Online Streaming Fraud Risks Every Streaming Business Should Know

Did you know that nearly 100 million households globally share passwords to their online streaming accounts? What if we told you that’s not the only fraud risk that could affect your business? Because there are 5 major threats to your business that could be costing you revenue.

Learn about these common pitfalls so that you can adjust your risk management strategy accordingly.

What is Artificial Streaming Manipulation and Fraud?

Online streaming manipulation and fraud refers to any unusual or fraudulent activity related to digital streaming services. This activity includes anything from exploiting platforms for monetary gain to artificially inflating music streams.

Common Types of Fraudulent Streaming Activity

So what are the pitfalls you need to avoid to remain a steady and profitable streaming service? Check out these five threats.

1. Account takeover (ATO) fraud

ATO fraud is an attempt to hack into an online account. And fraudsters use a variety of methods to carry out this attack.

When fraudsters successfully hack into user accounts, they typically change account credentials and sell the entire account online at a lower price. And they can steal stored payment information and open new account subscriptions using those stolen credit cards.

Worse, fraudsters can access and sell more accounts if customers use the same login credentials across multiple accounts. And customers will usually hold the business responsible when their accounts are breached.

Account holders affected by this kind of attack will likely become frustrated and blame you for not securing their accounts. Plus, they may file chargebacks for any purchases made using their stolen payment information.

Over time, customers may lose their trust in you and cancel their subscriptions. After all, customers have an abundance of streaming services to choose from. It would be easy for them to choose someone else who has a more secure platform.

2. New account fraud

New account fraud typically involves creating fake accounts that will not be used by legitimate customers. Fraudsters and opportunistic customers commit new account fraud to take advantage of a promotional offering or sell accounts online at a discount.

For example, say you offer a sign-up bonus for new customers. Suddenly, you get hundreds of new accounts. While it may look like your campaign was a success, many of these sign ups are not from legitimate customers, and the fake accounts result in zero return on customer retention.

Additionally, fraudsters typically create new accounts and use stolen credit cards to pay for the subscription. Then, they sell those accounts online at a discounted price. Eventually, once the original cardholders notice the charges, they dispute them with their banks.

3. Music industry fraud

Fraud in the music industry happens when fraudsters artificially inflate streams of songs. For example, fraudsters will set up an artist account on a music streaming platform, upload some generic songs, and then run a bot to stream those tracks on repeat.

Most music streaming platforms pay artists per stream, so the more streams an artist gets, the more the artist gets paid. If fraudsters use streaming manipulation to get more streams, they take away profits from real artists. As a result, these fake streams make the platform look bad and can turn away legitimate artists.

4. Friendly fraud

Friendly fraud occurs when a customer incorrectly uses the dispute process to get a refund. For example, say that Sally buys a subscription to a streaming service. She watches a whole season of her favorite show and then stops using the platform. After a few months, she notices the charges and immediately calls her bank, believing that someone else used her card to pay for the streaming service.

This kind of scenario happens all the time on streaming platforms. Most of the time, subscribers just forget they signed up for services. But sometimes customers intentionally dispute charges to get out of paying for a service.

5. Password sharing

While some streaming services allow password sharing among household members, many subscribers wind up sharing their login credentials with members outside their households. And this use case typically falls outside of streaming policies — resulting in policy abuse.

However, many subscribers don’t intend to commit policy abuse fraud. For example, say that Jerry — a current subscriber — has a friend who wants to watch one show on a streaming platform but doesn’t want to pay for a whole subscription. So Jerry shares his login credentials, thinking his friend will only watch the one show.

But the friend continues to use the streaming service after finishing the show. This practice might not seem like a big deal to Jerry and his friend. However, password sharing can cost you serious revenue dollars. Just take a look at some numbers from Parks Associate. By 2024, they estimate streaming services will lose around $12.5 billion in revenue to piracy and account sharing.

Password sharing also increases the likelihood of those credentials falling into the hands of a fraudster who may resell those credentials online. So, this practice can be a major risk for your business.

5 Ways to Prevent Streaming Manipulation and Fraud

1. Choose a secure hosting service for your content.

Preventing fraud starts with using secure hosting services —whether that be from a cloud or a content delivery network (CDN). Make sure you do your research and choose a provider who has the same commitment to security as you do.

2. Protect user accounts.

Protecting your subscribers’ accounts involves monitoring account logins and watching for suspicious account behavior. When you notice unusual activity, you should report it to your subscribers as soon as possible.

For example, if there are multiple failed login attempts for an account followed by requests to change personal information or login credentials, that could be a sign of fraud. Subscribers should be notified of this activity and have an option to report it if they did not initiate it.

Additionally, you can challenge unknown logins with further proof of identity using step-up authentication protocols. Sometimes a subscriber might just be logging into their streaming account from a new place. Other times, it might be a fraudster trying to hack into an account. Either way, an extra security step could stop a potentially fraudulent login attempt.

3. Implement authentication tools at sign up.

Knowing who you’re doing business with is key to keeping fraud away. When users sign up for your services, make sure you vet them before accepting them onto your platform. There are a variety of authentication methods available. And using a combination of these tools gives you the best chance at blocking the fraudsters.

For example, most businesses that offer online accounts authenticate users by requiring them to set up a password. On its own, a password doesn’t give you much information about a user, nor does it provide the best account protection.

However, if you complement password authentication with a biometric tool — such as facial or voice recognition, you can collect a whole lot more information from your users. As a bonus, most fraudsters won’t want to waste time going through these extra steps to create an account if they don’t intend to use it seriously.

4. Establish clear lines of communication with customers.

Communicating with your subscribers is essential for reducing friendly fraud. Not only that, but it also helps you establish a long-lasting, trusting relationship. Send regular communications about account security to your subscribers. For example, notify them whenever changes happen to their account — whether the password changed or there’s a login from a new location.

And when it comes to billing, send an invoice each time you are about to charge the subscriber. In the message, include information about canceling the subscription or making changes to the payment information. That way, you encourage subscribers to reach out to you about payment issues rather than their banks.

5. Require users to register devices.

You can prevent password sharing from getting out of hand by limiting the number of devices your subscribers can add to their accounts. For example, if you want to give subscribers the opportunity to share your streaming service with members of their immediate household, require them to register a limited number of devices. Then, any devices that try to log into the account after the threshold has been met will automatically be declined.

Want to Give Your Business an Extra Layer of Fraud Protection?

Sometimes, no matter how hard you try to prevent it, fraud still happens. The best thing you can do is have a strategy in place to protect your business. And that’s where Kount can help. We’re digital trust and safety technology and we’ve worked with streaming services just like yours. To learn more about our unique approach to your industry, check out our online streaming fraud solution.