iGaming Fraud Prevention: How to Mitigate Risks and Stay Profitable

iGaming — or online gambling for games and events — has been steadily increasing in popularity. Despite its appeal, iGaming is not without fraud risk. In fact, its growth has contributed to the rise in account takeover fraud and bot attacks on the wider online gaming industry.

Here's what you need to know about iGaming fraud prevention.

What is iGaming Fraud?

iGaming fraud is any type of fraudulent activity targeted at iGaming operators and players, online casinos, and online betting shops.

The reason this industry is so appealing to fraudsters is because it promises high rewards. Global online gambling is a multi-billion dollar market. And fraudsters are reaping the benefits. Because online fraud allows them to remain anonymous and online casinos lack the face-to-face interaction of traditional casinos, fraudsters can get away with all kinds of schemes.

Fraud Threats in the iGaming Industry

As a merchant in this vastly growing industry, you face a multitude of threats each day. While fraudsters perpetuate the majority of these attacks, even customers you might know can take advantage of your generosity and commit fraud.

Account takeover attacks

During account takeover attacks — sometimes referred to as account takeovers — fraudsters hack into player accounts with stolen credentials. Sometimes, they may deploy bots to crack valid username and password combinations.

Once fraudsters get into accounts, they may change account credentials, steal payment information, drain any stored account value, or make unauthorized purchases with the account information.

Bonus Abuse

Bonus abuse happens when a fraudster or player exploits promotions for personal gain. For example, a fraudster might create multiple fake accounts to take advantage of a sign-up bonus.

Chargeback fraud

Chargebacks happen when cardholders dispute purchases with their banks. And they can happen a couple different ways.

Unauthorized transactions

Payment fraud happens when a fraudster uses stolen credit cards and debit cards to make purchases. In iGaming, a fraudster may use stolen cards to top off betting accounts. When cardholders discover the fraud, they call their banks to dispute the charges.

Friendly fraud

Friendly fraud happens when cardholders and opportunistic customers use the chargeback process incorrectly. For example, a player might regret the amount gambled and falsely claim fraud to get the money back. Or a significant other might not know the family member is gambling and disputes the charge as suspected fraud.

Multi accounting

Gnoming, or multi-accounting, involves players creating multiple online gambling accounts to help one player win or increase their odds of winning over other players.

Money laundering

Online casinos provide an easy opportunity for fraudsters to launder money. They can buy chips with laundered money, gamble, and then cash out with real money. This threat puts you at risk of failed compliance with anti-money laundering (AML) regulations.

Self-exclusion fraud

Some casinos participate in self-exclusion policies — which allow a person with a gambling problem to request their name be added to a self-exclusion list. The person is then legally banned from participating casinos and faces repercussions for entering those casinos.

In this scam, fraudsters open online gambling accounts and make false claims under the self-exclusion policy to blackmail iGaming operators into getting a refund.

Unfair gameplay

Unfair gameplay refers to using tactics to gain an advantage over other players or bypass restrictions set by the iGaming operator. For example, players can use bots to assess the odds in a game and bet accordingly. Underage players often use technology to bypass ID verification so that they can gamble.

How to Prevent iGaming Fraud

Protecting your online casinos and sports betting sites is crucial to maintaining the success of your business. Although iGaming fraud prevention can be difficult, the benefits far outweigh the negatives.

Improve site security

First and foremost, make sure your site is safe for users. That includes everything from monitoring your site traffic to protecting account logins.

Implement firewalls

Firewalls allow you to monitor your site traffic and filter out bad traffic — such as traffic from bots. Implementing firewalls can improve your overall site security and give you better insight into who is visiting your online casinos.

Use a secure web hosting service

Choose a host that is aware of threats and offers ongoing support. Also make sure your host backs up your data to a remote server so that you can easily restore it in case your site is hacked.

Encrypt login pages

Use SSL encryption on your login pages to prevent fraudsters from accessing your login data. SSL is a web security protocol that allows sensitive information — like credit card numbers, social security numbers, and login credentials — to be transmitted securely through a web browser.

Keep software up-to-date

Fraudsters are always on the lookout for loopholes and weaknesses in web software. Combat their efforts by regularly updating all the software products you use.

Implement identity verification methods

Preventing fraud starts by separating the good customers from the fraudsters. You also need protocols that allow you to verify that users are who they say they are.

Add CAPTCHAs

A CAPTCHA is a test to determine if a user is a human or a bot. When users sign up for a new account or make a purchase, require them to fill out a CAPTCHA.

Use authentication protocols

Require two-factor or multi-factor authentication to verify your players. These protocols require users to provide multiple pieces of information to prove their identity — which can deter fraudsters trying to hack into someone’s account.

For example, you can send an authentication link to a user’s phone when they log in. Or you can use protocols like fingerprinting or facial recognition.

Verify document authenticity

If you require a player to provide a driver's license or other documentation to prove age and identity, make sure your technology can detect liveness. In other words — determine if the player is taking a photo of an actual item or uploading a fake document that’s been computer generated.

Check cardholder information

The more information you collect from your users, the better your chances are at identifying and preventing fraud. During checkout, ask for more information so that you can verify that the cardholders are the ones making purchases.

Require CVV codes

The card verification value (CVV) is a three-or-four digit number on a credit or debit card that’s meant to help verify online purchases. Businesses can’t store security codes, so if fraudsters obtain card credentials from a data breach, they likely won’t have the CVV. Requiring this information could block card testing and prevent unauthorized transactions.

Perform AVS checks

Address Verification Service (AVS) compares the billing address provided during checkout to the billing address on file with the cardholder’s bank. If the addresses don’t match, the user probably isn’t the cardholder. Checking this information can help you reduce unauthorized transactions.

Set limits around account creation

Players that cheat by multi-accounting ruin games for the rest of your players — and potentially cause them to leave your platform altogether. However, you can set up policies to reduce this activity.

First, you’ll need to analyze your users to identify suspicious behavior. From there, you can limit or block attempts to create multiple accounts.

Use device fingerprinting to identify multiple accounts

Device fingerprinting is collecting information — such as the software and hardware — of the devices used to access your website. Collecting this information can help you identify users who try to create multiple accounts using the same device.

Flag IP addresses

You can identify a user’s attempt to create multiple accounts by checking IP addresses and flagging known VPN IPs. Then, you can limit the number of accounts that can be associated with that IP address.

Evaluate email addresses

Evaluate email addresses used during sign up to identify suspicious account creations. With technology, you can find out when the email was created, how often it has been used, and when it was last used.

Newer email addresses with no usage history can be a sign of fraud. If you’re able to identify suspicious emails, you can then block or challenge attempts to create accounts with them.

Offer ongoing account protection

The players are at the heart of your business. And if you want to maintain positive relationships with them, you’ll need to protect their accounts. Account takeover prevention software is the easiest and most accurate way to give your players the right protection, but you can also implement tools and policies to remind players that you care about securing their accounts.

Require strong passwords

Help keep accounts safe by requiring players to create unique, strong passwords. Most account takeover attacks happen because users share the same weak or easy-to-guess password across multiple accounts.

Notify players of unusual logins

When a user logs in from an unknown device, notify the account holder that an attempt has been made to sign in from a new device. This reminds your players that account safety is important to you and encourages them to monitor their accounts.

Authenticate users at sign in

You can also implement authentication protocols like MFA when users log in from new locations or devices. Of course, if the user is logging in from a known location, this step wouldn’t be necessary.

Monitor transactions

Regularly check your transaction data to identify any suspicious activity that could indicate fraud. Some red flags include unusually large bets or frequent deposits from multiple accounts.

It’s also important to monitor transactions so that your platform doesn’t contribute to criminal money laundering or terrorist funding. AML regulations mandate that merchants carry out customer due diligence. Failure to comply with these regulations could leave you with huge fines and penalties.