a particularly notorious type of fraud because of its focus on controlling existing accounts rather than creating new ones (which could be easier to identify as fake).

Account Takeover in Action

As we said before, you’ve likely seen or heard of someone you know having their account hacked. If we had to guess, it was probably one of their social media accounts. 

Here’s how it might have happened:

1. ATO typically begins with the theft of the victim's credentials. They often get their foot in the door through social engineering attacks, phishing attacks, or even malware. 
2. Once the attacker has these credentials, they can access the account.
3. The fraudsters will change the passwords and security settings to lock out the legitimate owner and maintain control for as long as possible.

These stolen credentials provide bad actors with an opportunity to steal personal information or even make fraudulent transactions.

Account Takeover Fraud Detection

So, how do you know if your account has been taken over? It depends on what the fraudster has access to, but the first signs are often suspicious activity.

If your Facebook account has been hacked, for instance, you may realize you can’t get in with your login credentials. You might also have friends and family reaching out after receiving strange messages from your account. This is probably an attempt by the fraudster to find more targets.

Similarly, if you are locked out of your email, they may be sending more phishing emails to your contact list or digging for personal information.

Perhaps the most alarming is when bank account information is stolen. When a bad actor gains access to your credit cards, bank accounts, or other personal information you may start to see charges you didn’t make, or your financial institution might flag suspicious transactions. Advanced fraud solutions help detect the use of stolen credentials before they log into the account. These fraudsters need to hide themselves, and when they do, a good SIVT filter can identify and stop them.

The Impact of ATO

Unfortunately, account takeovers are on the rise. The latest account takeover fraud statistics shared by Security.org found that 29% of people have experienced an account takeover, which is an increase from 22% in 2021. 

Why is that? Well, the COVID-19 pandemic caused a spike in cybercrime, including ATO attacks. As more individuals rely on online accounts for socializing, entertainment, and work, it means more opportunities for bad actors to take them over and exploit them. 

For individuals, the effects of ATO attacks can be frustrating at best and devastating at worst:

• Financial Loss: Victims may find their bank accounts drained, credit cards maxed out, or new fraudulent accounts opened in their names.
• Identity Theft: Once fraudsters access personal accounts, they can steal identities to commit further fraud. Identifying theft can be costly and stressful.
• Damage to Reputation: Attackers may post inappropriate content or send emails that damage the victim's personal and professional reputation.
• Loss of Privacy: Sensitive information such as addresses, phone numbers, and private communications can be exposed. This is a major violation of privacy.

This type of fraud also directly and indirectly impacts advertisers and businesses:

• Fraudulent Ad Campaigns: Attackers can use stolen accounts to run unauthorized advertising campaigns. Or these fraudsters might be interacting with ads from stolen profiles, effectively skewing campaign data.
• Brand Damage: If an advertiser’s account is taken over and used to share harmful or misleading content, it can severely damage the brand’s reputation and consumer trust.
• Increased Costs: Dealing with the aftermath of an ATO incident can be costly. Keep in mind that the cost of a data breach in 2024 was 4.88 million dollars. It’s important for businesses to prevent any events that could lead to such a breach.
• Loss of Customer Trust: Customers may lose trust in a brand if they perceive it as unable to protect their personal and financial information. Businesses might see a decline in sales or more customer churn.

Account takeover fraud is an issue for the entire digital ecosystem. While the individual impact is often discussed the most, we can’t forget that ad fraud driven by account takeovers can lead to skewed analytics. When traffic and engagement metrics are artificially inflated, advertisers are misled about the effectiveness of their campaigns. 

How to Prevent Account Takeover Fraud

These types of ploys aren’t going anywhere, so it’s important to follow the best practices for account takeover fraud prevention in both personal and professional settings. 

For Individuals:

1. Use Strong, Unique Passwords: Avoid using the same password across multiple sites. Employ a combination of letters, numbers, and symbols to increase password strength.
2. Enable Two-Factor Authentication (2FA): Adding an extra layer of security beyond just a password can decrease the risk of unauthorized access.
3. Be Wary of Phishing Attempts: Learn to recognize the signs of phishing emails, texts, or calls, and avoid clicking on suspicious links or downloading unverified attachments.

For Companies:

1. Employee Training and Awareness Programs: Regularly educate employees about the risks of ATO and train them on recognizing phishing and other common social engineering.
2. Implement Advanced Authentication Methods: Also use multi-factor authentication (MFA) for accessing company systems and sensitive data.
3. Invest in Proactive Solutions: Using an advanced fraud solution can detect and prevent ATO’s from happening on your site by protecting their visitors logins.

Continuous monitoring and adapting to new threats is key to protecting your personal information, business accounts, and advertising campaigns. Learn more about the benefits of investing in an ad fraud solution to protect your advertisement spend in our Ultimate Guide to Ad Fraud.