Account Takeover Fraud in Retail: How to Prevent Online Attacks

Why is the retail industry a target for account takeover fraud?

1. A Rich Data Environment

Retailers typically store large amounts of sensitive data, including customer personal information, payment details, and purchase history. This treasure trove of data makes them an attractive target for many different types of e-commerce fraud, because cybercriminals want to exploit that valuable information for financial gain.

2. High Transaction Volume

The retail industry is characterized by high volumes of online transactions, especially with the continued growth of e-commerce platforms. This high transaction volume explains the prevalence of bot threats in retail, because it gives cybercriminals many opportunities to launch automated attacks aimed at compromising customer accounts.

3. Ease of Access

With the explosive growth of online shopping channels and the widespread adoption of digital payment methods, retail accounts have become easier targets for cybercriminals. Additionally, the convenience of single sign-on and social login features may accidentally simplify the process for attackers to gain unauthorized access to customer accounts.

These reasons underscore the importance of e-commerce fraud prevention software and other robust cybersecurity measures to protect sensitive customer information.

What are the consequences of account takeover for retailers?

A successful account takeover (ATO) attack can have far-reaching consequences for any retailer, regardless of its size. Here are the key ramifications:

• Financial Losses: ATO attacks lead to fraudulent transactions, chargebacks and refunds, and increased operational costs from remediation efforts. Combined, these losses can erode a retailer’s profit margin.
• Damage to Reputation: Customers expect retailers to protect their personal and financial information. A successful ATO attack breaks that trust and leads to a drop in existing customers and fewer new customers. Rebuilding that trust takes time and effort.
• Customer Impact: Customers whose accounts have been compromised will feel inconvenienced, frustrated, and anxious as they navigate the fallout of unauthorized transactions, account lockouts, and worries about identity theft.
• Regulatory Compliance: Retailers will face regulatory scrutiny and legal repercussions if they fail to adequately protect their customers’ data and privacy. This non-compliance can result in heavy regulatory fees and legal costs.
• Long-Term Business Implications: An ATO incident will negatively impact a retailer’s market positioning and competitiveness, because it will be harder to convince new customers and retain existing customers.

In summary, the consequences of ATO attacks in the retail industry extend beyond the immediate financial losses. They also lead to reputational damage, dissatisfied customers, regulatory scrutiny, and other long-term business implications.

Proactive measures like payment fraud detection can detect and mitigate ATO attacks. Such cybersecurity measures become a must-have for retailers who want to safeguard their operations, reputation, and bottom line.

Common Methods Used for Account Takeover in Retail

Phishing Attacks

Cybercriminals try to obtain user credentials through phishing attacks like email phishing or SMS phishing (smishing), where they send deceptive emails or texts to trick recipients into clicking malicious links or providing their account credentials.

Credential Stuffing

Cybercriminals either reuse stolen credentials from data breaches or the dark web or use sophisticated automated tools to find their way into user accounts. They often do so at scale, targeting multiple retail platforms simultaneously.

Brute Force Attacks

Similar to credential stuffing, cybercriminals use automated scripts or tools to systematically guess login credentials, by trying multiple combinations of usernames and passwords until a match is found. They often do this with precompiled lists or commonly used passwords or dictionary words (called a dictionary attack) to expedite the brute force process and increase their chances of success.

Account Takeover through Social Engineering

Cybercriminals sometimes impersonate legitimate customers or support representatives to trick retail employees or customer service agents into disclosing account credentials or resetting passwords. Alternatively, sometimes they exploit lax verification processes or inadequate authentication mechanisms to fraudulently reset passwords or go around security controls.

Malware and Keylogging

Cybercriminals use malware to infect devices and capture sensitive information entered by retail customers. For example, keylogging software can silently record keystrokes entered by the users of an infected device, capturing all kinds of confidential information without their knowledge.

Network Interception Attacks

Cybercriminals can intercept and manipulate the communication between retail customers and retailers themselves, for example by exploiting vulnerabilities in unsecured wifi networks or compromised routers or by hijacking authenticated sessions to bypass authentication mechanisms.

Preventing Account Takeover Fraud in Retail

1. Implement Multi-Factor Authentication (MFA)

MFA requires users to provide multiple forms of authentication to access their accounts, such as passwords, one-time codes sent via SMS or email, and biometric authentication. This extra layer of protection often eliminates the risk of ATO even if someone’s login credentials have been compromised.

2. Enforce Strong Password Policies

Nudge users towards strong unique passwords by enforcing a minimum length, complexity, and diversity. Additionally, prompt them to update their passwords regularly to minimize the risk of compromised credentials due to data breaches or leaks.

3. Use Fraud Detection Tools

Fraud detection solutions leverage machine learning to analyze user behavior and identify unusual activities that may indicate ATO attempts. It’s important to always keep an eye on unusual login activities, multiple failed login attempts, or sudden changes in account activity.

4. Enable IP Geolocation Filtering

Restrict access to user accounts based on a user’s IP geolocation. Additionally, block login attempts from known regions of malicious activity or regions where you don’t do business. Even better, use dynamic geolocation filters that adjust security controls based on evolving threat intelligence and risk profiles.

5. Use ATO Protection Software

Specialized ATO protection software like DataDome will proactively defend your business and its users against account takeover fraud and other bot threats in retail that target websites, mobile apps, and APIs.  DataDome’s advanced bot management capabilities can identify and mitigate malicious bots trying to exploit vulnerabilities, abuse your APIs, or engage in other fraudulent activities. 

DataDome is continuously updated with the latest insights into emerging threats and attack vectors, so retailers always stay ahead of the newest and most sophisticated cybersecurity threats.

Real-Life Examples of ATO in Retail

Amazon Enhances MFA Requirements

Amazon’s popular cloud service AWS announced that they were strengthening their security posture by requiring the use of MFA for the root users of AWS management accounts. While many retailers are still cautious about forcing customers into MFA, this simple requirement will immediately and significantly reduce the risk of ATO attacks for AWS accounts. It’s in line with Amazon’s dedication to user security.

Shopify’s Lax Password Requirements

Shopify user passwords have to be at least five characters long. Unfortunately, passwords that are exactly five characters long are easy to break with a robust brute force attack. Shopify could immediately improve the security of its users by requiring passwords to be at least fifteen characters long. They could also require their users to change their passwords at least once a year.

BlaBlaCar Uses Advanced ATO Software

BlaBlaCar is the largest community of carpoolers in the world. But they were observing a large number of bots try to take control of user accounts on their website. So they installed DataDome to monitor and prevent these bot attacks. Since then, DataDome has protected BlaBlaCar’s user accounts without requiring maintenance and without impacting web and app performance. 

Setting up DataDome is insurance. You can live without one, but you need to know that if you do, you are putting yourself at risk.

Francis Nappez, BlaBlaCar CTO

Key Takeaways

Account takeover fraud poses a significant threat to the retail industry. Cybercriminals use various tactics like credential stuffing, brute force attacks, malware, and more to compromise accounts and steal sensitive information. 

Retailers can reduce this risk by implementing MFA, enforcing strong password policies, using fraud detection tools and IP geolocation filters, and installing specialized ATO protection software like DataDome. Doing so is crucial to safeguard customer trust, preserve your brand’s reputation, and stay financially stable. 

Don’t wait until it’s too late. Book a live DataDome demo today to understand how advanced ATO software can immediately improve the security of your business and its customers.