Account Takeover (ATO) Fraud: What Is It and How It Happens

  • By Greg Brown
  • Published: Aug 02, 2023
  • Last Updated: Aug 02, 2023

account takeover fraud

The impacts of account takeover fraud are genuine. According to the Javelin 2022 Identity Fraud Study, 22% of U.S. adults have been victims of account takeover attacks.

This type of fraud can have devastating financial and personal consequences when criminals gain access to accounts and exploit them for theft and abuse. Understanding account takeover and how it happens enables individuals and businesses to better detect and prevent these schemes.

Account takeover (ATO) refers to online fraud where a malicious actor successfully logs into a user's account by acquiring legitimate credentials. Once logged in, the fraudster can leverage the account for criminal purposes, such as making unauthorized transactions.

ATO attacks have been on the rise due to an increase in significant data breaches that provide fraudsters with extensive collections of usernames and passwords. The ease of accessing stolen credentials online and the potential profits from account misuse incentivize criminals to undertake ATO fraud.

By learning about the methods bad actors use and how to identify signs of account misuse, individuals and businesses can take critical steps to hinder account takeover attempts. With vigilance and preventative tools, the prevalence of successful attacks can be reduced.

But it first requires understanding precisely what is account takeover fraud in the modern threat landscape.

What is Account Takeover Fraud (ATO)?

In simple terms, account takeover fraud, often abbreviated as ATO, refers to identity theft, where a criminal gains unauthorized access to someone's existing accounts. The fraudster can "take over" control of the account by using stolen or guessed login credentials to impersonate the legitimate user.

ATO fraud differs from creating fake accounts, as the fraudster compromises real accounts belonging to consumers and businesses. Victims are often unaware their accounts have been infiltrated until they notice unrecognized activities, charges, or disappearing funds.

Account Takeover Statistics Overview

The scope of losses and breaches attributed to account takeover fraud reveals why this cyber threat tops security concerns today. In 2021 alone, account takeover losses reached $11 billion in the U.S. This marked a staggering 90% increase compared to the figures recorded in 2020.

Account takeover fraud has been rapidly escalating in recent years. CyberNews reported a 250% year-over-year surge in 2020. Financial firms saw a 72% spike in attacks that same year, with a 282% increase in Q2 2021.

As more commerce and financial services move online, ATO attacks become more accessible and profitable. By 2025, it's predicted that account takeover fraud losses will reach almost $17 billion globally.

These account takeover fraud statistics underscore an urgent need for action. Implementing more robust security controls, avoiding password reuse, enabling multi-factor authentication (MFA), and training employees to spot these fraud attempts are key prevention steps.

How Does Account Takeover Fraud Work?

Account takeovers start with criminals capturing a victim's login credentials through phishing sites, malware infections, or purchasing stolen data online. Major third-party data breaches provide vast troves of usernames and passwords to fuel credential-stuffing attacks.

Once fraudsters acquire the login information, they gain illegal access to accounts by impersonating legitimate users through easily guessed or reused passwords.

The accounts most frequently targeted in account takeover schemes are financial in nature. Typical forms of financial account takeover fraud include bank account fraud, credit card fraud, mobile payment fraud, and e-commerce account fraud.

By hijacking financial accounts, criminals can initiate unauthorized transfers, make fraudulent purchases, steal funds directly, or sell compromised account credentials while avoiding detection. A compromised PayPal credential, for example, may sell for over $1,000 on dark web marketplaces due to its monetization potential.

Types of Accounts That Get Attacked

While any online account with sensitive data or financial assets provides an attractive target, fraudsters tend to focus their account takeover efforts on specific industries and account types. Understanding which accounts get targeted frequently can help users and businesses strengthen account takeover prevention and protection.

Below is a table providing insights into the common types of accounts targeted by ATO fraud, the methods used to compromise them, the consequences of such attacks, and real-life account takeover fraud examples.

Type of Account

Common Ways of Attack


Real-Life Examples

Financial Accounts (bank, credit card, etc.)

Phishing, Credential stuffing, SIM swapping

Funds stolen, Fraudulent transactions

Fraudulent wire transfers, Unauthorized card charges

Email Accounts

Phishing, Password spraying

Identity theft, business email compromise (BEC) scams

W-2 and personal info theft, Vendor invoice scam

Social Media Accounts

Credential stuffing, Phishing messages, or fake login pages

Reputation damage, Data theft, Spreading misinformation

Fake posts or messages, Posts used for fraud

Retail Accounts

Phishing, Credential stuffing

Merchandise theft, Reshipping schemes

Large purchases for resale, Items shipped to different addresses

Healthcare Accounts

Phishing, Social engineering

Medical identity theft, Prescription fraud

Filing fraudulent claims, Obtaining unauthorized prescriptions

Cryptocurrency Exchanges Accounts

Credential stuffing, SIM swapping

Theft of cryptocurrency holdings and funds, financial losses

Hackers trick users into providing login credentials and stealing cryptocurrency funds from exchanges.

Methods Used in Account Takeover Fraud

ATO fraud is a constantly evolving threat, with cybercriminals employing numerous methods to gain unauthorized access to user accounts. While there are various techniques used in ATO attacks, the following have become particularly prevalent due to their effectiveness:

Credential Stuffing Attack

Credential stuffing, sometimes known as list cleaning, password spraying, or breach replay, is one of the most common methods for gaining account access in takeovers.

In credential stuffing attacks, cybercriminals leverage databases of stolen login credentials against multiple online services or automated tools or bots to test lists. This strategy targets individuals who utilize identical usernames and passwords across various platforms, providing criminals with a more straightforward means of illicitly accessing their accounts.

To protect yourself against this attack, use strong and unique passwords for each account; avoid the practice of password reuse across multiple platforms. By employing distinct passwords, others remain safeguarded even if one account is compromised.

Secondly, enable MFA for an extra layer of protection. It requires additional verification beyond just a password, making it harder for attackers to breach your accounts.

Lastly, stay informed about data breaches and security incidents that may affect the services you use. If a platform where you hold an account suffers a data breach, promptly change your password as a precaution, even if there are no signs your account was compromised.

ATO From Phishing

In ATO fraud from phishing, attackers send fraudulent emails, messages, or communications that appear to be from legitimate sources, such as banks, online services, or trusted organizations. These messages often use enticing language and create a sense of urgency or fear to prompt immediate action from the victim.

Within these deceptive communications, the criminals include links to fake login pages that mimic the appearance of genuine websites. When victims click on these links and enter their login credentials, they unwittingly hand over their usernames, passwords, and other sensitive data directly to the fraudsters.

To defend against ATO from phishing attempts, exercise caution and skepticism when receiving unsolicited messages or emails. Always verify the authenticity of the communication by cross-referencing with the official website or directly contacting the organization through trusted channels.

Avoid clicking on suspicious links, especially those that urge immediate action or claim urgent security concerns. Instead, manually enter the website address in your browser to ensure you are accessing the legitimate site.

Social Engineering Attacks

Unlike technical hacks, social engineering attacks use human psychology to deceive individuals and gain unauthorized access to their accounts. Aside from phishing, some standard methods used in social engineering attacks include pretexting, baiting, and impersonation.

In pretexting, attackers craft a false narrative or scenario to gain the victim's trust. Posing as co-workers, customer support representatives, or authority figures, they manipulate individuals into revealing sensitive data.

On the other hand, baiting lures victims with tempting offers like free downloads or gifts, leading them to download malware or disclose login credentials unknowingly.

Another method involves cybercriminals impersonating individuals or organizations to deceive victims into sharing sensitive information, using the guise of colleagues, friends, or even family members to exploit trust.

To defend against social engineering attacks, be cautious and skeptical, especially when receiving unsolicited messages or emails. Be wary of divulging sensitive information to unknown or unverified sources.

Always verify the legitimacy of requests or communications by directly contacting the supposed sender through trusted means. Be cautious of sharing personal information on social media platforms, as attackers can use this data for tailored social engineering attacks.

Man in the Middle Attack (MitM)

During a Man-in-the-Middle attack, the cybercriminal gains access to the communication channel between the user's device and the intended website or service. It is often accomplished through various methods, such as setting up rogue Wi-Fi hotspots or exploiting vulnerabilities in public Wi-Fi networks that lack proper security measures.

Once the attacker has inserted themselves into the communication flow, they can silently capture and record all the data transmitted between the user and the legitimate server. This data can include login credentials, personal information, financial details, and even one-time passwords (OTPs) used for two-factor authentication.

To defend against Man-in-the-Middle attacks, exercise caution when connecting to public Wi-Fi networks. Avoid accessing sensitive accounts or conducting financial transactions while connected to unsecured hotspots.

Whenever possible, use a Virtual Private Network (VPN) to encrypt your internet traffic and add an extra layer of security when using public Wi-Fi. Additionally, ensure that the websites you access are secured with HTTPS, which provides encryption and helps prevent MitM attacks.


In a SIM-swapping attack, fraudsters use personal data from breaches or social media to pose as victims and convince mobile providers to transfer phone numbers to attacker-controlled SIM cards.

By hijacking the victim's phone number, attackers can intercept one-time passcodes for two-factor authentication and access financial accounts and personal data.

To protect yourself against SIM-Swapping attacks, be cautious about sharing personal information on social media or public platforms to minimize the data available to attackers.

Furthermore, opt for more potent authentication methods, such as app-based authentication or hardware security keys, in addition to SMS-based OTPs for enhanced account security.

You can also inquire about additional security measures offered by your mobile service provider, such as setting up PINs or passphrases to prevent unauthorized SIM swaps.

Lastly, regularly monitor your mobile service and account activity for unexpected changes or suspicious behavior. If you suspect an unauthorized SIM swap, promptly report it to your mobile provider for immediate action.


In XSS (Cross-Site Scripting) account takeover attacks, hackers exploit vulnerable web apps by injecting malicious scripts. These scripts silently execute when users visit infected pages, stealing login credentials and cookies for account access.

When victims visit the compromised web page, the malicious script runs in their browsers without their knowledge, extracting the necessary authentication information. Armed with the stolen credentials or session tokens, the attackers can masquerade as legitimate users and access their accounts on the target website or application.

To defend against XSS to ATO attacks, prioritize secure coding practices and input validation. Employing security mechanisms like Content Security Policy (CSP) can help mitigate the risks associated with XSS attacks. You can also take precautions by keeping your web browsers and security software up to date, as this can help prevent the execution of malicious scripts.

Impacts of Account Takeover

how to detect account takeover fraud

Successful account takeovers unleash immediate and downstream consequences on victims ranging from personal stress to financial damages. The most direct impact is the fraud and theft enabled by criminals accessing the hijacked account. Funds are stolen, charges are made, and new credit cards or loans are opened using the victim's identity.

Beyond direct account abuse, takeovers expose sensitive personal and financial data. It fuels identity theft as criminals leverage stolen information for additional scams and fraud.

Recovering from an account takeover also involves significant time and effort. Changing passwords, disputing fraudulent charges, and correcting records across other services create a headache for victims. And the stress of financial uncertainty, identity theft worries, and account vulnerability takes a toll on mental health.

For businesses, takeovers damage customer trust, revenue, and reputation.

How to Detect Account Takeover Fraud?

If you're concerned about account takeover fraud or have experienced it firsthand, staying informed and vigilant is crucial in safeguarding your financial security. Detecting ATO fraud is vital in protecting yourself and your hard-earned assets from potential harm. Let's explore some practical tips below to help you identify red flags and stay one step ahead of cybercriminals.

  • Keep a Close Eye on Your Accounts: Regularly monitor your account activity for unusual transactions, unexpected password changes, or logins from unfamiliar devices or locations. If something seems off, don't hesitate to investigate further.
  • Set Up Account Alerts: Enable notifications for critical account activities, such as logins, password changes, withdrawals, and new payee additions. Alerts are your early warning system, alerting you to real-time suspicious activities.
  • Review Your Statements: Take the time to review your account statements and transactions carefully. Watch out for unauthorized charges or suspicious activities indicating an account takeover attempt.
  • Trust Your Instincts: If you feel something isn't right with your account, don't ignore it. Trust yourself and promptly report any concerns to the responsible institution. Your quick action can make a significant difference.
  • Stay Informed: Keep yourself updated about the latest trends and tactics cybercriminals use in ATO fraud. Knowledge is a powerful tool in defending against such threats.

By understanding how to detect account takeover fraud or implementing these proactive measures, you empower yourself to identify such fraud early and respond quickly to safeguard your personal and financial well-being.

How Does Account Takeover Fraud Differ From Identity Theft?

Understanding how ATO fraud and identity theft vary provides essential insights into their distinct threats.

The core difference lies in the account that criminals target. With account takeover scams, fraudsters gain control of the victim's existing accounts by stealing their login credentials. It allows them to impersonate the legitimate user illegally. Identity theft instead relies on personally identifiable information to open new fraudulent accounts in the victim's name.

For consumers, account takeovers pose the risks of hijacked financial accounts, stolen personal data, and downstream identity theft. Businesses also face brand reputation damage and loss of customer trust when accounts are compromised. Identity theft centers around creating unauthorized accounts, destroying credit, and fighting fake liabilities.

While distinct crimes, there is sometimes overlap between the two. Data harvested during an account takeover may enable follow-on identity theft. And fraudsters may leverage a stolen identity to assist in account takeover access.

Protecting Yourself from ATO Fraud is Important

Account takeover fraud remains a severe threat as life shifts online, leaving people and businesses vulnerable to phishing, stolen credentials, and software exploits.

While attackers develop new techniques, the best defense is vigilance, monitoring accounts, enabling security protections, and verifying requests. Understanding which accounts get targeted also helps focus efforts.

Individuals and companies can substantially lower risk by staying informed on the latest schemes, proactively securing accounts, and swiftly detecting unauthorized access.

As the threat landscape expands, we must collectively strengthen our readiness through technology, education, and partnerships among security professionals, providers, and the public. With a deeper understanding of how these takeovers occur, we gain the power to halt their progress effectively.

To continue building your account security knowledge, explore the helpful resources available at IDstrong. IDstrong offers detailed guidance on prevention, detection, recovery, and other critical facets of fighting against account takeover fraud in its ever-evolving forms.


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