Are High-Security Checks Worth It?

by Christian Berecz
While esport gaming is still considered an emerging market, it’s undeniably growing faster than anyone had imagined during the Covid 19 crisis.
Everyone is staying at home, looking for online entertainment. Traditional sporting events are slowly resuming, and esport, which can be streamed online, fits the bill for those who want to keep betting. It’s no surprise that F1’s first virtual grand prix gathered more than 3.2 online viewers.
But the pandemic has only accelerated what was already a booming market. ESPN started covering esport in 2016, and what was once seen as a niche form of entertainment is quickly entering the mainstream.
Which should be good news for anyone involved in esport league gaming and gambling, whether you offer betting on the latest CS:GO games, Dota 2, League of Legends, or skin gambling.
Except for one thing: as demand increases at breakneck speed, so do the attacks of fraudsters.
There are of course many parallels between the fraud prevention challenges of esport gaming and traditional iGaming or online gambling, betting and casino, as your company may be pushed to deal with:
While the aforementioned recurring attacks will undoubtedly damage your bottom line, there’s more to consider too. In fact, it’s estimated that every dollar lost to fraud actually costs your organization up to $3 in costs.
You’re not just dealing with the immediate chargeback fees. There is also all the time and effort spent investigating the chargeback and disputing it. It’s likely your risk team will be overwhelmed by a great number of requests, not to mention the fact that it puts you in the card companies’ bad books.
And the damages for enabling too many chargebacks are increasingly punitive for companies. Visa’s new VCR process and Mastercard’s resolution process make things harder for merchants, as the window to dispute a chargeback is shorter than ever.
Affiliate fraud and bonus abuse are the two main offenders here, as they can considerably reduce your marketing ROI. The time and effort spent designing an attractive strategy to onboard new players is wasted on bad traffic that doesn’t convert.
While esports gaming is somewhat less scrutinized than traditional online gambling, it’s not hard to foresee that government regulators will increasingly crackdown on the industry. The debate following Steam’s infamous skin betting debacle has put the industry in the spotlight, and numerous countries, such as Sweden have already started pushing stronger legislation and heftier fines for protecting gamblers.
Building safety and trust is primordial for any company in the iGaming sphere, and it is also true of esports betting. Account takeovers are therefore damaging not just for the users who lose their account’s funds, but also because it is seen as a weakness in the company’s security. Players are quick to take to online forums and review sites to vent their frustration, and your company name will be associated with hacked accounts.
The golden rule in any fraud prevention context is that the more data you have, the better you can protect yourself. The key challenge is of course to acquire that data in a frictionless matter. We know that even something as simple as 2FA or 3DS are seen as an obstruction by marketing teams, so how do you work with as few data points as possible?
The answer is to use data enrichment processes, such as:
This all works together with the same goal: stop fraudsters from logging onto your platform before they can make use of stolen information and credit card numbers, which will reduce chargeback fraud in the long run.
Esports betting, which tends to attract a younger user base, needs to be particularly vigilant with KYC checks. They are mandatory at the withdrawal stage, and depending on the jurisdiction, at the registration stage too.
The problem? Legitimate users are also the most impatient ones with authentication: why should they go through numerous verification processes with one platform when competitors make it much easier?
To avoid churn while maintaining a high level of security, you must use adaptable KYC triggers. These are based on digital footprint analysis (more on that below), and let you leverage both light and heavy KYC, depending on the initial data you get.
A good fraud prevention tool should let you start with the lighter features for a quick KYC check, and only dynamically trigger heavier KYC checks only for suspicious players. This essentially removes the need for the first round of manual reviews, as the process is completely automated.
It’s also worth noting that this flexibility can be applied to transaction and payment verification. For instance, SEON helps enable dynamic 3D Secure (3DS), which gives you better control over your customers’ journey and UX.
Gathering user data isn’t the hard part. It’s running it through the right rules to create a reliable risk score that can be challenging. This is why it’s important to have access to as many data points as possible, but also to be able to test and experiment with your risk scores.
For instance, SEON lets you create rules based on the most commonly aggregated data points such as IP address, device and credit card data. But we also found that the following information could go a long way in reducing friendly fraud and multi-accounting:
Combining these data points with velocity rules gives you a much more precise understanding of fraudster behaviour. Best of all, you can use our Machine Learning engine to generate rules based on historical data, and test them in a safe environment before deploying them live.
Did you know that 77% of bonus abusers in iGaming do not have any social media presence related to their email address? Or that only 10% of bonus abusers have a Facebook account registered with their email address.
These are exactly the kinds of insights you can uncover with SEON’s fraud prevention tools, ranging from lightweight data enrichment to a full end-to-end, modular solution that integrates seamlessly into your platform for fighting esport gaming fraud. To see how SEON can help your esport gaming company reduce chargebacks, perform better KYC checks, and block bonus abuse and multi-accounting, don’t hesitate to contact us for a free demo today!
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Sources:
Learn more about:
Data Enrichment | Browser Fingerprinting | Device Fingerprinting | Fraud Detection API | Fraud Detection with Machine Learning & AI
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Christian is the Business Development Manager of SEON, and the first point of contact for clients who need to solve challenges associated with fraud.
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