Unveiling Deceptive Practices: An Interactive Handbook on iGaming and Betting Scams (2024)
In the rapidly growing world of online gambling, iGaming, fraudsters are constantly seeking new ways to exploit systems and profit illegally. From hacking into honest gamblers' accounts to place bets and claim prizes, to using stolen identities to trick gambling platforms, iGaming fraud poses a significant threat.
One form of iGaming fraud that has gained traction is chargeback fraud. This insidious practice occurs when players dispute legitimate transactions made on gaming platforms to unfairly get a refund while keeping the winnings or services. Chargeback fraud can take two forms: criminal fraud using stolen credit card information and friendly fraud committed by the actual cardholder.
The nature of digital goods and services in iGaming makes it harder to prove delivery or usage, and losses can motivate disputing charges fraudulently. To combat this, a layered approach is crucial.
Transparent communication is key. Clearly displaying product details, billing information, refund policies, and providing easy access to customer support reduces misunderstandings that lead to disputes. Advanced fraud prevention tools like Address Verification Service (AVS), 3-D Secure (3DS), IP geolocation, velocity checks, and behavioral analytics can detect and block suspicious transactions before authorization.
Pre-dispute alerts, such as Ethoca or Verifi, provide early warnings about disputes, allowing businesses to address them proactively with customers, potentially avoiding formal chargebacks. Reviewing and analyzing chargeback trends can help identify high-risk transaction types, regions, or payment methods, enabling adjustments to operational and payment policies to minimize exposure.
Prompt and thorough dispute handling is also essential. Gathering evidence from transaction records, KYC data, and gameplay logs can help respond effectively when a chargeback claim occurs. Employing AI-powered platforms to cross-check customer data and detect synthetic or fraudulent identities before they cause chargebacks further strengthens defences.
Money laundering in gambling can take several forms, including depositing money with illicit origin to an account and depositing it soon after, or "cleaning" illegal money by placing bets with low-risk outcomes. Regulators are taking a closer look at compliance in the iGaming industry, imposing heavy fines for violations of Anti-Money Laundering (AML) and responsible gaming requirements.
The iGaming industry is predicted to surpass $172.2 billion by 2030. With such substantial growth, it is essential for operators to prioritize compliance and fraud prevention measures to maintain trust, protect their reputation, and ensure long-term success.
Lastly, malicious affiliates use illicit tactics to get unearned commissions, such as hand-entering fake leads into a business's CRM or generating traffic through bots. As the iGaming industry continues to evolve, so too must the strategies employed to combat fraud and maintain a secure and fair environment for all participants.
Sports betting platforms, being part of the broader iGaming industry, are vulnerable to chargeback fraud due to the nature of digital goods and services. To address this, these platforms should invest in transparent communication, advanced fraud prevention tools, and prompt dispute handling mechanisms, while also implementing AI-powered platforms to detect fraudulent identities and ensure long-term success in the rapidly growing sector.
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