Consequently, Account Takeover (ATO) fraud has become more lucrative, presenting one of the easiest routes for fraud now that other methods – especially around physical payments – have become less effective as channels have become more secure.
Criminals can also obtain credentials data via the dark web, gleaned from hacking and data breaches. When an app or merchant is compromised, stolen credentials might be used across many different accounts with the same username and password, providing fraudsters with an ideal opportunity to make money fast.
The invisible career ladder in a hidden industry
While ATO can be committed by a standalone fraudster attacking a single computer or account, more seasoned fraudsters often operate on a larger scale. Our experience shows that it is fast becoming a professional process with increasingly sophisticated methods and a hierarchy of participants.
Following is a very common scenario:
- A person with strong computer science skills develops a bot and sells it on – they don’t commit fraud directly, but they may supply to those who do.
- The buyer runs the bot to test whether it can gain the data and access needed to take over accounts.
- They then resell the product and/or the list of verified accounts to another party, who steals using the compromised accounts.
With the endless churn of stolen data on offer, the ‘buy-sell-steal’ cycle is allowing Account Takeover fraud to become an industry unto itself.
Reduced friction adds fuel to the fraud fire
Because merchants don’t have the same level of protections in place as banks, they are increasingly the target of Account Takeover fraud as criminals look to exploit the weakest link and make their money as quickly and invisibly as possible.
At the same time, to remain competitive, many merchants are looking to match the customer experience provided by the world’s leading eCommerce businesses. This includes offering one-click checkouts, stored payment details, saved passwords and fast fulfilment options.
Once a fraudster has hacked a computer and email address, they can reset the password very easily, then change the email and/or shipping address. Again, the process is made easy for customers, but it makes access for criminals quicker and easier too.
Sophisticated fraud methods need sophisticated counter-measures
As fraudsters develop their methods and take advantage of new technologies, the response from merchants must at least evolve at the same pace and in the same direction.
Positive profiling can be an invaluable tool in the fight against Account Takeover fraud. By analyzing the history of a customer across multiple merchants, positive profiling can match up data points such as device ID, IP address, email, shipping address and a wealth of other identifiers – and highlight when new variables show up.
It can also help by flagging behavior that is unusual for that particular customer, or spot practices that are common in ATO. For example, in the fraud chain, it is common for someone to simply log on as the genuine customer to validate the profile or account so they can then sell onwards. This may then be followed by a second login with a change of email or address, followed by a new purchase. When a password and email address is changed in quick succession, this too should raise concerns. In this case, merchants can send confirmation emails to both the old and new email address for a defined period, in case it was not the genuine customer who made those changes.
The power of positive profiling lies in the combination of sophisticated analytics, coupled with cross-sector merchant consortium data and flexible fraud prevention tools. And of course, the more merchants (and other players in the payments ecosystem) are involved in intelligence-sharing, the more effective the fraud screening process becomes.
Collaboration must continue
Consortium data should just be the starting point for broader collaboration across the industry.
From my work with merchants around the world, I have seen first-hand the value of collaboration in creating a more efficient, compliant, safe and profitable environment for the whole ecosystem. I am a very strong believer in the difference that industry co-operation can make in shutting down fraud, and it’s for this reason that I have been serving on the Advisory Board of the Merchant Risk Council (MRC) for the past six years.
Merchant Risk Council brings together the largest eCommerce merchants with solution providers, card schemes, issuers, payment processors and other eCommerce companies to provide networking, education, benchmarking and advocacy opportunities, along with a trusted environment for global merchants to share their experiences. It is a worthwhile and successful endeavor from which the entire industry benefits.
ACI Fraud Management for Merchants 
