What is Account Creation Fraud?
Account creation fraud (also known as fake account fraud or new account fraud) is the mass creation of fake accounts using fabricated, stolen, or synthetic identities, typically executed in a highly coordinated and automated manner.
Fraudsters use these fake accounts to carry out activities such as:
- Referral bonus abuse
- Promo & discount abuse
- Spam content abuse
- Trial subscription abuse
- Reviews & ratings manipulation
- Money laundering
Businesses must actively recognize and address new account fraud, especially in industries like finance, e-commerce, and iGaming, where it can result in major financial losses and a breakdown of customer trust.
The Impact of Account Creation Fraud on Digital Businesses
Account creation fraud affects businesses on multiple fronts. Its consequences can be broadly categorized into financial losses and reputational damage.
Financial Losses
- Wasted Free Trials and Discounts: Many companies offer sign-up incentives such as free trials, new user discounts, and referral programs to drive acquisition. However, account creation fraud turns this advantage into a liability when fraudsters exploit these offers, leading to wasted marketing spend and reduced ROI.
- Skewed Analytics: Growth metrics, conversion rates, and campaign performance become unreliable when fake accounts inflate your numbers. Businesses make decisions based on distorted data, leading to misallocated budgets and poorly optimized strategies.
- Operational Burden: As fraud scales, businesses are forced to invest more resources in manual reviews, fraud investigations, and reactive risk operations. Fraud teams become overwhelmed, and operational costs rise.
Reputation Losses
- Regulatory Compliance Implications: Fake accounts can expose businesses to compliance issues under regulations such as GDPR and CCPA, triggering legal scrutiny and potential penalties.
- Loss of User Trust: Genuine users expect safe and authentic platforms. When they encounter bots, spam, or fraudulent behavior, trust erodes and churn increases.
- Compromised Platform Credibility: Fake reviews, inflated metrics, and fraudulent engagement damage brand reputation, weakening both customer confidence and investor perception.
Major Industries Affected by Fake Account Creation Fraud
Fake account creation fraud affects nearly every online business, yet a few industries bear the brunt as fake accounts can inflict outsized damage on them:
Online Retail and E-commerce
Fraudsters create bulk fake accounts to abuse referral bonuses, exploit promotions, bypass purchase limits, hoard inventory for resale, and post fake product reviews. This results in wasted marketing budgets and unreliable demand signals.
Banking and Finance
In fintech, fake accounts are a common precursor to account takeover fraud, money laundering, and loan abuse. Fraudsters use synthetic identities to open accounts and conduct unauthorized transactions while evading detection.
iGaming
Gaming platforms face large-scale fake account creation used to farm in-game rewards, exploit bonuses, manipulate leaderboards, and resell accounts—undermining fairness and player trust.
Mobility and Online Delivery
Ride-hailing and delivery platforms are targeted through fake driver or customer accounts used to claim incentives, inflate demand, bypass bans, and manipulate ratings.
These industries are prime targets, making fake account fraud prevention an essential layer of their fraud strategy.
How to Prevent Account Creation Fraud with Device Intelligence
Fraudsters can easily fake emails, phone numbers, and identities, but there is one thing they cannot operate without: a device. Whether it’s payment fraud, bonus abuse, or account takeovers, every attack begins with a physical device. However, fraudsters now use emulators, virtual devices, app cloners, GPS spoofers, and other tools to mimic thousands of devices at scale.
This is why traditional fraud prevention methods are no longer enough. To stop account creation fraud, platforms need visibility and intelligence at the device level.
SHIELD: Your First Line of Defense Against Fake Account Creation
SHIELD is a device-first fraud intelligence platform that helps digital businesses stop all malicious activity across both mobile apps and the web.
Persistent Device Identification
At the core of SHIELD’s solution is the SHIELD Device ID, the global standard for device identification. It persistently and accurately identifies each physical device with over 99.9% accuracy, even after factory resets, fingerprints scrambling, or advanced spoofing.
Real-Time Fraud Intelligence
SHIELD’s Fraud Intelligence continuously profiles device sessions and returns real-time fraud signals that reveal the exact moment a good user turns bad. This goes beyond traditional fraud checks, which only capture static snapshots.
Fraud Intelligence exposes every tool and technique commonly used to create and manage fake accounts at scale, including:
- GPS spoofers, VPNs, and proxies used to mask true locations and bypass geofencing, enabling fraudsters to generate multiple accounts undetected.
- Emulators and app cloners that allow attackers to simulate thousands of devices and automate fake sign-ups, and many more.
By identifying these signals in real time, SHIELD empowers businesses to block fraudulent account creation before damage occurs, while keeping the platform frictionless for genuine users.
Conclusion
Account creation fraud threatens growth, drains budgets, and undermines user trust. As fraudsters continue to automate attacks at scale, businesses must evolve beyond traditional defenses and stop fraud at its source—the device.
With SHIELD’s device-first fraud intelligence, digital businesses can detect and block fake accounts before they are created, keeping platforms secure, compliant, and ready to grow.
Explore how SHIELD’s advanced fraud protection can help you detect, block, and stay ahead of malicious sign-ups. Equip your business with the security it needs to grow with confidence.
