In the fast-evolving world of online gaming, iGaming account fraud has emerged as a pressing concern.
In 2021 the US gaming industry saw the largest percentage of annual fraud growth with an increase of 60.3% year on year, according to TransUnion Global Digital Fraud Trends Report.
The global online gaming market is growing at a rate of 13.2% annually, according to Accertify, and the market is expected to generate over $117 billion by 2025.
In Europe, the online gaming market is worth 24.8% of the continent’s total gambling market and is expected to reach 33.6% by next year. Over in the US, the online gambling market is projected to have an annual growth rate of 15.41% up to 2025.
Chris Blake, Director, and Principal Data Protection & Privacy Consultant, said: “There is a growing correlation between iGaming growth and fraud, as the iGaming market expands, so does its attractiveness to fraudsters.
“The challenges are multifaceted, ranging from sophisticated phishing scams aimed at stealing player credentials to intricate syndicates that manipulate game outcomes for financial gain. Bonus abuse, account takeovers, and self-exclusion fraud are prevalent.”
iGaming fraud not only impacts the financial bottom line for operators but also erodes player trust and integrity, a fundamental component of the industry's success.
What Is iGaming Fraud?
iGaming fraud refers to illegal activities aimed at deceiving or manipulating online gaming platforms to gain unauthorised benefits. This encompasses a wide range of malicious acts, from account takeover, where fraudsters gain control of a player's account to siphon off funds or assets, to bonus abuse, where players exploit signup bonuses through deceit. It also includes payment fraud, involving stolen credit cards used to fund accounts, and collusion, where players conspire to cheat the system.
Types of iGaming Fraud
As the iGaming industry continues to grow, so does the sophistication of these fraudulent schemes. Platforms must employ advanced security measures to protect their users. The most prevalent types of iGaming fraud include:
Multi-accounting: Players create multiple accounts to exploit signup bonuses or alter game outcomes. This undermines the fairness of games and can lead to significant financial losses for operators due to exploited promotions.
Bonus abuse: Individuals exploit bonus offers by meeting the minimum requirements to withdraw bonuses without genuine play. This drains resources intended for genuine players and skews promotional strategies.
Chargeback fraud: After depositing and playing, fraudsters dispute charges with their bank, falsely claiming unauthorised use. This results in lost revenue and additional fees for operators, alongside potential blacklisting by payment processors.
Affiliate fraud: Fraudsters generate fake activity to claim commissions, inflating legitimate marketing costs and skewing performance metrics, making genuine affiliate partnerships less effective and more costly.
Self-exclusion fraud: Players who've self-excluded to prevent gambling access create new accounts to bypass restrictions, undermining responsible gambling measures and regulatory compliance efforts.
Account takeover: Cybercriminals hijack player accounts to steal funds or sell accounts with high-value in-game assets, leading to financial loss for players and eroding trust in platform security.
Unauthorised transactions: Transactions made without the account holder's consent, often through stolen payment information, result in financial losses for players and chargeback penalties for operators.
Friendly fraud: Players make purchases and then request chargebacks from their bank, claiming fraud, leading to revenue losses and increased scrutiny from payment providers for operators.
Money laundering: Criminals use iGaming platforms to launder illicit funds through seemingly legitimate transactions, posing serious legal and reputational risks to operators.
Unfair gameplay: Players use software or conspire with others to gain an unfair advantage, disrupting the integrity of games and diminishing the experience for other players.
Transaction fraud: Involves the use of stolen or fake payment details to fund accounts, leading to chargebacks, lost revenue, and potential legal issues for operators.
Game-specific fraud: Tailored schemes targeting specific games' mechanics or economies, such as exploiting glitches for profit, damaging the game's integrity and player experience.
7 Ways To Mitigate iGaming Account Fraud
Site Security Enhancements
Operators can significantly reduce the risk of unauthorised access and data breaches by implementing a robust security infrastructure. Strategies include:
- Implement Firewalls: Deploying firewalls is the first line of defense against external threats. They monitor incoming and outgoing network traffic, blocking unauthorised access while allowing legitimate communications. Firewalls can be configured to detect and prevent intrusion attempts, safeguarding sensitive user data and backend systems.
- Use Secure Web Hosting Services: Selecting a web hosting service that prioritises security features is critical. Look for hosts that offer built-in security measures such as attack mitigation, secure data centers, and regular security audits. This ensures that the website and its data are stored in a secure environment, reducing the risk of breaches.
- Encrypt Login Pages: Utilise SSL (Secure Socket Layer) encryption for all login pages to make sure any information transmitted between the user's browser and the website, such as passwords and personal information, is encrypted and secure from interception. Displaying SSL certificates also boosts trust with users, signalling that their data is protected.
- Keep Software Up to Date: Regularly update all website software, including the CMS (Content Management System), plugins, and scripts. Hackers frequently exploit vulnerabilities in outdated software. Staying abreast of the latest updates and patches significantly reduces the risk of exploiting these security loopholes. Implementing an automated system for updates can ensure that software remains up to date without manual oversight.
Identity Verification Methods
Implementing rigorous verification methods can deter fraudsters by making unauthorised access and deceitful activities more challenging. Use the following to enhance identity verification:
- Add CAPTCHAs: Incorporating Completely Automated Public Turing test to tell Computers and Humans Apart (CAPTCHAs) helps prevent automated bots from creating accounts, making fraudulent transactions, or participating in bonus abuse. CAPTCHAs can be simple tests that are easy for humans to solve but difficult for computers, significantly reducing automated fraud.
- Use Authentication Protocols: Implementing advanced authentication protocols, such as two-factor authentication (2FA) or multi-factor authentication (MFA), adds a layer of security. These protocols require users to verify their identity through two or more validation methods, such as a password followed by a temporary code sent to their mobile device. This makes it much harder for fraudsters to gain unauthorised access to player accounts.
- Verify Document Authenticity: For critical transactions or account changes, require users to submit official documents for verification. Utilise advanced document verification technologies that can authenticate government-issued IDs, passports, and other official documents. These technologies can check the documents' authenticity against global databases and use features like facial recognition to match the document with the user, ensuring the person behind the transaction is who they claim to be.
Check Cardholder Information
By focusing on verifying cardholder information, operators can reduce unauthorised transactions and chargeback fraud. Consider the following strategies:
- Require CVV Codes: The Card Verification Value (CVV) is a three or four-digit code on credit and debit cards that provides an additional layer of security for online transactions. When you require users to enter the CVV code during transactions it ensures that the person making the transaction physically has the card in their possession. This significantly reduces the risk of fraudulent transactions made with stolen card numbers.
- Perform AVS Checks: Address Verification Service (AVS) checks compare the billing address provided by the user with the address on file with the card issuer. This process helps to verify the cardholder's identity and can flag transactions where the address information does not match. AVS checks are a powerful tool in preventing fraud, as they make it more difficult for fraudsters to use stolen card information without also having access to the cardholder's billing address information.
Set Time Limits Around Account Creation
Implementing time limits around account creation involves monitoring and restricting the frequency of new account creations from a single device or IP address. Here are specific measures to enforce these limits:
- Use Device Fingerprinting to Identify Multiple Accounts: Device fingerprinting technology collects information about a device's hardware and software configurations, allowing platforms to identify and track devices used to create multiple accounts. By setting time limits on how often a device can be used to create a new account, operators can prevent fraudsters from rapidly creating multiple accounts to exploit bonuses or manipulate gameplay.
- Flag IP Addresses: Monitor and analyse IP addresses to identify suspicious patterns, such as multiple accounts created from the same IP address within a short timeframe. Implementing time-based restrictions on how many accounts can be created from a single IP address helps deter fraudsters from using proxy servers or VPNs to mask their activities.
- Evaluate Email Addresses: Scrutinise the email addresses used for new account registrations. Implement algorithms to detect patterns indicative of fraudulent accounts, such as the use of disposable email addresses or emails with similar patterns created in quick succession. Setting limits on the number of accounts that can be associated with a single email domain within a specified period can further hinder fraudulent activities.
Offer Ongoing Account Protection
Ongoing account protection keeps players' accounts secure from unauthorised access and fraudulent activities over time. Implementing continuous security measures not only protects users but also builds trust in the platform. Consider the following strategies:
- Require Strong Passwords: Mandate the creation of strong, complex passwords for all user accounts. This should include a mix of uppercase and lowercase letters, numbers, and special characters. Implementing a password policy that requires a minimum length and complexity can significantly reduce the risk of brute-force attacks. Encourage or enforce regular password updates to further enhance account security.
- Notify Players of Unusual Logins: Set up a system to detect and alert users of unusual login attempts, such as logins from unfamiliar locations or devices. Sending notifications via email or SMS when the system detects a login attempt that deviates from the user's normal pattern adds a layer of security. It enables users to respond to and mitigate unauthorised access attempts promptly.
- Authenticate Users at Sign-In: Beyond just a password, implement additional authentication methods at sign-in, such as two-factor authentication (2FA) or biometric verification (fingerprint or facial recognition). This ensures that even if a password is compromised, unauthorised users cannot gain access to the account without passing through the additional security layer.
Monitoring Transactions
By keeping a close watch on the flow of funds, operators can detect anomalies that may indicate fraud, such as money laundering, chargeback fraud, or unauthorised transactions. Here are strategies for robust transaction monitoring:
- Set Transaction Limits: Implement limits on the amount and frequency of transactions for deposits, withdrawals, and transfers. These limits can be based on the user's historical activity, account age, or other risk factors. Setting thresholds helps in the early detection of unusual patterns that may signify fraudulent attempts.
- Use Real-Time Analysis: Employ real-time transaction monitoring tools that analyse transactions as they occur. These tools use algorithms and machine learning to identify patterns and flags that deviate from the norm, allowing for immediate action to prevent potential fraud.
- Implement Geolocation Checks: Compare the geolocation of the user at the time of transaction with their known locations to identify discrepancies. Transactions attempted from unusual locations can be flagged for further review or temporarily blocked until additional verification is obtained.
- Track and Analyse Payment Methods: Monitor the types and sources of payment methods used for transactions. Flag the use of multiple credit cards, especially those reported lost or stolen, or the frequent switching between payment methods as potential signs of fraudulent activity.
- Engage in Behaviour Analysis: Analyse user behavior and transaction patterns over time to establish a baseline for normal activity. Sudden changes in transaction behavior, such as a sharp increase in deposit amounts or rapid movements of funds, can indicate fraudulent intent.
Community Data Utilisation
Leveraging community data involves using aggregated data from user activities and interactions within the gaming community to identify and prevent fraudulent behaviors. Here's how operators can effectively utilise community data:
- Analyse Player Interaction Patterns: Monitor and analyse data from player interactions, including chat logs, betting patterns, and game participation. This can help identify collusion between players, such as consistent loss patterns that may indicate money laundering or coordinated actions that disrupt fair play.
- Utilise Peer Reporting Systems: Implement a system where players can report suspicious behaviour or activities. Peer insights can be incredibly valuable, as players may notice subtleties that automated systems might miss. Ensuring anonymity and protecting the reporters encourages the community to participate actively in safeguarding the platform.
- Benchmark Against Community Averages: Use community averages for various metrics (e.g., win rates, deposit frequencies, and amounts) to identify outliers. Accounts that significantly deviate from these averages may warrant further investigation for potential fraud.
- Share Information Across Platforms: Engage in information sharing with other iGaming operators, where legally and ethically permissible, to identify fraudsters operating across multiple platforms. This collaborative approach can help in pre-emptively blocking known fraudsters from accessing new platforms based on community-shared blacklists.
- Leverage Social Network Analysis: Apply social network analysis to understand the relationships and connections between players. This can uncover networks of collusion or fraud rings, enabling operators to take comprehensive action against groups rather than individuals alone.
To find more information about how we can help you stay secure and compliant check out our iGaming page.