Account takeover (ATO) fraud is growing—in fact, according to research from Sift, ATO fraud incidents increased by 24% in the second quarter of 2024, compared to Q2 2023^[1]. The financial impact is also staggering, with ATO fraud accounting for nearly $13 billion in losses in 2023^[2]. As these attacks become more frequent and sophisticated, it’s crucial to understand how they occur and, more importantly, how to avoid falling victim to them.

In this article, you’ll find out what account takeover fraud is, how to detect it, and what methods you can use to protect yourself. You’ll also learn about virtual cards and how they enable safer online payments.

What Is Account Takeover Fraud?

Account takeover fraud is an attack in which a hacker accesses and takes control of your online account using stolen personal information. Cybercriminals often target accounts at ecommerce stores, subscription services, and financial institutions specifically to obtain your payment card numbers, login credentials, and other data. 

Once the attacker successfully takes control of your account, they can perform fraudulent actions, such as transferring funds, purchasing items, or stealing private data. In many cases, you won’t even realize your account has been compromised until it’s too late. 

How Account Takeover Fraud Happens

Account takeover fraud begins with a cybercriminal gathering enough information to access your accounts. Popular techniques fraudsters use include:

1. Phishing
2. Credential stuffing
3. Malware
4. Man-in-the-middle attacks

Phishing

Phishing is a tactic where cybercriminals trick you into revealing sensitive information like usernames, passwords, and credit card details. They do this through fake emails, texts, or websites that look legitimate, often impersonating trusted brands or service providers^[3]. 

The goal of the fraudulent communication is to create urgency or curiosity, prompting you to click on malicious links or share personal information. For example, attackers might send fake emails pretending to be from a reputable ecommerce store, asking you to log in or update your details on a fraudulent website. 

Because phishing relies on human error and trust, it remains one of the most effective and widely used methods for initiating account takeovers.

Credential Stuffing

Credential stuffing is a technique in which hackers take a stolen username-password combination (often obtained from previous data breaches) and try it on multiple websites to gain unauthorized access to your accounts^[4]. 

This method exploits the fact that many people reuse the same login credentials across different platforms. As such, a hacker only needs to find one valid combination to gain access to your accounts on other platforms.

Malware

Cybercriminals may use malware to infect your device system and expose sensitive information. Common types of malware that malicious actors might use include^[5]:

• Keyloggers—They track every keystroke you make, capturing usernames, passwords, and other personal data as you type it. 
• Trojans—These are often disguised as seemingly harmless files or programs. Once downloaded, they secretly install themselves on your device and steal personal data without your knowledge. 
• Worms—They’re self-replicating and often spread across networks, infecting multiple devices while harvesting your login details from each.

Man-in-the-Middle (MitM) Attacks

In a MitM attack, a cybercriminal intercepts communication between two parties (a user and a website) without either party knowing. The attacker secretly relays or alters the messages, capturing sensitive information^[6].

For instance, during a login attempt, the attacker could intercept your username and password before the information reaches the intended server and gain access to your account. They can use the same method to steal your payment card numbers during a transaction. 

Potential Consequences of Account Takeover Fraud

Account takeover fraud can affect you in several ways, including:

1. Identity theft
2. Financial loss
3. Emotional distress
4. Wasted time and resources

Identity Theft

Account takeover fraudsters often gain access to your accounts by stealing login credentials and other personal information. Once they have control of your accounts, they can use them for more complex fraud, such as identity theft or synthetic identity fraud. This can lead to long-term consequences, including damaged credit scores, mounting debts, criminal charges, and legal fees. 

Financial Loss

A common motive for cybercriminals is to use the stolen financial information to make fraudulent transactions or withdraw funds. While you have liability protections under the Fair Credit Billing Act (FCBA)^[7] and the Electronic Fund Transfer Act (EFTA)^[8], you may not be covered in all cases. 

For instance, with debit cards, your liability depends on how quickly you report the fraud. If you don’t report it within the required timeframe, you could be responsible for some or all of the losses^[9]. Still, many banks offer zero liability for unauthorized charges arising from payment card fraud. 

Emotional Distress

When you experience account takeover fraud, the emotional toll can be significant. You may feel anxious, frustrated, and violated upon realizing your personal information has been compromised. 

The loss of access to key accounts (banking, email, or social media) adds to the stress, as cybercriminals may change login credentials and security settings and make it difficult to regain control. The recovery process can be time-consuming and challenging, contributing to ongoing feelings of uncertainty and vulnerability.

Wasted Time and Resources

Dealing with account takeover fraud often requires significant time and effort. In addition to disputing fraudulent charges, you may need to file police reports, place holds on credit reports, and gather and submit various forms of documentation. This process often involves lengthy calls with customer service and can disrupt daily life as you work to resolve the situation. 

How To Detect Account Takeover Fraud

Typical signs your account may have been compromised include:

1. Suspicious account activity
2. Unrecognized login attempts
3. Suspicious emails or text messages

Suspicious Account Activity

Watch for any unauthorized transactions or unfamiliar spikes in account activity. Requests to change your password, billing address, or payment methods can also indicate that a hacker is trying to take control of your account. If you notice any of these activities, check your account details, such as your password or contact information, to see if they’ve been altered. 

Unrecognized Login Attempts

Multiple failed login attempts may signal an attempt to breach your account. Be especially cautious if these attempts come from unfamiliar locations or at a time when your account is typically inactive.

Suspicious Emails or Text Messages

An increase in phishing emails or texts, particularly those asking for personal information, can be a red flag for an account takeover attack. It’s important to be wary of all digital communication from unknown senders, especially those containing links or attachments. Remember, legitimate companies will never ask for sensitive information like usernames, passwords, or financial details via email or text.

How To Prevent Account Takeover Fraud

Below are strategies you can adopt to safeguard your accounts and the personal information held in them:

• Monitor financial accounts regularly—Check for unauthorized transactions and set up alerts for unusual activity like large purchases, which can help detect fraud early.
• Set up multi-factor authentication (MFA)—Enable MFA on your accounts to add an extra layer of security. Use a second form of verification, like a fingerprint scan or a one-time password (OTP) code sent to your phone or email to access your accounts.
• Practice password hygiene—Create strong, unique passwords for each of your accounts and change them frequently. A password manager like Keeper, LastPass, or 1Password can help you generate and store robust passwords and alert you whenever your credentials are compromised.
• Beware of phishing scams—Never click on suspicious links or provide sensitive information in response to unsolicited emails, texts, or phone calls. 

If you want to increase the security of your payment card details, use virtual cards the next time you shop online. Virtual cards protect your actual payment card information with random card numbers, expiration dates, and CVVs, keeping it safe from potential hackers. 

While your bank might offer virtual cards, opting for a specialized provider like Privacy gives you access to advanced card controls that help protect your sensitive data and funds. 

Reduce the Risk of Financial Fraud With Privacy Virtual Cards

After connecting your bank account or debit card to it, Privacy lets you generate unique and reusable virtual cards for your online payments. Privacy Cards work like regular payment cards while helping protect your real financial information against theft if a merchant suffers a data breach. 

You can generate three types of virtual cards designed for different use cases:

You can set spending limits and pause or close your Privacy Cards anytime without affecting the linked funding source. Privacy will decline transactions that go over your preset amount and block further charge attempts on a paused or closed card, reducing the risk of hidden fees, double billing, and accidental charges.

Privacy Account and Fraud Protection

Privacy also provides comprehensive account security and payment fraud protection through:

• Two-factor authentication (2FA)—Privacy lets you choose between email, SMS, and authentication apps (Authy, Google Authenticator, or 1Password) as the second form of authentication.
• Transaction alerts—Privacy sends you instant notifications whenever your virtual cards are used or declined, helping you spot potentially suspicious activity.
• Fraud protection—If you encounter a fraudulent charge, you can report it to Privacy. Privacy’s internal team will investigate the transaction and file a chargeback if you have a valid claim.

Additional Convenience Features To Enjoy

Privacy offers multiple features to make managing your virtual cards and online shopping experience seamless:

How To Get Your First Privacy Virtual Card

To join Privacy’s 250,000+ satisfied customers, you only need to complete these four steps:

1. Visit the signup page
2. Provide the required details to verify your identity
3. Link a funding source (bank account or debit card)
4. Request and generate a virtual card

Privacy offers four plans to suit different needs. The Personal plan, which is free for domestic transactions, lets you generate up to 12 new Merchant-Locked and Single-Use Cards. It also allows you to:

• Set spending limits
• Pause and close virtual cards
• Access the mobile app and browser extension

If you want more virtual cards (up to 60 per month) and additional features such as Category-Locked Cards, fee-free international transactions, Priority support, and 1% cashback on eligible purchases (totaling up to $4,500 per month), opt for Plus ($5/month), Pro ($10/month), or Premium ($25/month).

References

^[1]Sift. https://sift.com/index-reports-account-takeover-fraud-q3-2024/, sourced March 28, 2025

^[2]AARP. https://www.aarp.org/money/scams-fraud/identity-fraud-report-2024/, sourced March 28, 2025

^[3]Phishing.org. https://www.phishing.org/what-is-phishing, sourced March 28, 2025

^[4]OWASP. https://owasp.org/www-community/attacks/Credential_stuffing, sourced March 28, 2025

^[5]Cisco. https://www.cisco.com/site/us/en/learn/topics/security/what-is-malware.html#:~:text=Malware%2C%20short%20for%20malicious%20software,spyware%2C%20adware%2C%20and%20ransomware., sourced March 28, 2025

^[6]Imperva. https://www.imperva.com/learn/application-security/man-in-the-middle-attack-mitm/, sourced March 28, 2025

^[7]FTC. https://consumer.ftc.gov/articles/using-credit-cards-and-disputing-charges#:~:text=Federal%20law%20(the%20Fair%20Credit,open%2Dend%20credit%20accounts).&text=you%20can%20dispute-,Unauthorized%20charges.,for%20unauthorized%20charges%20to%20%2450, sourced March 28, 2025

^[8]Federal Reserve. https://www.federalreserve.gov/boarddocs/caletters/2008/0807/08-07_attachment.pdf, sourced March 28, 2025

^[9]FTC. https://consumer.ftc.gov/articles/lost-or-stolen-credit-atm-and-debit-cards, sourced March 28, 2025

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