Identity Authentication: A Solution to Combat Account Takeover Fraud

In financial sectors, account takeover fraud is considered a rising trend. The Rippleshot State of Card Fraud highlights that account takeover has become a hurdle for financial institutions (FIs). Also, Javelin Strategy & Research report has endorsed this globally evolving issue. 2019 fraud study indicates the rise in loss due to card fraud. The amount is estimated from $6.4 billion to $8.1 billion. In 2017 alone, 300 account takeover fraud cases came onto the surface. The reason behind this inclination is the tricks of cybercriminals and attacks that could easily exploit the vulnerabilities in the online systems of banks and similar sectors.

Fraudsters are always in search of new accounts opening, steal the identities of people through various cyberattacks. These attacks include identity theft, phishing attacks, malicious executable injections, malware injections, credit card fraud, and account takeovers. Alone account takeover (ATO) cases resulted in a loss of $4 billion. In 2018, this amount hit up to $14.7 billion. There are a number of factors that are contributing to the rise in these hazardous trends.

How FIs can Reduce ATO Frauds

The cyberattacks will be exacerbated rapidly if proper fraud prevention steps would not be taken immediately. Fraudsters are always looking for opportunities to either steal the identities of people or transfer ill-gotten gains across the world which we call money laundering. Account takeover fraud is one of those through which scammers hack the account and use that identity for malevolent purposes. This in return affects individuals, businesses, and the economy. 

Account takeover fraud can be conducted through phishing attacks, mobile phone takeover, social media accounts takeover, bad link directions, and email phishing scams. An online user is fooled by fraudsters when a malicious link is sent through email or beneath an advertisement. It redirects to a website that seems a legitimate one but is a trap. The user is asked to enter the credentials and once they do, the account is hacked. Not only online platforms but individuals should be aware of malicious online campaigns.

A financial ecosystem is more prone to fraud and payment scams. It is in dire need of adopting robust and better prevent frauds tool. This would help them in combating the risks of account takeover fraud that gives birth to several other forms of hoaxes. While fraudster is always looking to capitalize on the weaknesses in the system across payment methods and even the retail industry, stringent security measures should be taken against the malicious desires of scammers. 

Identity automation can serve the purpose. A large number of frauds take place as a result of unauthorized access to confidential data. Controlled access rights can help in authorizing each identity who is trying to access data. This would reduce the chances of a data breach and identity theft.

Statistics are important

In 2018, the reports related to identity theft and fraud show that out of 3 million records, 1.4 million are fraud-related. Among these, 25% of events reported money loss. About $1.48 billion was lost due to the fraud complaints. As identified by FTC, imposter scams are the most ranked ones and lie in the category of top 10 frauds and resulted in a loss of about $488 million. 15% of complaints corresponded to identity theft and were categorized as the third most ranked fraud. 

These stats are important not to shock but they are intended to shed light on the growing frauds that are cutting roots of financial institutions. If on one side, fraudsters are getting smarter with their innovative tricks, FIs need to come up with a more strong strategy to stay one step ahead of malicious actors. For this, a strong identity access management system should be embedded in the system to avoid any unauthorized access to your legitimate systems.

To wrap up, any business that involves money flow attracts fraudsters. Cybercriminals have several ways to fool your system and run it according to their desire. By running malicious executables to your system, they can take out all the necessary information which includes credit card details, and use them to perform malevolent transactions anywhere. FIs that are the core of the finance industry should be careful about the traffic they are taking in as consumers and implement serious privacy on the databases.