Identifying & Preventing Account Fraud & Fake Account Creation: A Comprehensive Checklist

The two main forms of account fraud, account takeover (ATO) and fake account creation, pose significant challenges for businesses with user logins. Threat actors gain unauthorized access to accounts, resulting in financial fraud, data breaches, and user trust issues. Fake accounts, utilized for spam and fraud, diminish platform integrity and user experience.

How ATO & Fake Account Creation Happens

Fraudsters have intensified their attacks by targeting login and registration endpoints. Registration endpoints serve as the gateway for individuals to create new accounts on platforms and websites, making them a prime target for fraudsters. Cybercriminals exploit vulnerabilities in authentication processes to unlawfully access and hijack user accounts, or to create fraudulent accounts by circumventing the security measures in place. These activities pose significant risks to both businesses and their users.

What’s at stake?

Creating new accounts is how we access everything from online shopping to news websites and even work applications. It’s a fundamental part of our digital lives. Unfortunately, this convenience comes with a hidden danger. These “registration endpoints” can be exploited by criminals aiming to infiltrate systems and cause harm. This puts both businesses and individuals at risk.

By exploiting weaknesses in authentication protocols or hijacking accounts, cyber criminals circumvent safeguards meant to prevent fraudulent account creation. This issue poses significant and persistent challenges for organizations, as threat actors exploit login and registration endpoints to perpetrate their criminal activities.

Accounts stand at the heart of the e-commerce universe, holding a wealth of user activity, payment details, recommendations, purchase history, and other crucial information that fuels customer relationships, driving e-commerce businesses forward. Account fraud, the deceptive or illegal practice of obtaining unauthorized access to financial or personal accounts, consists primarily of account takeovers and fake account creation. Given the pivotal role of an account, any compromise due to account fraud yields detrimental outcomes, including spamming, stolen value, fraudulent purchases, carding, identity theft, and more.

The Importance of Combating Account Takeover & Fake Account Creation

ATO and fake account creation can have a slew of negative consequences for enterprises and their customers, including damage to your brand reputation, financial loss, regulatory fines, and more. Stopping these attacks helps to protect several areas of your business:

• Data Security: Protect sensitive user information from unauthorized access and breaches.
• Financial Integrity: Prevent financial losses due to fraudulent transactions and chargebacks.
• User Trust: Preserve the trust and loyalty of your genuine user base by ensuring their accounts remain secure.
• User Experience: Ensure engagement on your platform is genuine, creating a better user experience.
• Regulatory Compliance: Adhere to data protection regulations and avoid potential fines and penalties.
• Operational Efficiency: Save time and resources otherwise spent on fraud detection and account recovery processes.

How to Identify & Address ATO & Fake Account Creation

Use the comprehensive checklist to identify anomalies that can indicate malicious or fraudulent account activity on your website. We’ll cover:

The Signs of ATO

• Abnormal User Behavior: Unusual patterns in account usage, such as high-frequency transactions, logins at odd hours, or rapid changes in account settings.
• Failed Login Attempts: Repeated failed attempts to access accounts, indicating possible ATO attempts.
• Unusual Geolocation Patterns: Logins from locations or IP addresses not typically associated with the genuine user.
• And many others…

The Signs of Fake Account Creation

• High Volume of New Account Sign-Ups: Large numbers of registrations from similar IPs or devices, suggesting fake account creation.
• High Volume of Low-Activity Accounts: Many new accounts with minimal to no activity post-creation, often created to exploit sign-up incentives or for spamming.
• Inconsistent or Incomplete User Data: Accounts registered with suspicious, inconsistent, or obviously fake information (e.g. email addresses, names).
• And many others…

How to Analyze the Impact

Assess how account fraud threats could affect your business in terms of financial loss, user dissatisfaction, and compromised data. Identifying specific vulnerabilities within your systems is key to formulating an effective defense strategy.

• Incident Identification and Scope Analysis: Begin by determining the extent and nature of the suspicious activities. Identify the specific accounts impacted and the timeline of unauthorized actions.
• Data Analysis: Collect and analyze data related to the incidents. Use analytics to track the frequency and volume of these incidents over time to assess trends and the effectiveness of current security measures.
• Financial Impact Assessment: Calculate the direct financial losses from unauthorized transactions, refunds, and chargebacks associated with ATOs. Evaluate the costs related to fake account creation, including exploited promotional offers and the resources spent managing these accounts.
• And many others…

Based on the analysis, develop strategic recommendations to prevent future incidents. This may include enhancing security measures by implementing new technologies.

Strategies to Prevent Account Takeover & Fake Account Creation

Implementing a sophisticated, multi-layered security approach is essential for detecting and mitigating these threats:

• Advanced, Real-Time Bot Protection: Utilize solutions like DataDome Bot Protection that offer real-time, AI-powered detection and mitigation of bot-driven ATO or fake account creation attempts.
• Account Fraud Detection: On top of detecting whether requests are coming from bots, you need a tool that can identify when a user’s behavior is fraudulent or suspicious—because they might be human, a very sophisticated bot, or a hybrid of the two.
• CAPTCHA Challenges: Integrate CAPTCHA to differentiate between human users and automated bots during critical interactions.
• User Behavior Analysis: Monitor and analyze user activity for anomalies that signify unauthorized access attempts.
• IP & Device Reputation Scoring: Employ systems to evaluate risk based on the reputation of IP addresses and devices used for access.
• Multi-Factor Authentication (MFA): Enhance account security by requiring additional verification steps during login or account changes.

Taking Action Against Account Takeover & Fake Account Creation

Take a proactive stance on security with DataDome Account Protect.

Account Protect uses multi-layered machine learning and data analysis to identify suspicious behavior at login and registration. It goes beyond bot protection to build a more complete picture of user activity by spotting red flags that may indicate fraud. To do this, we scrutinize a set of brand new signals to Identify even the most subtle anomalies:.

• Location: We analyze the user’s login location (country, city, IP address) and compare it to their past login history. A significant deviation from usual locations might raise a red flag.
• Device: The type of device used for login (phone, computer, operating system) and its fingerprint are analyzed. Login attempts from unknown or unusual devices could be suspicious.
• Time: The time of day and day of the week the user attempts to log in are compared to their past patterns. Login attempts outside typical usage times might be a concern.
• Behavior: We can analyze how the user interacts with the login page, such as typing speed or mouse movements. Unusual behavior patterns could indicate automated login attempts.
• Session History: For returning users, we analyze their past browsing or activity within the account. A sudden change in typical behavior patterns could suggest a compromised account.
• IP Address: The system checks the IP address for suspicious activity or association with unknown malicious networks.
• Email Address: We analyze the email address used for login attempts, checking for suspicious characters or patterns associated with fraudulent accounts.

We analyze these signals over a significant time frame to build a comprehensive profile of the intent to commit fraud. This allows us to identify even the most unobtrusive changes in user behavior that might signal fraudulent activity. You can combine Account Protect with DataDome’s powerful Bot Protection solution to identify bot-like behaviors and even feed the outcomes of Account Protect. This twofold protection will further protect your business from the risks of ATO and fake account creation.

Book an Account Protect demo and start a free trial of DataDome today. You’ll get a full assessment and actionable recommendations from our industry-recognized threat research and SOC team experts.