Stay Safe and Play Smart: Tips for Recognizing Online Gambling Fraud
Curious about iGaming fraud but unsure where to start? Look no further!
In this guide, we’ll cover the fundamentals of online gambling fraud, its impact on businesses, and the cutting-edge solutions to safeguard yourself against it.
What is online gambling fraud?
Cybercriminals attempt to defraud or fool operators of online gaming platforms. It can manifest in a variety of ways, including opening several accounts, taking advantage of bonuses, affiliate fraud, money laundering, and even murky practices like arbitrage.
Fraud analysts refer to gambling fraud as any unethical or harmful behavior that fraudsters use to steal money, bonuses, or other benefits from online gaming companies or to aid in other fraudulent activities.
Online gaming is a target for fraud due to its accessibility and linkages to money launderers. Fraud on all sorts of online gambling platforms, such as poker rooms, casinos, slots sites, bingo rooms, and bookies, worries legislators and regulators as well.
Most Common Types of Online Gambling Scams
Although scammers are always coming up with new ways to game the system, there are a few standard strategies to be wary of:
Multi-Accounting
By creating numerous fictitious accounts with false information, scammers frequently use this method to gain an advantage online. Then, these accounts are employed in different ways.
Bonus Abuse
Fake accounts abuse new player bonuses and offers. Although these offers draw gamers, if too many bonuses are offered, platforms may suffer financial losses.
Gnoming
When playing games like poker, scammers frequently use numerous accounts to help one player win. In order to transfer wins and bonuses to the primary account, other accounts purposefully lose.
Chip Dumping
When playing poker, scammers open several accounts and coordinate their actions at the same table to rig the results in favor of or against particular players.
How to Stop Online Gambling Fraud
The implementation of sound KYC (Know Your Customer) procedures is essential for preventing fraud in online enterprises. This calls for the adoption of fraud detection software that both adheres to KYC regulations and concentrates on the particular dangers associated with online gaming.
Implement these actions, starting with onboarding, to ensure compliance and combat fraud:
- Using official papers to verify identification (depending on local legislation)
- PEP (Politically Exposed Persons) checks,
- age verification,
- AML-mandated procedures, including any applicable watch lists, criminal lists, and sanctions lists
You can use the following techniques to look for fraud during the registration process:
Device fingerprinting
Determines whether numerous accounts are being used from the same device in order to identify collusive conduct.
Password hash analysis
It helps catch most fraudsters, as they rarely create unique passwords for each fraudulent account.
Digital footprint analysis
Reputable phone numbers and emails are frequently connected to social media profiles, offering personal information about the user.
IP fraud score analysis
It provides details about a person’s location and online activity, much like device fingerprinting.
Behavior and velocity checks
Look at user behavior and compare it across time to find odd trends, like logging in several times from the same IP address in a short amount of time.
To verify account ownership at deposit, withdrawal, and other touchpoints, most of these processes can be employed. Device fingerprinting and IP analysis can detect account takeovers (from stolen passwords or phishing assaults).
How does fraud affect an online gambling site?
Impact of fraud on online gambling sites:
- Loss of revenue: Fraud leads to spending on chargebacks, loss of bonuses, and wasted time, resulting in financial losses.
- Reputation with payment processors: High chargeback rates can result in a ban by payment processors, which will limit their ability to accept deposits.
- Waste of resources: Time spent chasing fraudsters and improving processes to reduce risk is a significant resource drain.
- Overwhelmed customer support: Increased complaints from fraud-related issues can overwhelm customer support teams.
- Compliance issues: Failure to detect fraud or address self-excluded players can result in fines and legal trouble from regulators.
- Reduced customer satisfaction: inability to resolve fraud issues for legitimate players can lead to dissatisfaction and loss of customers to competitors.
- Impact on multiplayer games: Failure to control fraud in games like online poker can lead to a decline in the number of users.
Why is online gambling at increased risk of scams?
Online gambling faces an increased risk of scams due to
- Advancements in technology and the growing popularity of online gambling attract fraudsters seeking loopholes in platforms.
- Research shows significant variation in fraud volume and types across regions, with up to a 38% risk variance.
- Balancing acquiring new players with managing risk and keeping existing players satisfied poses unique challenges for operators.
The online gambling industry’s growth is significant, with global revenue predicted to reach $92.9 billion by 2023.
The rise in online gambling also brings an increase in scams, as fraudsters exploit platform vulnerabilities for their own gain.
Summary
For gambling operators, monitoring and preventing fraud is a complex task due to the nature of their operations as digital wallets. KYC (Know Your Customer) and AML (Anti-Money Laundering) are significant challenges in the industry due to strict legislation and hefty fines. Building trust with players is crucial for gambling operators, as their business relies on user trust and loyalty. Preventing fraud and demonstrating commitment to player safety can have positive long-term consequences for the business.