Understanding and solving fraud in igaming

What is fraud prevention and management? 

Fraud prevention and management is a strategy to detect and minimise illegal activities and abuse that may cause financial or brand reputation damage for igaming operators. Igaming includes sports betting, online casinos, online poker, esports betting, horse racing wagering and ilottery. Bettors use many different fraudulent strategies against igaming operators, including promotional abuse from multi-accounting (the practice of registering multiple betting accounts to maximise profits), stolen credit cards, identity theft, fraudulent chargebacks and more.

What are some of the current challenges that igaming operators are having with fraud prevention and management?

First, promotional abuse from multi-accounting. Igaming operators are typically focused on rapid account acquisition, and many offer large incentives, such as risk-free bets and deposit matches, for creating a new account. Fraudsters know this and create new accounts to take advantage of numerous promotions, which further exacerbates the problem. With multiple accounts, they believe they can increase their chances of winning by betting both sides of the same game with the promotional money. The fraudster may even share a percentage of the winnings with any accomplices for a percentage of their winnings in return.

Second, stolen credit cards and identity theft. Some industries that conduct business online with card-not-present (CNP) transactions experience fraudulent payment problems. Fraudsters can easily purchase stolen credit cards on the dark web and use those to play. This is often not discovered until a chargeback comes through, sometimes months later. It is also very easy for fraudsters to create fake accounts with stolen identity information. Most of the information required to create an account is easily obtained: name, address, date of birth, etc. According to Forbes’ May 25, 2020 article Your Social Security Number Costs $4 On The Dark Web, anything else can also be purchased online for just a few dollars. With over 20 states regulating online sports betting, the use of stolen identities to create accounts may become easier and more profitable. In the US, sports betting is growing and becoming more popular, and the expectation is that igaming operators may consider implementing additional fraud prevention and management measures and tools that are used by financial intuitions, such as enhanced KYC (know your customer) regulations, reputational databases and device checks.  

Third, chargebacks: Another common problem for igaming operators is buyer’s (or in this case bettor’s) remorse — also known as “friendly fraud”. The customer makes a deposit to their account, loses their money, regrets it, and disputes the charge with their bank. This is problematic and can be difficult to prove. The other chargeback issue facing igaming operators is legitimate chargebacks as a result of stolen identities. The legitimate cardholder sees the surprise charge on their statement and submits a dispute. Since operators aim to balance user experience against loss risk, it can be a losing battle. They want to accommodate valid customers with certain perks, but this can leave them open to fraud – and the fraudsters know how to exploit this. By enhancing their upfront fraud controls, igaming operators can potentially minimise the incidence of hostile chargebacks and may win friendly fraud disputes by using a platform that helps them prioritse and standardise their chargeback process. As more states begin to offer online gaming, we may see this problem continue to grow, so it is important to get ahead of it. 

How can igaming operators improve their fraud prevention and management processes, and what are some of the key benefits?  

Fraudsters follow the money. According to Kaspersky’s post Online Gaming Scams during Pandemic. How to Stay Safe, fraudsters have set their eyes on the online gaming industry. For igaming operators thinking about how to protect their businesses, they should consider deploying the following: 

• A proven fraud prevention and management platform that uses both machine learning and rules-based approaches to gauge the riskiness of every transaction.
• A device intelligence solution that provides visibility to all devices accessing and creating accounts. Seeing that one device has accessed several accounts or that a device located in a foreign country is trying to create an account with a US address can be warning signs. 
• Use of behaviour analytics to evaluate if a person or a bot is behind a transaction. As fraudsters become more sophisticated, they create bots that mimic human behaviour. But sophisticated fraud prevention solutions can tell the difference and flag those transactions immediately. 

With the necessary tools in place, igaming operators can reduce fraud as they scale to take advantage of all the growth opportunities in the online gaming industry.

A wholly owned subsidiary of American Express, Accertify is a leading provider of fraud prevention, digital identity, device intelligence, chargeback management, and payment gateway solutions to customers spanning diverse industries worldwide.