Account takeover fraud is characterized by:

• A. An account on your platform is hacked and a third party gains access to the customer’s account.
• B. A merchant charges but never ships.
• C. The cardholder disputes a payment after a dispute is initiated.
• D. A payment is refunded to a different method.

Answer: (A)

Account takeover fraud happens when someone gains unauthorized access to a legitimate user's account and can act with that user's privileges, accessing sensitive data or making transactions as that user. The described scenario—an account on your platform is hacked and a third party gains access to the customer’s account—fits this pattern exactly, since it centers on illicit entry and the attacker using the victim’s account.

The other options describe different fraud types. Charging a merchant account for goods or services that aren’t delivered is merchant fraud or non-delivery fraud. A cardholder disputing a payment after a dispute has started relates to the chargeback/dispute process, not unauthorized access. Refunding a payment to a different method describes a refund pattern that doesn’t inherently involve taking over the user’s account.