Calculating the Cost of Account Takeover
By Kevin Lee /
20 Dec 2017
Account takeover (ATO) is a growing threat faced by online businesses across industries – from social networks and e-commerce merchants to SaaS and professional services. But not every company even realizes ATO is a looming threat.
Besides counting your company lucky for not making headlines, how do you measure whether ATO is a problem for your business? ATO can be harder to quantify than payment fraud. When measuring the total cost of ATO, there are a number of individual costs to consider.
Chargebacks (if applicable), including:
- Product cost
- Chargeback fees
- Dollar amount of the transaction
- Does this chargeback put your company over the excessive chargeback threshold, which could result in financial penalties?
Reduced customer engagement, including:
- Fewer clicks, fewer purchases, lower average dollar amount, less time spent on the site or app
- Customer lifetime value (LTV): If the customer churns, you lose all future sales. We have more info on calculating LTV below.
- Customer acquisition costs: Now you need to spend more money to acquire more customers.
Brand damage + Cleanup costs
- Negative PR: This is tough to measure, but you may consider looking at negative social media sentiment and article mentions.
- Lost brand value: For example, Yahoo lost approximately $350 million in the Verizon deal because of its data breaches.
- Legal fees (if applicable)
- Compliance fines or additional audits
- Ops, Eng & PM staffing: This includes salary, equipment, and overhead costs.
- Cost of external tools used to fight ATO
How do you put a price on lost user engagement with your site or app? We’ll walk you through a way to do this, based on calculating the lifetime value (LTV) of a user:
Collect active inputs
This bucket encompasses every complaint and reported ATO. You can find this information by asking Customer Support how many tickets, inbound phone calls, chats, and emails they’ve received that mention ATO. You can also track traffic to any support articles related to ATO. If you aren’t formally tracking this information, it’s a good idea to start now.
Collect passive inputs
But not every ATO victim proactively reports what happens to them. Some simply stop using a website or service, while others close their account altogether. One way to gauge passive ATO damage is to analyze all of the users who have deactivated their account, or haven’t engaged with your site for a certain amount of time. Do a post-mortem on a sample of each one (depending on volume) to determine whether they have suffered ATO.
Measure how ATO affects engagement
Once you have gathered both active and passive inputs, you can compare the LTV of an affected user to that of a normal user. For an e-commerce site, this value may be measured in terms of money spent. For a social site, it could be how often they visited or engaged on the platform.
Compare the delta between the ATO affected user and the normal user. That will give you a sense of how ATO is affecting your business from a monetary perspective.
Learn more about why ATO is growing, and how to detect and stop it, with our free ebook, the Complete Guide to Preventing Account Takeover.
Kevin is the Trust and Safety Architect at Sift Science. Building high-performing teams and systems to combat malicious behavior are what drive him. Prior to Sift, Kevin worked as a manager at Facebook, Square, and Google in various risk, spam, and trust and safety roles.