Account takeover (ATO) fraud detection solution is a serious problem that can impact banks and fintechs in various ways. From the customer perspective, it results in financial losses that wreak havoc on personal or business finances. It can also cause identity theft, which can linger for years and lead to credit issues that could hurt future credit applications or loan requests. Moreover, it can erode customer trust and brand reputation, and lead to a high churn rate that can cost businesses dearly.

From the bank or fintech perspective, it increases operational costs for fraud detection and mitigation. It can also create regulatory headaches if the attacks are widespread and substantial. For example, it can lead to fines and legal issues, and if the attacks are from large or small banks, they can damage their reputation.

Understanding Account Takeover Fraud: A Primer

To mitigate the risks of account takeover, organizations should implement strong login protections that require multifactor authentication. They can also use behavioral analytics to identify abnormal patterns that indicate a fraudster is trying to gain access to an account. It is essential to monitor transactions in real-time so risk teams can detect suspicious activity, and stop fraudsters in their tracks.

Fraudulent transactions from account takeovers result in chargebacks, which can lead to a significant increase in payment providers’ processing fees. They also lead to a loss of revenue from customers who no longer shop with the business, resulting in lower customer lifetime value. The most devastating impacts, however, come from the loss of a business’s good reputation and the loss of loyal customers.