Payment Liability Shifts: Understanding and Preparing for Them

by Tamas Kadar
iGaming companies are no strangers to payment fraud originating from stolen credit cards.
This is bad for chargebacks, brand reputation, and business. Let’s see how to solve that problem.
iGaming companies operate on a rapid account acquisition model. That means accepting new players with as little friction as possible – and fraudsters know they can exploit this structure to both deposit and play using stolen credit card numbers.
This causes a number of issues down the line, including chargeback requests initiated by the legitimate cardholder, which your iGaming company has to successfully dispute – or refund the money.
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This is an expensive and time-consuming process. To add insult to injury, card issuers will punish you if you accept too many fraudulent payments by increasing the standard processing fees you pay as you use their services.
The latter point is particularly worrying for iGaming operators. They are already considered a high-risk industry, so an increase in transaction costs could very well be a death knell.
In practice, it would mean you can’t accept deposits by players who have a Visa or AmEx card, for example.
So how exactly are you supposed to beat iGaming fraud when your opponents have every incentive to fool your review process? Let’s break it down below.
An iGaming account isn’t unlike an electronic wallet (e-wallet). Players can deposit, spend (play), and withdraw funds as needed. When it comes to payment fraud, there are two key stages you must monitor:
In order to answer these questions, you need to gather as much data as possible.
And the best way to gather more information without creating too much friction is via data enrichment.
Put simply, it allows you to learn as much as possible about an online user based on their digital footprint. The tools for the job include:
Last but not least, a BIN lookup can reveal a ton of helpful information about the payment method itself.
Free BIN lookup!
Enter the first 6 or 8 digits of a card number (BIN/IIN)
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But what exactly should you do with all this data? The best way forward is to feed it to an anti-fraud engine with risk scoring.
Let’s now look at concrete examples of risk rules an iGaming company could deploy today to detect payment fraud.
This is a rule that comes directly from SEON’s customer success team, which has been deployed and loved by a number of iGaming companies. Known as a velocity check, this type of rule looks at a set of actions during a specific time frame.
In this case, we’re looking at:
This rule is essentially attempting to describe common fraudster behavior. Bad agents create accounts fast and start depositing funds in quick succession, typically with stolen credit cards.
A pretty obvious yet effective technique aims to check if a user’s payment method is truly theirs.
In fraud detection, this would be done by checking where the user is connecting from (by looking at their IP address), confirming that data with a home address and, importantly, comparing it all with the card details.
In the screenshot above, you can see a handful of risk rules relating to the payment method. You can of course combine them and adjust the results of the rule depending on your needs.
Note that a prepaid card isn’t necessarily fraudulent – but it can increase your risk score and encourage you to look at this player more carefully, in tandem with other data points.
How does a lack of social profile relate to payment fraud? Well, the key point to understand is that, in our digital age, an absence of social signals is highly suspicious.
Yes, you could be dealing with a privacy enthusiast, but what’s more likely is that it is someone who created a phone number and email address in a hurry.
And, you’ve guessed it, this is exactly what a fraudster who hopes to pay with a stolen credit card number would do.
At SEON, iGaming has always been a vertical where our anti-fraud tech has the most positive impact. This is because thanks to data enrichment and powerful custom rules, you get to:
Best of all, you get complete control over which modules you choose to create a complete end-to-end solution or to augment your existing risk management stack.
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Tamás Kádár is the Chief Executive Officer and co-founder of SEON. His mission to create a fraud-free world began after he founded the CEE’s first crypto exchange in 2017 and found it under constant attack. The solution he built now reduces fraud for 5,000+ companies worldwide, including global leaders such as KLM, Avis, and Patreon. In his spare time, he’s devouring data visualizations and injuring himself while doing basic DIY around his London pad.
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