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Understanding and solving fraud in iGaming

Tuesday, 14 December 2021

The online gambling industry is becoming a victim of its own success. As it grows, attracting more players and generating more revenue, it has piqued the interest of fraudsters. This is a growing issue for iGaming companies, but you can mitigate the risks by understanding the different kinds of fraud and the solutions available.


Chargeback fraud

Chargeback fraud is a big problem for online gambling operators. If your chargeback ratio reaches a certain level, you can end up with your merchant account suspended. Chargebacks can occur for many reasons, including not recognising the transaction or simply forgetting a payment. But some are deliberately fraudulent.


Players suffering from “players remorse” will deposit money, bet, lose it, and then dispute the card payment with the bank. More often than not, the bank will refund the money to the detriment of the operator.


There are other kinds of chargeback fraud, for instance, when a card is used fraudulently, and the owner disputes the charge with the bank to get the money refunded. However, the issue remains complex as both banks and operators want to protect their clients from fraud while keeping chargeback ratios low.


Identity fraud

Businesses that work online and conduct payments digitally are at an increased risk of identity and card fraud. Criminals purchase stolen cards and use those to gamble away other peoples’ money. These cases are often not identified until a chargeback takes place.


Other instances of these frauds include creating fake accounts using stolen identity documents. Information such as name, date of birth, age, and address can be found easily or purchased on the dark web. Despite tough regulations and increasing compliance requirements, criminals always find a way. As online gambling becomes more and more popular, the incentive for criminals to target the sector increases.


Multi-account fraud

Otherwise known as promotions abuse, multi-account fraud is where one player will open multiple accounts to avail themselves of incentives, bonuses, and special offers. They believe they will stand a better chance of winning more, for less, using this method. Some will even borrow accomplices personal information and give them a cut of the winnings. This is a big issue for operators as if enough people participate in these schemes, losses can soon rack up.


Fraud management and detection

With cases of fraud ever-evolving and increasing, operators should be aware of how to counter the issue. Furthermore, regulators are looking to online casinos and betting sites to be proactive and take as many steps as possible to prevent fraud. While it is impossible to eliminate criminal behaviour, providers must make the maximum effort.


These include steps such as the following:

  • Using AI: Artificial intelligence can mitigate the risk of fraudulent behaviour in several ways. For example, it can onboard clients and deal with customer service inquiries. It can also analyse countless transactions in a fraction of a second to identify suspicious behaviour. There are many AI and machine learning solutions to help online gambling platforms deal with fraud.
  • Blockchain technology: Another weapon in the arsenal is blockchain technology. When a transaction is made on the blockchain, it is immutable. This means it cannot be altered or deleted, and it maintains a permanent digital paper trail. In disputes or potential chargebacks, this kind of record is indispensable. If you allow cryptocurrency payment, it can also help reduce the risk of credit and debit card fraud.
  • Improving customer service: If you have a fantastic customer service team on-call all the time, you can help resolve issues before they escalate. While this may not reduce much fraud per se, it will keep your customers happy and make them feel confident when gambling with you.
  • Being compliant: Compliance is not optional; it is an obligation. But being compliant will also help you in protecting yourself and other customers. Compliance rules are designed to weed out criminal behaviour and ensure your platform is not complicit. By enforcing all the rules and being proactive about others, you can make your platform safer for all involved.
  • Investing in tools: To reduce fraud on your online gambling site, you will need to invest in some tools to help you. Asides from those already mentioned, you can consider behaviour analytics tools that can verify whether a gambler is a person or a bot. Another suggestion is a technology that can identify if a certain device has already opened an account with you. This can help combat multi-account fraud and prevent more than one sign up. This kit can also tell you whether the location of the device and the address being used to sign up match.


Fast Offshore

We have worked in the online gambling sector for 24 years. If you want to start a gambling company, or you own one and are looking for assistance, Fast Offshore can help. From managing all corporate matters, including incorporation, payments, licensing, and offering expert advice, we are here to help. Contact us today to talk through your business aims and take the first steps.

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