An account takeover vs. identity theft: Differences explained

An account takeover occurs when a hacker gains unauthorized access to someone's account, while identity theft occurs when a criminal steals someone's personal information to impersonate them. Scammers typically carry out these crimes through phishing attacks and data breaches, but the full list of methods for stealing accounts and identities is much more extensive. These crimes are particularly dangerous because account takeover can lead to identity theft and vice versa. Read the article to learn more about the differences between account takeover and identity theft.

What is an account takeover?

An account takeover (ATO) is when a hacker takes control of someone's account using stolen login details. These stolen usernames and passwords often come from shady places on the dark web, where criminals buy and sell them after getting these login details through social engineering, data breaches, or phishing scams.

What is identity theft?

Identity theft happens when someone steals a victim's personal information and uses it without their permission. They opt for full names, addresses, financial details, Social Security numbers, and medical insurance data. Once thieves have it, they can commit fraud, open up new financial accounts in the victim's name, or make unauthorized purchases.

What's the difference between an account takeover and identity theft?

An account takeover happens when an attacker steals someone's account, while identity theft involves a criminal stealing someone's personal data to open new bank accounts, commit fraud, or make purchases without their knowledge.

The table below provides some more perspective on the differences between account takeover fraud and identity theft.

How does an account takeover happen?

In account takeover fraud, criminals target all sorts of accounts—email, social media, financial, cloud storage, HR systems, and other internal corporate accounts that hold sensitive data and require a username and password to get in.

To steal accounts, hackers usually use credential stuffing, phishing, or brute-force methods. In credential stuffing, for example, they take advantage of the fact that people often reuse passwords, trying login details from previous data breaches on different accounts. Phishing is when attackers impersonate someone trusted to extort sensitive data from victims. Brute force attacks, on the other hand, use automated tools that keep guessing passwords until they hit the right one.

As soon as a stranger gets into someone's account, they change passwords and email addresses or even add their own multi-factor authentication (MFA) device. If that happens, getting an account back might become a nightmare.

Let's take Uber as a real-life example. In September 2022, Uber suffered an account takeover. The attacker gained access simply by purchasing stolen credentials of an external contractor from the dark web. The attacker bypassed Uber’s MFA by spamming the contractor with login approval requests until they inadvertently accepted. Once inside, the hacker compromised internal communications via Slack and G-Suite and accessed sensitive internal systems. Uber shut down several internal tools and systems as a containment measure.

Signs of account takeover in businesses

Red flags that signal an account takeover fraud include:

• Unusual account activity. Logins from unfamiliar locations or at odd hours might indicate that someone's trying to gain unauthorized access to your business account.
• Changed account details. After hackers get unauthorized access to a victim's account, they often change account information, like emails, phone numbers, or even passwords.
• Suspicious emails. Another red flag is out-of-the-ordinary emails asking you to reset passwords or provide sensitive information. These are usually phishing emails designed to compromise user accounts.
• Unauthorized transactions. This one's a dead giveaway. If an attacker gains access to your financial account, they might start making unauthorized transactions to unfamiliar accounts or make fraudulent purchases using your money.

What are account takeover risks for businesses?

Account takeover attacks might hit businesses hard. After hackers get hold of employee or customer accounts, they always opt for as much as possible—they steal sensitive information so later they could sell it on the dark web, they commit fraud under a victim's name, or even lock you out of your own systems.

One of the main goals of ATO for criminals is financial profit, so the immediate financial loss after an account takeover can definitely be overwhelming. However, the long-term damage to your brand's reputation and customer trust can be even more emotionally distressing.

Why businesses should address both threats separately

Understanding the nuances of an account takeover vs. identity theft is crucial because while they are often linked, they are fundamentally different threats that require distinct security strategies. Addressing one does not automatically mitigate the other. Businesses that fail to treat them as separate risk categories leave significant gaps in their defenses.
Here’s why a separate approach is critical:

• Different attack surfaces and threat actors. An account takeover (ATO) targets an existing account, focusing on authentication points like login pages and password reset flows. The goal is often immediate: drain funds or steal data from that specific business account. In contrast, identity theft targets the person, not the account. Attackers hunt for repositories of sensitive information—customer databases and employee files—that are often exposed through data breaches. The threat actor who launches account takeover attacks for quick profit is distinct from one who patiently harvests PII from the dark web to execute complex, long-term fraud.
• Separate detection patterns and incident response plans. Detecting an account takeover attempt relies on real-time monitoring for suspicious activity, such as multiple failed login attempts from a new device or “impossible travel” logins. The response to account takeover incidents is tactical and immediate: invalidate sessions, force password resets, and block malicious IPs. Detecting identity theft, however, is often delayed; it's usually uncovered long after the initial theft, perhaps when a customer reports fraudulent transactions. The response is strategic and complex, involving forensic investigation, legal counsel, and broad public communication.
• Requires coordination across different teams. An effective response to an account takeover (ATO) is typically led by IT and security teams. An identity theft incident, however, requires a much broader coalition, including Legal and Compliance to manage regulatory obligations, HR to support affected employees, and Customer Support teams to handle inquiries from impacted customers.

How can businesses prevent account takeover and identity theft risks?

A robust defense strategy for account takeover protection and identity theft prevention requires a multi-layered approach. Security leaders must combine strong technical controls with proactive monitoring and continuous employee education. Together, these three layers work to prevent account takeovers and safeguard data.

Preventing account takeover (ATO)

For tech-savvy teams, account takeover prevention is about securing every entry point and quickly identifying suspicious behavior.

• Implement advanced multi-factor authentication (MFA). Go beyond simple SMS codes. Prioritize phishing-resistant methods like FIDO2-compliant hardware keys, authenticator apps, and biometrics to create a strong barrier against attacks using stolen credentials.
• Use behavior-based authentication. Deploy User and Entity Behavior Analytics (UEBA) to baseline normal user behavior. This allows you to automatically flag and challenge deviations—such as logins from new devices or unusual locations—that could signal a malicious attempt to gain access.
• Deploy sophisticated bot detection. Protect login portals from automated account takeover attacks like credential stuffing and password spraying. A good bot management solution can distinguish between human users and malicious scripts trying to validate stolen credentials through thousands of login attempts.
• Enforce strong password policies and lockout mechanisms. Mandate the use of strong, unique passwords and disallow common or previously breached ones. Automatically lock a business account or user account after a specific number of failed login attempts to thwart brute-force attacks.

Preventing identity theft

Protecting against identity theft means safeguarding the raw data that criminals seek.

• Strengthen data encryption and access controls. Encrypt all Personally Identifiable Information (PII) and other sensitive information both at rest and in transit. Implement the principle of least privilege to ensure that even if an account is compromised, the attacker's access to data is limited, reducing the risk from data breaches.
• Conduct dark web monitoring. Proactively scan the dark web for exposed employee and customer login credentials, PII, and other sensitive company data. Early detection allows you to invalidate compromised accounts and login credentials before they can be exploited.
• Establish secure PII handling and disposal policies. Train employees on the proper procedures for handling sensitive information and implement secure data destruction methods for both digital and physical records.

Foundational security practices for both

• Continuous employee training. Conduct regular, engaging security awareness training focused on identifying sophisticated phishing attempts, vishing, and social engineering tactics that are designed to steal login credentials and other account details.
• Fraud detection tools. Embed modern fraud detection platforms into your customer-facing applications and internal workflows. These tools can analyze user behavior in real time to identify and block fraudulent transactions originating from compromised accounts.

We've got something else besides the above methods to prevent account takeover and identity theft. NordStellar is an advanced threat exposure management platform designed to detect cyber threats targeting your company. It runs vulnerability assessments and finds system flaws that could lead to account takeover fraud or identity theft, giving you time to respond to emerging risks.

FAQ

Can identity theft lead to account takeover?

Yes, absolutely. Identity theft is often a direct pathway to account takeover fraud. When a criminal steals enough sensitive information (the act of identity theft), such as a date of birth, address, or answers to security questions, they can use it to impersonate the victim. This allows them to successfully reset a password on an existing account, pass identity verification checks, and ultimately gain access. The stolen identity becomes the key to taking over the account.

What are the compliance risks associated with identity theft and account takeover?

The compliance risks are significant. Regulations like GDPR and CCPA impose strict rules on protecting personal data. Both account takeover incidents and data breaches leading to identity theft can trigger severe consequences, including:

• Massive fines: Penalties can reach millions of dollars or a significant percentage of global annual revenue.
• Mandatory breach notifications: Businesses are legally required to notify regulators and all affected individuals, a process that is costly and damaging to brand trust. As part of a remediation plan, some companies may offer affected users subscriptions to identity theft protection services.
• Legal action: Customers or employees whose compromised accounts or data were involved may file individual or class-action lawsuits.
• Audits and ongoing scrutiny: Regulators may impose mandatory security audits and monitor the company's account takeover prevention practices for years to come.