What Is Account Takeover Fraud and How to Protect Yourself From It

Account takeover fraud is a growing problem in the United States. It’s estimated that over $2 billion has been lost because of account takeover fraud, with an average loss of $6,000 per incident. To protect yourself from this type of fraud, you need to understand how it works. This blog post will better introduce you to account takeover fraud to protect yourself against this growing crime trend.

What is account takeover fraud?

Account takeover fraud occurs when a criminal obtains your credit card number, debit card number, or online account credentials by some means and uses those account credentials to make fraudulent purchases. Many times this type of fraud is committed overseas. Other times it’s committed domestically by someone who has access to your personal information and can easily impersonate you (i.e., a family member, close friend, or co-worker).

Typically account takeover fraud will occur online or with the purchase of goods from an online retailer. In either situation, the criminal uses your actual credit card number to make purchases, even though it’s not you making these purchases. Often the scammer doesn’t need to know your total credit card number to make fraudulent purchases. The criminal will use your account numbers or guess your account information (the expiration date and security code).

How does it work?

The following is an example of how to account takeover fraud might occur:

A criminal obtains your credit card number by stealing your wallet, hacking into an email account, or using other means. The criminal then contacts an online retailer and orders goods using your credit card number but gives them a shipping address different from your actual billing address. When the items are shipped out, they include a receipt that shows the criminal’s name and not yours.

The criminal may also use stolen merchandise return information to get products shipped to them for free. The criminal will order items, receive the shipment in his name, and return the items in your name. This is an easy way to scam stores out of money, merchandise and it’s also an excellent way to get gift cards sent to you if done often enough?

Who can be affected by account takeover fraud

Anyone who owns their credit card, debit card, or another financial account can become a victim of this crime. All it takes is one piece of personal information that falls into the wrong hands – whether it’s an actual physical card or just your account credentials – and you could be at risk of having your identity stolen.

The consequences of account takeover fraud

The consequences of this type of fraud can be very harmful. Not only are you responsible for paying off any debt made on your account, but the thief will also typically have a reasonable amount of time to use your credit card or make purchases before you even notice there is a problem with your account. This usually happens when your billing statement comes in the mail.

By the time you are aware of any suspicious activity, there have likely been additional purchases made. Once you are experiencing fraudulent charges, the process for disputing them is usually strenuous and painful. This means you will have to do a lot of work to fix this problem. It can take months or even years before you are reimbursed for what happened.

How to protect yourself

The first step you should take is to obtain a credit report. You can get yours for free at annualcreditreport.com. By bringing your free credit report, you’re able to see if any accounts have been opened in your name without your knowledge or consent, which could be an indicator of account takeover fraud. Also, you’ll see if anyone has been using your Social Security Number to open accounts under your name. The credit bureaus will investigate any suspicious activity and notify you of the results.

Suppose you find any evidence of account takeover fraud. In that case, you must report this activity immediately to the appropriate credit bureaus and financial institutions that issued any of the accounts that may have been compromised.

It would help if you remained vigilant about checking your credit report on an annual basis so you can identify any suspicious activity right away. It takes most people several months to discover account takeover fraud, which is why it’s necessary to monitor your credit on an ongoing basis.

If you see any evidence of fraudulent activity, make sure you file a police report. The sooner you act after becoming aware of the suspicious activity found on your credit report, the more likely authorities will be able to apprehend the criminals before they can cause further damage.

Here are other tips that will help you protect yourself from account takeover fraud:

  1. Limit the amount of personal information that you make public. If a criminal is going to impersonate you, they need as much personal information about you as possible, so don’t give it out freely. For example, never put your full name and address on a message board or social media post. If you’re not comfortable having your home address listed in a public place, don’t do it.
  2. When buying online, use a credit card instead of a debit card, if possible. Credit cards offer more consumer protections than debit cards do. Debit card transactions are often reversible, whereas credit card transactions are not. With credit cards, you also have the option of disputing a charge with your bank if something goes wrong (i.e., the product is never delivered, the order was placed using your account without permission, etc.).
  3. Be proactive about checking your financial statements and monitoring your accounts online for unauthorized activity. Suppose someone does illegally obtain access to your financial information. You want to know about it as soon as possible to take action if needed.
  4. Find yourself an account takeover fraud prevention strategy. None of the tips mentioned above can guarantee you 100% protection from account takeover. There is always a human factor that can expose your information. So, it is much easier and safer to have professionals that will do everything for you and you can focus on more important things.

Tips for preventing account takeovers?

Anyone that has access to your personal information is a threat for account takeover or other types of online theft. If you suspect that someone has obtained unauthorized access to your accounts, contact the financial institution involved and file a report with the police. Filing a report can be done even if there was no monetary loss, as sometimes, just the act is enough grounds for filing.

Steve Max
Steve Maxhttp://www.webzando.com/
A long time digital entrepreneur, Steve has been in digital marketing since 2010 and over the past decade he has built & executed innovative online strategies for leading companies in car insurance, retail shopping, professional sports and the movie & television industry.


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