How Biometric Authentication Reduces Identity Theft and Account Takeovers (ATOs)
23 April 2025
How Biometric Authentication Reduces Identity Theft and Account Takeovers (ATOs)
23 April 2025
With over 33% of global fraud stemming from account takeovers, protecting digital identities is as important as ever. Traditional security methods like passwords and SMS OTPs are proving to be inadequate, and as the attack surface increases, organizations must move towards solutions that not only strengthen security but also protect privacy and deliver a strong user experience.
What is Account Takeover Fraud?
To understand the problem, let’s start with the account takeover definition: Account takeover (ATO) fraud happens when a bad actor gains unauthorized access to someone’s account. This almost always leads to further malicious activity - from stealing money and personal data to holding accounts for ransom or damaging reputations.
What is Account Takeover Fraud Used For?
Fraudsters typically use account takeovers to:
- Steal funds or make unauthorized purchases.
- Harvest personal data for identity theft.
- Send phishing attacks from trusted accounts.
- Demand ransom or extort victims.Circumvent access controls in businesses or services.
The scale of this is staggering. With 24 billion username-password combos floating on the dark web, criminals have easy access to the building blocks of online identity fraud. The result? ATOs have become one of the most common and damaging forms of cybercrime.
How Do Account Takeovers Happen?
There’s no single method. Instead, attackers mix and match techniques, depending on what defenses are in place. Here are the most common:
- Phishing Attacks: Sending fake emails or messages that trick people into sharing login info or downloading malware.
- Credential Stuffing: Using stolen credentials from one site to try logging into others, banking on reused passwords.
- SIM Swapping: Hijacking a phone number to intercept SMS OTPs.
- Man-in-the-Middle (MITM) Attacks: Intercepting communications between the user and the service to steal credentials or inject malicious code.
- Impersonation Scams: Pretending to be a trusted figure to extract sensitive information.
Each of these exploits weak points in legacy authentication systems - especially those relying on passwords, magic links, and SMS OTPs.
The Identity Theft Chain: From ATO to Full Compromise
Once an attacker gets into an account, it rarely ends there. A single ATO can cascade into broader identity theft. From resetting other account credentials to applying for credit in someone else’s name, the impacts are severe.
That’s why identity theft protection starts with blocking the takeover itself. And that begins with authentication.
Why Traditional Authentication Falls Short
Most organizations still rely on:
- Passwords - weak, reused, and easily phished.
- SMS OTPs - vulnerable to SIM swapping and Man in the Middle attacks.
- Email-based logins - risky if the email account itself is compromised.
- Call centers - expensive and do not prove identity.
These methods all suffer from one critical flaw: they don’t actually prove who the user is. They only prove that someone has access to a password, a phone, or an inbox.
In short, they don’t offer identity assurance.
Biometric Authentication: A Better Front Door?
Biometric authentication verifies the person behind the credentials - using traits like fingerprints or facial recognition. This is a game-changer for account takeover fraud prevention.
Biometrics vs Other Authentication Solutions
- Hard to steal or spoof. You can’t launch a phishing attack on someone’s face.
- Always with the user. Biometrics don’t get lost or forgotten.
- Strong user experience. A quick glance at the camera is all it takes.
Unlike hard tokens or SMS OTPs, biometrics link access to the individual—not just a device or credential.
However, not all biometric solutions offer the same protection.
Local Biometrics: No Link Between Identity and Credentials
Local authentication systems like FaceID can’t truly confirm who is behind the screen—only that the device “thinks” it’s the right person. For example, if someone resets FaceID on a stolen phone, a bank has no idea if the person logging in is the original user or an imposter.
That gap is exactly what attackers exploit in account takeover (ATO) fraud, whether through phishing attacks, SIM-swapping, credential stuffing, or device theft.
Centralized Biometrics: Done Right, Almost
Centralized systems store sensitive biometric data in the cloud. This model enables consistent authentication using a user’s biometric ID across devices, but if it’s not encrypted, it exposes users to serious privacy and compliance risks.
- Pros: Works across multiple devices and platforms. The facial template used to open an account is tied to it - only that face can open that account.
- Cons: Less privacy. Storing biometric data centrally introduces significant privacy and security risks - if a server is compromised or hacked, the biometrics are.
Zero-Knowledge Biometrics: Stronger, Smarter, Safer
Zero-Knowledge Biometrics (ZKB) by Keyless combines the privacy of local biometrics with the flexibility and security of the cloud. It works by transforming biometric data on the user’s device into an encrypted format, which is then verified in the cloud using secure multi-party computation (SMPC) without revealing their biometric data to any party.
It’s called “zero-knowledge” because neither the user device nor the server learns anything about the actual biometric data - only whether the submitted sample matches the enrolled profile. This significantly enhances both privacy and security.
The result is a system that guarantees the person logging in is the same person who enrolled, without compromising their privacy.
How to Prevent Account Takeover Fraud with Biometrics
For organizations considering how to prevent account takeover fraud, the answer lies in deploying biometric authentication with real identity assurance and privacy at its core. Here’s how to get started:
- Replace passwords and SMS OTPs with biometric authentication.
- Adopt Zero-Knowledge Biometrics to eliminate privacy risks associated with third-party biometrics.
- Deploy across channels - apps, browsers, shared devices.
- Use device binding to link users and devices securely.
- Implement passive liveness detection to stop deepfakes and spoofing.
Final Thoughts
As long as accounts exist, ATOs will remain a threat. But by rethinking authentication and moving beyond outdated methods like passwords and SMS OTPs, organizations can dramatically reduce their risk.
Biometric authentication - especially solutions built on Zero-Knowledge Biometrics - offers the best of all worlds: security, privacy, usability, and scalability.
If you're ready to put a stop to account takeovers, it's time to rethink your front door.
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