Although the term “account takeover fraud” may be well-known in the cybersecurity field, there are still some subtleties to its avoidance in the e-commerce industry. Retailers have always been concerned about chargeback-related payment fraud systems. This occurs when a customer uses a credit card to make an online purchase and wants a refund from the bank that issued the card despite obtaining the products or services they requested. This sort of fraud, more commonly referred to as friendly fraud, makes it challenging for retailers to discern between loyal consumers and fraudsters. The risk of account takeover is rising since e-commerce platforms have weak security infrastructures.
Customers who shop online expect ease, yet they must constantly go through various security checks to verify their identity and purposes. E-commerce merchants should take immediate action to ensure their platforms are safe and usable to keep customers online, keep them from switching to rivals, and reduce cart abandonment rates.
Ecommerce merchants can implement account takeover prevention tools to mitigate risks and prevent revenue loss.
Standard account takeover:
Account takeover is a type of fraud and identity theft. It occurs when someone accesses a customer’s account using their login information and executes unauthorized transactions on their behalf. This covers any internet account, such as a person’s bank account, email, credit card, etc.
Other strategies include buying personal data, security codes, or passwords obtained from thieves.
According to dark web audits, the number of account credentials available on the black market increased 300% during the year 2018 and now stands at over 15 billion.
Once the hacker has access to the account, they can use it to make purchases on the online store, withdraw money, alter the account’s password, and access other funds belonging to that particular client. They directly bear the costs, but shops also suffer revenue loss and reputational damage due to their lax security when customers opt for rivals with more dependable online platforms.
Hackers now publish bots that may be machine-learned-programmed to carry out thousands or millions of account takeover attempts every minute. Credential stuffing attacks that allow for account takeover are among the four most common harmful bot assaults encountered in e-commerce, according to Gartner (2021).
Users’ disregard for using strong passwords and the ease with which stolen credentials can be accessed via the dark web has given hackers a “commercial opportunity.” A rise in malicious bots and account takeovers is the result. No matter the size or sector of the e-commerce platform, all websites are vulnerable to these assaults if not secured.
How Bots Affect E-Commerce Retailers’ Losses
More than a quarter of e-commerce merchants aren’t prepared or ready to manage account takeover attacks, according to Riskified’s data from the year 2021. As a result, two out of every three online shoppers hunt for alternatives after encountering account takeover and leave e-commerce shops. Similar to how e-commerce increased during the epidemic, fraud also increased. Account takeover fraud accounted for 43% of all attempts to commit fraud in the United States, ranking it first through third among online retailers in the year 2020.
According to reports, account takeover fraud has increased by 378% since the pandemic’s start. According to Juniper’s research (2020), fraud will cost the e-commerce industry $17 billion in 2020. They also forecast that this amount will surpass $25 billion in three years, which poses a serious problem for online e-commerce platforms.
As a result of merchants’ failure to address both security and convenience for their customers, account takeover fraud through bots is causing friction to the consumer experience on e-commerce platforms, losing both customers and revenue.
Use bots detecting tools to reduce the workload for real consumers:
E-commerce platforms should prioritize reducing the necessity for user tests of humanity and moving the separation of the bot from human analysis to the background. As a result, it promotes greater consumer involvement, loyalty, and trust in the online business.
Implement adaptive authentication for activities with different levels of risk:
Two-factor or multi-factor authentication can be implemented using adaptive authentication. Based on the customer’s preferences and risk profile, it chooses particular authentication elements and, as a result, adapts authentication techniques to the circumstance.
Such a strategy has two key advantages. Users engage in seamless interactions while purchasing online, on the one hand. On the other side, the online merchant can assess and analyze information by separating legitimate clients from malicious bots. This is accomplished without disclosing to the fraudsters the risk-mitigating techniques.
Software that protects against and detects account takeover attempts can spot more complex bot attacks. Newer 4th-gen bots that mimic human behavior are frequently used in ATO attempts, making them considerably harder to spot. Advanced Account Takeover prevention solutions are required to monitor your website for suspicious activity successfully and attempt behavior-based detection to identify complex ATO attempts.
Any website and business offering credential-protected accounts must be able to recognize account takeover attempts and successfully stop them. When a website is compromised, it can decrease consumer confidence and cause irreparable harm to your brand’s reputation.