Guide to preventing iGaming fraud in 2024

1. How to prevent iGaming fraud in 2024

We are in the middle of a boom decade for iGaming. Global revenue in 2017 was $35bn, which is set to quadruple by 2027 to $140bn.  This exponential expansion in participation across various gaming sectors, including poker, bingo, sports betting, and casinos, is primarily fueled by two factors: the legalization and regulation of the industry in various countries and the increasing accessibility of technology and the increasing accessibility of technology. 

One of the few things, however, growing faster than iGaming is iGaming fraud. While iGaming is growing at 10% a year, iGaming fraud is growing by a staggering 400% a year! This proves that iGaming fraud is lucrative and the barrier to entry to entry is extremely low. With an ever-growing army of fraudsters, the types of fraud are evolving at mach speed.

Fraud obviously costs operators in losses, but it can also cause catastrophic reputational damage. Customers want to know they are competing on a level playing field and that they can trust the operator with their personal financial details. Effective iGaming fraud prevention is therefore crucial, and operators have to be ever vigilant to the evolving nature of the threat. 

In this article, we look at all the latest types of iGaming fraud and the measures operators can take to combat them. 

2.  Types of iGaming fraud

Many regions, including North America and Europe, are experiencing an iGaming boom. Meet us at SBC North America on May 7-9 to discuss how Veriff can help keep your business and users safe from fraud.
In every corner of the globe, fraudsters have devised ways to target security vulnerabilities and attack iGaming operators across the player journey, from login to deposit to withdrawal. Some of the most common fraud schemes that threaten iGaming companies include:

Identity fraud (also known as ID theft) 

Involves the use of a person’s stolen details to commit a crime. Common examples of identity fraud include:

• Opening a new bank account
• Taking out a new mobile phone contract
• Starting a new credit agreement
• Obtaining genuine documents like a passport or a driving license in someone else’s name
• Taking out credit, a loan, or benefits

To help stop identity fraud, most businesses now have some form of identity fraud management solution in place. These are designed to help beat identity fraud and keep customer accounts secure.  

Multiple account fraud

New iGaming fraud techniques emerge constantly, but one of the most problematic currently is multi-accounting. This is where players create multiple accounts under different names to cheat at games or abuse bonuses offered as part of marketing promos.

Affiliate fraud

This is a type of fraud that doesn’t involve players but is problematic for operators as fake websites send bad-quality traffic that eats away at marketing budgets with very low ROI.

Chargeback fraud

This type of fraud happens when a player convinces their bank that their card was used fraudulently, and the bank insists the operator refunds the player's money, plus fees. Some players even resort to self-exclusion fraud, where they mark themselves as problem gamblers (a legal requirement) but then log into the platform using an alternative account and blackmail it by saying they will report it to the authorities.

Account takeovers

Fraudsters frequently initiate account takeover (ATO) attacks with the aim of accessing genuine player accounts and conducting unauthorized transactions. These ATOs threaten platform security, potentially resulting in the loss of funds and undermining trust in the business among players. Indeed, a recent study by Sift revealed that 78% of consumers would cease engaging with a brand following an account takeover incident.

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.

Additionally, there are numerous other fraudulent activities specific to gaming, including matched betting, chip dumping in poker, and gnoming.

3. Why is iGaming fraud prevention important?

iGaming fraud prevention is essential for a multitude of reasons. Fraudulent activities can result in substantial financial losses, impeding the business’s expansion. Moreover, these activities can tarnish the brand reputation of iGaming operators, which is crucial for attracting and retaining customers.

In addition to protecting the company’s financial and reputational assets, iGaming fraud prevention is vital for regulatory compliance. Betting operators are mandated to implement certain checks and balances to safeguard players, and failure to comply with these regulations can lead to penalties and legal repercussions. Furthermore, by preventing fraud, iGaming operators can bolster customer trust and satisfaction, as customers are more likely to continue using a platform they perceive as secure. Fraud prevention also plays a significant role in combating serious financial crimes like money laundering.

4. What are the challenges of iGaming fraud prevention?

iGaming fraud prevention poses significant challenges due to the unique nature of online gaming platforms and the evolving tactics used by fraudsters. Fraudsters are constantly developing new and sophisticated techniques to evade detection, including using fake identities, employing automation tools, and collaborating with others to cheat the system. Additionally, iGaming platforms often operate across borders, making it challenging to navigate and comply with the different regulatory requirements of various jurisdictions. Fraud prevention systems must adapt to different legal landscapes and ensure compliance.

Online gaming involves high-frequency transactions, particularly in poker or sports betting. This rapid pace makes it difficult to manually review every transaction for potential fraud, necessitating automated fraud detection systems. However, gathering and storing customer data for fraud prevention can raise privacy concerns. Striking a balance between protecting user data and preventing fraud is a constant challenge, especially in the face of evolving data protection regulations. Overzealous fraud prevention systems can sometimes flag legitimate transactions or users as suspicious, resulting in false positives. If valid transactions are rejected, this can lead to customer frustration and potentially lost revenueThis can lead to customer frustration and potentially lost revenue if valid transactions are rejected.

Fraudsters may collude with each other or even have insiders within the platform who aid in fraudulent activities. Detecting collusion and insider threats can be challenging, as the perpetrators may not exhibit obvious signs of fraud. As technology advances, so do the tools and techniques available to fraudsters. Keeping up with these developments and ensuring that fraud prevention measures remain effective requires ongoing investment and adaptation. 

iGaming fraud prevention is a complex and ever-evolving field, where staying one step ahead of fraudsters while maintaining a seamless user experience and complying with regulatory requirements is an ongoing challenge for operators in the industry. It requires a combination of advanced technology, expertise, and a commitment to continuous improvement to address these challenges effectively.

5.  iGaming fraud trends 2024

iGaming fraud, much like other forms of fraud, is highly adaptable and constantly evolving. Staying informed about the latest trends is essential.

In 2024, multi-accounting emerges as one of the most prevalent types of iGaming fraud. This tactic involves fraudsters creating multiple accounts to maximize their illicit gains. Such activity may involve using a single device or coordinated bot attacks across multiple machines.

Secondly, chargebacks continue to present significant challenges for businesses in 2024, as consumers frequently dispute legitimate transactions. This can result in substantial financial losses and increased administrative burdens.

The rapid expansion of affiliate marketing brings the risk of funneling undesirable traffic to your website, often resulting in no actual sales or automated bots triggering affiliate payout rewards. This underscores the critical need for robust monitoring and detection mechanisms to identify affiliate fraud.

Lastly, the issue of bonus and promo abuse remains persistent for iGaming platforms that offer promotional incentives to attract customers. Fraudsters are becoming increasingly creative in exploiting bonuses, loyalty programs, and reward systems.

6. How to prevent iGaming fraud

iGaming companies must adopt multifaceted prevention strategies to tackle fraud effectively. These strategies encompass verifying identities, analyzing behaviors, securing payments, conducting routine audits, and providing staff training. This section outlines several tools utilized in fraud prevention.

Artificial intelligence and machine learning

An effective method for iGaming operators to prevent fraud is closely monitoring website traffic and implementing automated measures. This may involve utilizing affiliate software with built-in Anti-Fraud Logic, which can automatically identify and flag suspicious traffic and activities.

By isolating bad affiliates through traffic monitoring, new customers coming from a referral can be tracked using an ID. It’s crucial, therefore, to deploy systems that can analyze this data effectively. 

KYC regulations

Implementing enhanced Know Your Customer (KYC) regulations is another effective measure. KYC is a process that financial institutions and other regulated entities (including gambling operators) use to verify the identities of their customers and assess the potential risks associated with them before entering into a business relationship. The KYC process helps prevent identity theft, fraud, money laundering, terrorist financing, and other illicit activities. 

It’s important to remember that iGaming fraud is adaptive and evolves constantly. Therefore, staying on top of the latest trends is crucial for effective fraud prevention.

7. How Veriff can help with iGaming fraud prevention?

The gaming sector faces significant challenges, including expensive and intricate regulatory standards. Additionally, there's a desire to provide a personalized user experience that sets your brand apart and reduces obstacles. Veriff streamlines processes to be fast, easy, and user-centric while ensuring compliance. Veriff aids gaming operators in swiftly and effectively onboarding new players, and our identity verification solutions guarantee that only individuals meeting your age, location, and KYC criteria can access your services.

Identity Verification

Full-service online identity verification solution to quickly onboard and verify real players. 

Age Validation

Veriff’s Age Validation solution enables your business to seamlessly confirm whether or not users are above a minimum age threshold. Choose to grant access to age-appropriate users while underage users are automatically declined. 

AML Screening

Automated and ongoing PEP and sanctions checks to comply with AML regulations.

Proof of Address

Simplify your Proof of Address (PoA) process and make it easy for your users to verify their address. Proof of Address from Veriff saves time, reduces friction, and helps you stay compliant while getting a comprehensive view of a user's identity. Seamlessly integrate Proof of Address into identity verification when required by regulators.

Biometric Authentication

Biometric Authentication is a fast, convenient, and secure way to authenticate your trusted players.

8. FAQ

1. What is IGaming fraud industry?

The iGaming industry, short for "internet gaming," encompasses a wide range of online gambling activities and services. It is a dynamic sector where players engage in various forms of betting and gaming over the internet. This includes online casinos, sports betting, poker rooms, bingo, and more. The industry has witnessed exponential growth due to the accessibility and convenience of online platforms, allowing players to wager from the comfort of their homes or on the go via mobile devices. Moreover, technological advancements, such as live dealer games and virtual reality experiences, have enriched the iGaming experience. However, the industry also faces regulatory challenges and concerns related to responsible gaming and consumer protection.

2. What is the most common iGaming fraud?

The most common iGaming fraud is multi-accounting. This is when a player creates multiple accounts under different names in order to cheat at games, abuse bonuses, or launder money. Multi-accounting is a major problem for iGaming operators because it can give players an unfair advantage and lead to financial losses. To combat multi-accounting, operators employ various techniques including biometric authentication and verification, IP address monitoring, device fingerprinting, and cross-referencing player information.  Bonus abuse is another common form of iGaming fraud. This is when players take advantage of bonus offers in ways not intended by the operator. For example, players may create multiple accounts to claim the same bonus multiple times, or they may use bonus funds to play games that are not eligible for the bonus.