Online Casino Fraud Prevention

The world of online casino fraud and real money games is very diverse; the scams are as varied as the games and bets themselves. Let’s take a look at the common types of casino fraud seen in this industry:

Promo abuse 

Promos are a great way to get people in the digital door—after all, it’s hard to say no to free spins, chips, credits, or other forms of bonuses or discounts. Promotions, coupons, and bonuses are usually a win-win for users and operators. The user gets something free, discounted, or extra, and the operator gets to draw in new business and encourage returning users to keep coming back. But when bad actors get involved, the house doesn’t win.

By creating multiple accounts, using multiple devices, and using app cloners and tamperers to run multiple instances of the gaming app at once, promo abusers can take advantage of promotional offers in a way that wasn’t intended. Handing out a few free chips in exchange for encouraging a new user to sign up isn’t a bad deal, but unknowingly handing out hundreds of free chips to the same person under different accounts can have a large negative financial impact. The more the problem scales, the worse the impact gets. 

Chargeback fraud 

Chargebacks are an important part of protecting consumers from the negative impacts of fraud, but unfortunately, they can also be abused to leave merchants in the cold. In this form of gambling fraud, a consumer makes bets and spends money at the online casino using their own card, only to dispute the charge later as though it was made illegally. Of merchants who dispute chargebacks, the average win rate is only 32%, and those odds only get worse for an adult-oriented industry like online gambling.

Identity theft 

Identity theft is a high-stakes problem in the online gambling world. Bad actors who commit identity theft score big, not by mastering the game or getting lucky, but through stealing other players' personal and financial details. Identity theft can have financial consequences for the platform in the form of chargebacks from true cardholders, and it also undermines players’ trust in the platform’s integrity, hurting retention and spending.

Account takeover (ATO) fraud 

Account takeover fraud is a losing situation for everyone (except the fraudster). The victim loses access to their account as well as any money, personal information, or other assets the attacker is able to steal. They also have to endure the stress of knowing their account has been compromised until it can be secured again.

The platform has to cope with the loss of consumer trust and any financial consequences related to compensating the victim or addressing chargebacks from transactions made by the attacker. Additionally, investigating and reinstating compromised gambling accounts takes up precious time that might have otherwise been spent benefiting the platform instead of putting out fires.

Player collusion 

Part of the fun of skill-based real money games like poker is the combination of chance and skill—you might draw a poor hand, but if you’re good enough, you could bluff your way into a win. Colluders remove this chance-based element of the game by rigging it in their own favor. When players collude, particularly in card games like poker, they join an online game as though they were strangers, only to communicate and manipulate the game in secret.

Meanwhile, the other players have no idea that the deck is stacked against them. This form of cheating can lead to legitimate players feeling burned by unfair games as well as the platform losing money in payouts to fraudsters.

Location spoofing 

Location spoofing is a kind of Swiss army knife for online casino fraud. It allows fraudsters to mask their true identity and to manipulate aspects of the online gambling industry that rely on location, such as jurisdictional compliance and some automated fraud detection measures.

Gambling laws in the U.S. change by state and jurisdiction. If someone using location spoofing is in a jurisdiction where online betting is illegal, they can use spoofing tools to jump location to a jurisdiction where it’s allowed.

Multiple accounts (multi-accounting) 

Multi-accounting is another technique that allows fraudsters to scale and spread their fraud activities out across multiple attack vectors. For example, in gnoming schemes, bad actors can use multiple accounts to populate a game like poker—all of the “players” would be multiple accounts owned by one bad actor. To the platform everything appears normal, but the bad actor is able to use the phony accounts to throw the game and pocket the winnings.

Multi-accounting can also be used to support a collusion scheme in a practice known as chip dumping. In this case, one or more fraudsters might join a game against real people while also using fake accounts to join the same game and tilt it in their favor.

Promo abuse is another practice that can’t scale meaningfully without the ability to make multiple accounts. People can abuse promotions by making multiple accounts, using multiple devices, or using cloning apps. Multi-accounting is particularly appealing to fraudsters because it’s much more cost-effective than purchasing dozens of different mobile devices.

Lastly, having multiple accounts gives fraudsters much more ability to avoid accountability. After all, if you have dozens of accounts to use for fraud, it matters less if one account gets caught and banned for abuse. If casino fraud cases can’t be connected to the same person across different accounts, it’s much harder to enforce a penalty.

In a brick-and-mortar casino, fraud still happens, but it’s arguably a lot harder for the fraudster to get away with. You might give the operator a fake ID, but short of any Hollywood-level cosmetic shenanigans, you won’t be able to hide your face. That’s one barrier to fraud that bad actors in online casinos simply don’t have to deal with.

It also takes less resources to commit fraud against an online platform. Outside of the digital world, there’s no multi-accounting to help fraudsters get extra mileage out of their attacks. In order to scale an in-person fraud operation, you need either more fraudsters or more casinos to target, and the fact that casinos can send each other photos of suspected criminals means that once someone gets caught for in-person fraud, it’s much harder to successfully commit fraud again.

Fraud prevention can be like a game of cat and mouse between fraudsters and fraud fighters. For every new attack vector bad actors think up, fraud solutions are working to find ways to defend against it.

Browser & device fingerprinting

Browser fingerprinting and device fingerprinting offer a proactive approach to preventing fraud in online casinos. Browser fingerprinting identifies unique configurations of a user's browser, such as the browser type, version, enabled plugins, and settings, which can aid in detecting fraudulent activities. This information, when cross-referenced with a database of known fraudulent patterns, can flag suspicious behavior so that illicit access to user accounts can be prevented.

Similarly, device fingerprinting works by collecting unique characteristics of a user's device, such as the operating system, screen resolution, installed plugins, and other specific identifiers. This creates a unique 'fingerprint' for each device, which can be checked against known devices each time a login attempt is made. If the device's fingerprint matches one associated with previous fraudulent activities, the system can block the attempt, thus preventing fraudsters from infiltrating the platform.

Geolocation 

Geolocation is a necessity for online gambling platforms because of jurisdictional compliance laws. In the United States, only six states allow online gambling, and it’s the operators’ responsibility to ensure that only legally allowed players participate. Aside from the necessity of compliance, however, geolocation can also provide defense against fraud and abuse.

Used as an identity signal, geolocation acts in a similar way to device fingerprinting in that it can allow operators to identify individuals and patterns of risky behavior that are associated with certain locations. However, it’s also important to note that geolocation needs to be tamper resistant in order to be effective as an anti-fraud solution.

Multi-factor authentication (MFA) 

Multi-factor Authentication (MFA) is a critical security measure employed by online casinos to prevent fraud. MFA requires users to provide two or more verification factors to gain access to their accounts, thereby creating an additional layer of security. These factors can include something the user knows (like a password), something the user has (like a mobile device), and something the user is (like a fingerprint or facial recognition).

In the context of online casinos, if a fraudster gains access to a player's login credentials, MFA prevents unauthorized access as the fraudster would also need access to the second factor, which is typically either a physical device owned by the player or biometric data. This significantly reduces the risk of account takeovers, even in the event that there’s a data breach or login details get compromised in some other way.

Automated fraud detection 

Automated fraud detection plays a crucial role in safeguarding online casino platforms. These systems work by integrating advanced artificial intelligence and machine learning algorithms with the platform's operations. The system continuously analyzes and learns from user data, including behavior patterns, transaction history, and play style in order to establish a baseline of "normal" activity for each user.

When a user's activity deviates significantly from this baseline, the system flags it as potentially fraudulent. This could include unusual betting patterns, sudden changes in location, abnormal transaction sizes, or account activities in rapid succession. These red flags trigger an automated review process, and in some instances, the platform may temporarily freeze the user's account or transactions until a human fraud analyst can review the situation.

If gambling is all about chance, you could say fraud prevention is all about risk. Every time someone logs into their account, makes a transaction, places a bet, or cashes out their winnings, there’s a risk that that interaction is fraudulent or abusive in some way. The job of a fraud prevention expert is to develop strategies to best manage and mitigate that risk.

So, how do you assess risk? Through using a variety of risk signals like device fingerprinting, location, transaction monitoring, behavioral analytics, and more, transactions and logins can be classed as low or high risk and approved and denied accordingly. But how do you make this risk-based approach as strong as possible? If fraudsters want to stack the deck against you and your good users, how do you tilt the odds back in your favor?

The answer is not to put all your chips on one risk signal or solution. For instance, if you rely on location alone for all of your online casino fraud detection and compliance needs, and fraudsters figure out how to spoof their location and trick your software, then your platform could be in trouble.

However, if you use a combination of location and device intelligence, like Incognia’s solution, the extra redundancy gives you the tamper-resistant punch you need to pull ahead of the fraudsters. Incognia’s device intelligence can look for red flags like app tampering tools, cloners, rooted devices, and GPS spoofers. Our location intelligence pitches in by allowing us to identify devices even after a factory reset–a longstanding weakness of traditional device fingerprinting solutions. The more layers of security you can build into your stack, the better your odds of gaining the upper hand in the fight against fraud.

The world of online gambling offers a remarkable example of how modern technologies can both facilitate new forms of fraud and provide the tools to combat it. Browser and device fingerprinting, geolocation, and automated fraud detection solutions are all critical components in an effective fraud prevention strategy for digital casinos. However, these measures are not infallible and have to be continually adapted and improved to stay ahead of increasingly sophisticated fraudsters.

The ultimate goal is to create a secure and compliant gambling environment that ensures user confidence while maintaining the thrill and excitement of the game. It might not always be an open-and-shut process, but with a multi-layered security strategy in place, online casinos can significantly tilt the odds in their favor in the ongoing battle against fraud.