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Data breaches, malware, phishing and pharming attacks have continued to evolve while maintaining high levels of success in recent years and compromising millions of consumer credentials. As a result account takeover (ATO) is at an all-time high, and many businesses are finding themselves not fully prepared to handle the increased risk.

Account takeover dollar losses increased 69 percent in the United States from 2011 to 2012 while ATO fraud incidences grew by 53 percent in the United Kingdom, representing nearly two-thirds of all identity related fraud in the UK. Account takeover is both growing and expanding its reach from not just targeting financial institutions, but also e-commerce merchants and marketplaces, social networking platforms, as well as telecom, utilities, insurance and other industries. The idea that account takeover is only a concern for financial institutions is a misconception.

Unfortunately, the weakest link in the security chain can often be the user. Consumers have a tendency to reuse usernames and passwords across multiple web merchants and services, meaning when this data is compromised in one instance it can often be used in several places. This risk is compounded by the fact that many e-commerce merchants and services store billing instruments for quick payment and convenience. But consumers also fall victim to malware, phishing and pharming scams, which either scrape their login credentials or dupe the consumer into handing this information right to the fraudsters.

Many organizations who have not been concerned with ATO in past should be thinking about it today. The problem is, however, that many vulnerabilities to account takeover go unnoticed until they are exposed. Account takeover can lead to significant costs, from both direct financial loss and a tarnished brand. Exposure and vulnerabilities to ATO should be understood and improved before a significant event occurs.

In terms of potential risk exposure from account takeover, organizations need to understand what they are protecting behind a user login, how valuable this information is and how easily it can be monetized or used directly to make purchases or transfer funds. To fully understand this risk exposure, as well as to identify and correct potential account takeover vulnerabilities, The Fraud Practice offers an Account Takeover (ATO) Audit:

Account Takeover (ATO) Audit

Account Takeover ATO Audit

The Fraud Practice offers an Account Takeover (ATO) Audit to quickly inspect more than 80-points of vulnerability, exposure and best practice protection as it relates to account takeover business risk in the e-commerce channel. The ATO Audit is a short duration low cost packaged engagement providing analysis, reporting and answers to the question of how exposed a company is to account takeover fraud and abuse.

 

About The Fraud Practice

The Fraud Practice is a privately held US LLC based in Sarasota, Florida. The Fraud Practice provides consulting services on eCommerce payments, fraud prevention and credit granting as well as prepared research and online training for payment and fraud professionals. Businesses throughout the world rely on The Fraud Practice to help them build and manage their payment, fraud and risk prevention strategies.

Contact:

The Fraud Practice LLC
David Montague,
President and Executive Consultant
Toll Free: +1 888-227-0402
dmontague@fraudpractice.com

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Press Release: Many Businesses are Unprepared for the Growing Risk of Account Takeover (ATO)

Sarasota, FL, June 7, 2013 / By: David Montague, The Fraud Practice LLC

We are starting to see more and more fraudsters focusing larger efforts on using account takeover (ATO) to perpetrate fraud.  Most likely it is because businesses  aren’t focused on account takeover (ATO) risk today and there is a vast supply of compromised consumer and business accounts from cases of phishing, pharming, malware and data breaches. Any business that offers users the ability to setup an account or protects their customer information behind a login is at risk to account takeover (ATO) and a potential target for fraud.

"There is a broad misconception in the market that ATO is really only a problem for financial institutions. In fact, the data indicates that fraudsters have already turned their attention away from financial institutions and have merchants and e-commerce providers squarely in their sights. By some accounts, ATO has already eclipsed the damage caused by credit card fraud in hard dollar terms." Michel Giasson, CEO NuData Security Inc.

The issue is many businesses do not know the extent of their exposure to account takeover nor do they know how to measure the presence of account takeover attempts, and most importantly they do not know the best practices on how to protect their business and customers from account takeovers.

“The problem is most companies are blind to ATO signals which is why NuData Security developed a service like NuDetect, a behavioral analytics service, to help companies detect ATO and other automated fraud activity. We firmly believe that to successfully detect and prevent ATO from occurring, companies will need tools to be able to monitor consumer behavior across key events.” Michel Giasson, CEO NuData Security Inc.

There is no denying that account takeover has been a growing issue for fraud and risk management. The Federal Reserve Bank of Atlanta recently published a document making the case for greater education of consumers and employees as a means of mitigating online account takeover risks. The report also references a recent study from Javelin Strategy and Research showing that account takeover dollar losses in the United States increased by $2 billion from 2011 to $4.9 billion in 2012, a 69 percent increase, victimizing 0.6 percent of all U.S. consumers. But account takeover isn’t just increasing in the United States. According to CIFAS, a non-profit membership association focused on fraud prevention in the UK, account takeover fraud incidences increased 53 percent in 2012 to where account takeover now represents 65 percent of all identity related fraud in the United Kingdom.

One of the primary reasons account takeover fraud has been increasing is because fraudsters are able to get their hands on ever increasing account credentials through successful efforts at scaling data breaches, phishing and pharming activities. Account credentials and compromised data records remain at high levels while phishing and pharming continues to increase and evolve. As reported by Financial Fraud Action UK, an offshoot of the UK Payments Administration, there were over 111,000 pharming sites spoofing UK banks and building societies identified in 2011. The March 2013 RSA Online Fraud Report listed over 27,400 phishing attacks worldwide with 257 different brands being targeted just for the month of February 2013. Meanwhile, phishing and pharming tactics are morphing to target social media users. Symantec stated in their 2013 Internet Security Report that phishing attacks via email have declined, but at the expense of more phishing scams carried out through social networking platforms like Facebook and Twitter. The study additionally found that pharming sites spoofing social networks increased by 123 percent in 2012.

While phishing, social engineering and other schemes trick consumers into providing their account credentials, data breaches can affect thousands and sometimes millions of consumers in a single attack. Although data breaches involving Social Security Numbers and payment account information can do the most immediate financial harm, breaches involving email addresses, usernames and passwords can lead to high losses as well. Due to the fact that consumers tend to reuse usernames and passwords across sites, an account compromised with one business can be used to takeover accounts with other companies or services.

With the continued high level of data breaches and compromised records in recent years, many online organizations that did not suffer a breach directly have been concerned about the potential fraud risk they might incur from other companies compromised data and accounts. The Identity Theft Resource Center tracks all reported data breaches and tallies the number of compromised records, while noting that there is likely a significant number of data breaches that go unreported. With over 400 data breaches and tens of millions of records compromised in each of the past three years, fraudsters have plenty of information to use for attempting account takeover. So far this year the number of data breaches are on pace to surpass the amount that occurred each of the past two years with 264 reported incidences and nearly 6.3 million compromised records recorded by the IRTC as of June 4, 2013. It should also be noted that for compromised records to be tallied they must include an individual’s name with either their Social Security Number, driver’s license number, medical record, credit/debit card information or a financial record. Therefore this does not include many other breached consumer records such as the 50 million emails and passwords compromised with the recent LivingSocial data breach.

data breaches June 2013

The threat of account takeover is continuing to rise, and it affects all varieties of online organizations to include merchants of all types, financial institutions, social networks as well as the telecom, utilities and insurance industries. Preventing account takeover can be difficult, especially when a consumer has handed over their login credentials or has reused passwords that were compromised in a data breach elsewhere. But there are several things organizations can do to mitigate this risk.

The first step is understanding the vulnerabilities that make a company more susceptible to account takeover. There are many factors that contribute to account takeover risk ranging from password policies to use of bot protection and other tools or features to reduce ATO risk. Organizations also need to understand their potential risk exposure from account takeover, that is, understanding what they are protecting behind a user login, how valuable this information is and how easily it can be monetized or used directly to make purchases or transfer funds.

As a company you need to ask yourself a series of questions to understand how at risk you are to account takeover (ATO).  Do you manage accounts for your customers?  Do you know your vulnerability to account takeover (ATO)? Do you know your exposure to account takeover if it occurs? Can you measure and monitor for the presence of account takeover?  Keep in mind, when it comes to ATO vulnerabilities, many go unnoticed by businesses until they are exposed when account takeover becomes the basis of a significant loss event. Even with significant account takeover losses and events taking place, how these are being perpetrated and what can be done to correct this may still be unknown for many businesses. If you are struggling to answer these questions, or in developing a strategy to deal with ATO consider an Account Takeover ATO audit.

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Additionalresources

  • Account Takeover Training
    Understanding & Mitigating Account Takeover RIsk.

    Businesses operating online need to take the necessary measures to understand their risk exposure to account takeover (ATO) fraud as well as familiarize themselves with how to better recognize and prevent account takeover. Policies, procedures, techniques and third party tools are all discussed in the context of how they affect account takeover risk exposure and how they can be used to mitigate account takeover risk.

  • Behavior Monitoring white paper
    Differentiating Methods for Making Use of Behavioral Monitoring in CNP Fraud Detection.

    A white paper providing insight in online behavioral monitoring and the important role it can play in fraud detection. Learn about the different techniques for online behavioral monitoring, and how to choose a method suitable for the organization's needs. 

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