How to prevent account takeover fraud for financial institutions

What is account takeover fraud and how does it work?

An account takeover occurs when an unauthorized person hijacks a genuine user's account to commit fraud.

Unlike synthetic identity fraud, where criminals create fake identities, account takeover targets active accounts belonging to real people. As such, fraudsters exploit the trust you’ve already established with that customer.

Common targets include financial services institutions, online gaming platforms, e-commerce retailers and corporate email systems.

Here’s how an account takeover attack usually plays out:

1. Fraudster obtains credentials through data breaches, theft or social manipulation.
2. Fraudster gains access to the target account.
3. Fraudster changes account settings, contact details or passwords.
4. Fraudster performs unauthorized transactions or fund transfers.
5. Customer discovers suspicious activity and reports it.
6. Institution investigates the incident and attempts recovery.

Fraudsters use these common attack methods to hijack accounts:

• Credential stuffing: Bots test lists of stolen usernames and passwords across multiple sites at once.
• Phishing and social engineering: Attackers trick users into revealing credentials through fake emails, text messages, or spoofed websites.
• SIM swapping: Criminals transfer a victim's phone number to a device under their control to intercept authentication codes.
• Malware and keyloggers: Malicious software records login inputs from user devices.

Five strategies to prevent account takeover fraud

Here’s how to build a strong defense against account takeover fraud:

1. Spot red flags before fraudsters cash in

Detecting the behavioral shifts that indicate an account might be compromised early lets you intervene before financial damage occurs. Watch for these specific account takeover signals:

• Unrecognized devices: Logins from hardware or browsers that have never accessed the account before.
• Sudden contact information updates: Changes to email addresses, phone numbers or mailing details made shortly before a transaction.
• Multiple failed login attempts: Rapid authentication failures suggesting automated credential testing.
• Unusual login behavior: Impossible travel events, such as an account accessed from New York and London within 20 minutes.
• Uncharacteristic transaction activity: Unexpected wire transfers, reward point redemptions or sudden high-value purchases.

2. Use risk-based routing to apply friction where it counts

If you treat every login like an attack, you’ll quite understandably frustrate genuine customers. Treat every password as proof of identity, though, and you’re inviting fraud.

Risk-based authentication evaluates the context of each interaction. The system determines whether to auto-approve the user, request a quick check or require step-up identity verification.

Low-risk anomalies, such as a customer logging in from a new browser, can trigger lightweight checks like multi-factor authentication (MFA) with a one-time passcode (OTP) or Knowledge-Based Authentication (KBA).

High-risk anomalies, like a contact detail change followed immediately by an international wire transfer attempt, can trigger high-assurance verification. This can include scanning a government ID alongside a live biometric selfie check.

Read more: Understanding customer due diligence in banking and financial services

3. Leverage pre-authentication data signals

Step-up verification kicks in after something looks suspicious, asking the user to prove who they are. But there’s a way to catch trouble even earlier: pre-authentication monitoring looks at hidden signals happening in the background before the user finishes logging in.

Instead of relying only on what the user types in, look at:

• Device fingerprinting: Checks whether the connecting device links to known fraud networks or botnets.
• Phone intelligence: Verifies if the registered number is a virtual VOIP line or if a recent SIM swap occurred.
• Email risk scoring: Determines whether the email address is disposable, newly created, or tied to suspicious domain activity.
• Shared fraud intelligence: Networks like our GBG Trust match identity attributes against data across industries. When identity data triggers a risk alert somewhere else – even in a completely different sector – your platform flags the threat before bad actors gain access.

4. Continuously monitor accounts after onboarding

Strong Know Your Customer (KYC) checks establish the actual customer’s identity during onboarding. However, account takeover is a downstream risk that occurs months or years later.

So even if you’ve already verified the real customer, a fraudster can try to operate as that person using stolen credentials.

This is why account takeover protection requires performing ongoing monitoring for device changes, contact updates and uncharacteristic transactions. When red flags appear, step-up verification can help confirm if you're actually dealing with your customer.

5. Educate customers about phishing and social engineering

Even the best security controls won’t help if a user hands over their password to an attacker.

Phishing attacks are often hiding in plain sight: a payment request with an urgent deadline or a sender domain that’s almost right but not quite. When your customers know what to look for, they’re less likely to get caught off guard.

The same goes for passwords. They should be unique and hard to guess, and nobody – not even “customer support” on the phone – ever needs a passcode read out loud.

It’s also worth encouraging users not to click through if a message seems even slightly off. Suggest going straight to your website or official app instead. And when something does look suspicious, customers should have a quick, easy way to report it.

How GBG helps prevent account takeover fraud for financial institutions, iGaming companies and more

GBG is an identity verification and KYC & KYB provider with more than 30 years of experience helping businesses connect safely with genuine identities across 195 countries. We combine global data, biometric technology and risk intelligence to help companies onboard real users and prevent account compromise.

Here are a few reasons 20,000+ customers, including financial institutions like HSBC, Santander and Metro Bank, choose to work with us:

Stop impersonation earlier with pre-authentication signals and GBG Trust

A stolen password will easily make it through a basic login check: after all, it’s just text and traditional authentication doesn’t know the difference between a real user and a fraudster typing it.

So, how do you catch what the login screen can’t see? By looking at background risk factors, like whether the device, phone number or email tied to the login actually check out.

 

For example, our mobile and email intelligence helps to identify unverified phone lines, recent SIM swaps, or disposable domains.

You can also use our GBG Trust product to cross-check identity attributes against shared fraud network data gathered across 28 sectors.

GBG Trust's velocity monitoring helps you spot when personal details get reused rapidly across different platforms and accounts. When the same name appears alongside multiple email addresses or phone numbers, you can flag the fraud attempt before bad actors exploit the account.

You can configure thresholds around these patterns, such as flagging repeated registrations within a particular timeframe, and determine when activity should trigger an alert or additional verification.

Increase conversions by setting up flexible verification flows based on customer type

Forcing every customer through identical, high-friction checks isn't just bad for user experience – it's expensive. A returning customer logging in from a familiar device shouldn't undergo the same scrutiny as an unfamiliar device requesting an immediate wire transfer or a completely new customer.

With GBG Go, an end-to-end identity orchestration platform, you can design flexible verification workflows through a single API. You maintain complete control over which checks run, in what order, and what actions follow during initial customer onboarding and ongoing monitoring.

 

You can combine more than 110 modules to keep routine logins frictionless while reserving step-up authentication for suspicious behavior. For example, you can evaluate background email or phone intelligence first and require a document scan or biometric check only when those initial signals flag an anomaly.

When document verification is triggered, our technology performs 50+ forensic checks in seconds across 8,500+ global document types, including Digital IDs. These checks catch tampered text, photo substitutions and synthetic IDs.

Paired with biometric verification and certified passive liveness testing, our platform protects remote authentication against deepfakes and face-swap apps without forcing real users through unnecessary hurdles.

Detect suspicious activity after onboarding with ongoing monitoring

Confirming someone’s identity at onboarding tells you who opened the account, not who’s logging into it years later.

This means successfully verifying someone at onboarding is only the beginning. You need ways to recognize when later activity no longer aligns with the customer or account you’ve come to trust.

 

The GBG Go solution provides real-time fraud scoring and ongoing monitoring for high-risk events. When something changes, the system triggers an appropriate step-up check, such as an automated passcode or biometric re-verification, to confirm identity before transactions are completed.

This all happens within the same platform as your onboarding and verification workflows. Audit trails consolidate into a unified dashboard, or you can embed them directly into your existing case W

How GBG helped MrQ identify that 2% of active accounts were using deceased player details (thereby reducing fraud)

MrQ, a UK-based online casino, wanted to clean its customer database ahead of marketing campaigns and remove any accounts using deceased customers' details.

Using our identity verification solutions, MrQ screened active player records against authoritative mortality databases.

The results revealed that 2% of active accounts were operating using deceased player details. MrQ suspended the suspected fraudulent accounts immediately to conduct further verification checks, preventing unauthorized access and mitigating fraud exposure.

Read the full case study: MrQ cleans its gaming database with our tech and expertise

 

Request a demo to see how our platform helps you prevent account takeover fraud and protect your customers.

FAQ: How to prevent account takeover fraud

What is account takeover fraud?

Account takeover fraud occurs when an unauthorized individual gains access to a genuine user's account credentials and uses that access to commit financial crimes. Attackers hijack existing accounts to steal funds, make unauthorized purchases or access sensitive personal data.

How do fraudsters perform account takeover attacks?

Fraudsters use several methods to steal login credentials and hijack accounts. The most common techniques include credential stuffing, phishing emails and texts, SIM swapping, social engineering and malware keyloggers.

How can businesses detect account takeover fraud?

Businesses detect account takeover fraud by monitoring pre-authentication risk signals and user behavioral changes. Key indicators include logins from unrecognized devices, impossible travel events, rapid changes to email or phone details, multiple failed login attempts and uncharacteristic transaction patterns.

How does identity verification help prevent account takeover fraud?

Identity verification helps with account takeover fraud prevention by requiring step-up authentication when high-risk behavior occurs. By checking government IDs, running forensic document tests and verifying facial biometrics with passive liveness detection, businesses can confirm whether the person accessing the account is the true owner.