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Account Takeover: Protect Your Online Business and Your Customers

There is one thing you can expect from online fraudsters, and that is to expect the unexpected. Fraudsters waste no time in changing their approach and appearance in hopes of attacking businesses and their customers. This season, the threat to worry about is account takeover.

Account Takeover Fraud

What is account takeover fraud? Far from a new technique, this form of financial identity theft involves the unauthorized use of another person’s account information (e.g. credit card) to obtain products and services using that individual’s existing accounts. Once they have this data, fraudsters often use the information at the point of sale, or they move on to access the individual’s accounts online, through the postal service or over the phone.

According to an analysis by Signifyd of billions of transactions over a two-year period, account takeover is responsible for an 80 percent increase in fraud losses between 2016 and 2017. (Fraud losses include both successful fraud attempts and orders declined due to the suspicion of fraud.)

Once a fraudster obtains the credentials necessary to take over an account, he or she has complete control. Passwords can then be changed, so the rightful owner is locked out. Shipping addresses can be changed to take over the delivery of products. The fraudster has the ability to change any aspect of the account.

The Risk to E-Commerce Merchants

More and more e-commerce merchants are being affected by the massive amounts of personal data being hacked. Last year, account takeover losses rose from .25 percent to .45 of total orders. This increase has many e-commerce cybersecurity experts seriously concerned. To make matters worse, most consumers use the same username and password across all their accounts; a habit fraudsters are fully aware of and take full advantage of.

The information fraudsters obtain is then sold on the dark web to criminals who use advanced technology to access credit card accounts, online shopping accounts, apply for new credit cards and more. Criminals then make purchases and complete cash advances (and worse) with the stolen information. For the consumer, there are both short-term and long-term impacts. Fortunately, credit card companies do not hold violated cardholders responsible.

On the other hand, merchants are not so lucky; their losses go beyond the cost of the lost merchandise and associated revenue. Account takeover fraud hurts merchants from many angles:

  • Monetary fraud loss – Because this payment fraud is outright theft, there is no recourse with a chargeback case (or other measures) that would allow the merchant to recoup losses.
  • Cardholder distrust – Unfortunately, fraud can lead to cardholder mistrust, even though it is not the merchant’s fault. The consumer simply associates the fraud incident with that particular merchant and no longer feels comfortable doing business with them.
  • Brand damage – It can be difficult for a merchant to distance themselves, which can result in considerable damage to brand and reputation.

How to Protect Your E-Commerce Business

In addition to monitoring customer buying habits, there are several other ways you can protect your business from fraud. First, pay close attention to unusually high purchases, a change in customers’ address, purchases made from a new or unknown device, purchases from an unrecognized address, etc. It is also a good idea to create a proactive customer service team that takes the time to contact cardholders when they notice unexpected purchasing activity.

You can also inquire after chargeback insurance providers. With, for example, the majority of incidents will be covered with your merchant account through credit card chargeback insurance. This coverage applies to a number of different circumstances, including:

  • A credit card lost or stolen and used before the cardholder notices the card is missing (and before they can report it).
  • Credit card number generators or those that counterfeit any plastic cards.
  • Post purchase or “ship to” information changes.
  • Signature mismatch or a signature is not on file at all.

Merchants are also reimbursed for:

  • The cost of the stolen service or the stolen product from someone else using a card that does not belong to them.
  • The loss of the profit from the theft.

Do you need a chargeback protection and prevention program to protect your business and its customers from fraud like account takeover fraud? Contact the team of experts at EMB to get more information and/or start the application and setup process.
*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance, it is an alert system.