Bonus Abuse: what is it & how to stop it

1. What is Bonus Abuse?

Bonus exploitation is the act of registering for a service multiple times in order to repeatedly obtain promotions or sign-up bonuses that are intended solely for new users. This practice is also referred to as multi-accounting and is particularly prevalent in the online gambling or iGaming industry.

Bonus exploitation is also known by various other terms, such as promotion misuse, bonus hunting, and bonus manipulation.

Although it primarily impacts websites offering poker, casino, and sports betting services, any business that relies on sign-up bonuses as a marketing tactic could be susceptible to this risk.

Recent reports indicate a significant 71% increase in instances of bonus exploitation reported by online gambling companies.

2. How Bonus Abuse works?

Many iGaming operators rely on special promotions or bonuses to entice new customers or keep existing ones interested. Doing so has become a staple for new and old brands in the industry and this looks to remain the case for at least some time to come. 

These bonuses are designed to encourage players to continue betting using their own money once the bonus funds have run out.

Bonus abuse involves unfairly manipulating promotion incentives aimed at those yet to sign up. 

Given that most bonuses can only be used once, fraudsters often set up multiple accounts to take advantage of repeated bonuses.

It works in fraudsters' favour to target free bet promotions and bonuses that have no deposit requirements and then withdraw the funds that they have made before they get caught. And as long as people can get away with this, then the abuse will continue.

In fraud terminology, this process is known as multi-accounting, one of the biggest problems that iGaming companies have to contend with. 

Multi-accounting sees fraudsters create as many new accounts as possible – a process called ‘gnoming’. 

They do this using disposable emails, stolen IDs, synthetic identities, and fake, stolen, or prepaid credit information details. This, in turn, causes huge compliance and regulatory issues. 

But once they’re in the system with multiple accounts, fraudsters can begin their attacks.

There are also advanced gambling communities consisting of tech-savvy criminals who collaborate to take advantage of these bonuses (referred to as bonus hunting). They employ betting bots, virtual machines, emulators, and simulated IP addresses to exploit the system. 

The greater the resources these scammers possess to create accounts, the more profitable bonus abuse becomes for them.

Nevertheless, not all individuals engaging in bonus cheating are professional fraudsters. Many are ordinary gamblers who mistakenly believe they are only "gaming the system" and are unaware they are stepping into unlawful territory.

Although bonus fraud may not be explicitly prohibited by law, it typically violates the terms and conditions of the company. It can result in an individual being barred from other gaming platforms.

3.  Why do iGaming businesses give out bonuses?

Bonuses often play an important part in the marketing strategy of many iGaming companies. This is because, owing to heavy regulations from governments and gambling bodies, these organizations need to pay close attention to their budgets and choose to spend their money as wisely as possible. 

The aim of bonuses is to attract new players and retain existing ones – and they are often the most reliable way to grow and build a loyal player base. They do this by optimizing the player’s gaming experience by providing, for example, bonus money, free spins, or a combination of both.

4. Most popular types of Bonus Abuse

Importantly, for operators to obtain authorization and avoid future fines, the adoption and implementation of responsible gambling policy and money laundering controls and procedures is of uttermost importance. Proper implementation of a responsible gaming policy will require operators to check and ensure that only persons above 18 years of age can participate. The money laundering controls, on the other hand, require the identity verification process to be completed for bettors as required under Brazilian legislation. Moreover, in order to enable prospective bettors to open an account and perform monetary transactions, the law further introduces a novel requirement of verifying the bettor’s identity by using facial recognition technology. 

5. Why do fraudsters target gaming operators?

For decades, scammers have been focusing their efforts on deceiving gaming establishments. The strategies they have employed to cheat casinos and the like can also be applied to fraudulent activities in the online realm. 

One particular area that scammers exploit in online gambling fraud is promo abuse. This was made possible because operators offered generous bonuses with low betting requirements. As a result, the floodgates were opened for fraudsters. 

However,  operators have recognized this issue and have made attempts to try to curb it, but nevertheless, fraudsters have continued to employ different tactics to great effect.

Today, gaming platforms are more likely than ever to be targeted due to their soaring popularity, which began to climb during the pandemic. The more people gravitate towards a particular trend, the more potential victims exist to fall foul to fraudsters. 

Gaming websites are also likely to have high transaction volume. Many players could be making large numbers of payments regularly, too, which might make detecting illegal and fraudulent behaviour much more challenging. 

6. How to prevent Bonus Abuse?

Most systems struggle to effectively detect whether or not a single person has multiple accounts. As such, bonus abusers can easily sign up to receive the same sign-up bonus by registering with multiple identities. So long as they avoid detection, they can continue to cash out and repeat the process.

Detecting the first signs of bonus abuse is therefore, key to preventing this type of fraud. Gaming companies should be on the lookout for certain patterns and behaviors including:

• Suspicious IPs such as those using a VPN, TOR browser, or blacklisted residential-like proxies.
• Repeat visitors who use a similar combination of hardware and software.
• People signing up significantly faster than the average user. 
• Dumping of chips or withdrawing winnings quickly after registration. You might see, for example, a newly assigned bonus being instantly lost to a third person at a poker table
• Suspicious patterns of play on certain games. Take poker for example.  Here, players can play against each other and more easily manipulate the outcome. Games like this are most at risk of bonus abuse.

More organizations are looking for solutions to help better protect them and their customers from fraudulent activity. For obvious reasons, KYC and ID verification platforms have become crucial in helping gambling operators identify potentially criminal and/or fraudulent practices.

7. How is Veriff helping gaming operators?

The gaming industry has high hurdles to clear — such as costly and complex regulatory requirements and delivering a bespoke user experience that differentiates your brand and minimizes friction. Veriff is helping gaming companies across the board. Veriff makes things as quick, simple, and user-friendly as possible while supporting compliance requirements.

Verify players the first time

Improve your conversion rates with an easy and straightforward verification flow which helps real players get verified on the first try. Confirm players´ ages with one simple integration.

Make onboarding simple

Know that people who are using your platform are who they say they are and keep your online community safe. Get people playing with no hassle — Veriff provides an intuitive and inclusive process that allows users to use the device or platform of their choice whether that be iOS, Android, or the web.

Reduce errors

Leverage industry-leading AI and data extraction to prefill forms with data from a government-issued identity document, while mitigating manual input error.

A layered approach

We can combine face, document, device, and network diagnostics with video-based behavior analysis to mitigate sophisticated advanced and recurring fraud such as chip dumping, bonus abuse, and multi-accounting.