Understanding Payment Fraud in iGaming

by Bence Jendruszak
Your business is growing, payments are flowing in and customers are delighted. But at some point, inevitably, fraudsters rear their ugly heads and start targeting you.
You’re not alone. The fraud management industry is set to grow to USD 38.2 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 12.8%, which proves that companies aren’t afraid to spend money on protection.
Now these fraudulent attacks can take many forms: opening multiple accounts to claim your promos, stealing other customers’ accounts, or, most commonly, paying using stolen credit card details on your site.
Whatever the case, you’re often the one who has to pay for these crimes. You pay for chargeback fees, for a loss in customer trust, or for compliance fines.
Something has to be done, right? Enter fraud detection software.
Fraud detection software is designed to monitor, investigate and block fraudulent activity on your website. It’s frequently used to prevent fraudulent transactions made with stolen credit card details. Companies can also rely on fraud detection software and tools to confirm user IDs at signup and login.
SEON offers a fully modular fraud solution and the support of a team that are experts in online fraud
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Fraud detection software should cover a lot of bases, from chargeback prevention to identity verification. Here are examples of must-have features:
Without further ado, let’s look at our list of the best fraud detection software for the year – including pros and cons and which problems they solve the best.
Disclaimer: Everything written about the companies mentioned in this article was gleaned from online research and user reviews. We did not manually test the tools. However, we ensured the information was correct as of Q1 2022. Feel free to get in touch to request an update or correction.
When it comes to the tools and technology, you also get the best features around, including in-depth device fingerprinting (to understand how users connect to your website), complete data enrichment based on an email address, IP address or phone number, and a way to check 40+ social media and online networks for related user info.
The integration is also flexible thanks to the REST API calls, and many businesses even use SEON as an extra layer of protection for data enrichment only (available via a Chrome plugin, amongst others).
Last but not least, you get complete control over the risk rules, and you can even get suggestions from a powerful machine learning engine that suggests them based on your historical business data.
You’ll be in good hands with Signifyd’s team. After leaving PayPal, two engineers turned their expertise towards fraud software development, with a specific focus on enterprise eCommerce clients.
Signifyd now protects 10,000 online stores globally, helping them prevent chargebacks via three key products: Revenue Protection, Abuse Protection and Payments Optimization.
Their products are specifically geared towards high volumes of transactions, and they even automate chargeback protection via a chargeback-guarantee model, where they assume payment for chargeback admin fees.
You can read a review of SEON vs Riskified here.
Launched in 2013 with a focus on ecommerce, Riskified soon developed its fraud prevention software to cover many more industries. It’s certainly a success story, as the company is now headquartered in New York and Tel Aviv, and recently filed for an IPO.
As far as products go, Riskified offers Policy Protect, designed to curb bonus and promo abuse; Account Secure, for account takeover protection; and Deco, which leverages big data to determine if a transaction is likely to be fraudulent.
The AI part is blackbox, meaning you won’t get full insights into how it works, but it does obviate the need for manual work when optimising for conversion versus chargeback rates.
You can read a review of SEON vs Riskified here.
Launched in 2011, Sift is now a $1 billion company, funded in part by startup accelerator Y Combinator. They offer fraud protection for a whooping 34,000 sites and apps, including world-renowned names such as Airbnb and McDonald’s.
Their key products include a Digital Trust and Safety Suite, which combines all their individual API tools into one complete solution. Then, there is a module specifically designed to authenticate users and to avoid ATO (account takeover) attacks, which includes the ability to enable 2FA at the same time.
For all your chargeback challenges, Sift offers a Payment Protection product, which uses the data from its global network. It analyses payment information in real-time and uses machine learning to develop new risk rules.
Finally, you can also purchase their Dispute Management module, which is specifically designed to help monitor log as much data as possible when going through a chargeback resolution process.
You can read a review of SEON vs Sift here.
Founded by Brad Wiskirchen after he wrote his idea “on the back of a napkin during a sushi lunch”, Kount soon grew into a fraud detection behemoth, with 9,000 clients across the world. It was acquired by Equifax in early 2021.
Kount is focused on innovative risk tech (it owns 30 technology patents) and enterprise clients, such as Barclays, PetSmart, Staples and Chase, among others. They offer everything you need for CNP (card not present) monitoring and protection via Kount Command.
For ID verification, you’ll need to purchase access to the Kount Identity Trust Global Network, which captures data from 32 billion user interactions per year, as it has done for the last 13 years.
Kount Central is more specifically built for payment providers (hence their relationship with Barclays and Chase) and Kount Control is the account takeover prevention solution.
You can read a review of SEON vs Kount here.
An email address is a powerful data point, if you know how to get the most info from it. It’s exactly what LexisNexis’s Emailage specializes in so you can get a customer profile with an associated risk score based on an email address only.
Emailage’s technology is now incorporated into LexisNexis, a huge cybersecurity and risk management corporation, which helped it access 4 billion email data and 5.9 billion digital identifiers worldwide.
You can read a review of SEON vs Emailage here.
Founded in 2012, ArkOwl was developed by GitLab engineer Mike Greiling along with Rob Daline, before joining NICE Actimze’s platform-as-a-service in 2019.
ArkOwl’s key selling point? Its ability to pull data from fresh databases such as social networking sites, who’s databases, webmail hosts, service providers and more. They can perform data enrichment based on an email address, phone number or IP address, for instance when looking at domain information.
You can read a review of SEON vs ArkOwl here.
Another mature and well-established fraud detection software, founded in 1997 (originally under the name Whitepages), Ekata offers global identity verification and fraud prevention via a handful of APIs, including a Transaction Risk API, Address Risk API and Phone Intelligence API.
The anti-fraud vendor also offers two onboarding APIs (Merchant and Account) as well as a Pro Insight tool designed specifically for manual reviews.
Acquired by Mastercard in 2021, Ekata has first-hand experience with enterprise clients such as Lyft, Equifax and Microsoft.
You can read a review of SEON vs Ekata here.
Don’t let the multiple name changes confuse you: TruValidate (formerly TransUnion and Iovation) is a well-established iGaming fraud prevention specialist that has been operating since 2004.
Their key product is a device recognition technology designed to help authenticate users and it’s pretty much the defacto fraud detection software of the iGaming world. However, the software is also prevalent in the fintech, credit union, healthcare and ecommerce industries too.
Key products include a fully customizable authentication solution, document verification (via their proprietary database) and biometric verification.
You can read a review of SEON vs Truvalidate here.
SEON Fraud APIs are highly configurable for various business use-cases to match your unique business needs
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As fraud shows no signs of slowing down, you now have access to more risk management tools than ever before. The problem: it can be hard to evaluate, test, and choose the best one based on your fraud challenges.
We hope this comparison will provide a good primer on the topic and that you’ll soon get started on your road towards a safer, healthier online business.
Source in this article: Fraud Detection and Prevention Market worth $53.4 billion by 2026
Monitor: Fraud detection tools will allow you to capture data about users. For example, an IP address or the kind of device they use.
Investigate: You also need to be able to learn more about users based on the data you have. This is where data enrichment can help, to complete the picture about the users.
Block: Most fraud detection software will allow you to automatically allow or block certain actions based on risk rules.
Interested in learning more – feel free to book a live demo
Because there’s been such a boom in the market for fraud prevention tools in recent years, it helps to consider the following six points before choosing your tool:
1. Your fraud challenge: Do you mainly need to reduce chargebacks? Or also to verify identities and authentication at login?
2. Integration type: Most modern tools work as SaaS via API calls, but you might want to consider on-site integration or even software that works via browser extension.
3. Preset rules vs customizable systems: Some companies need simple solutions that work out-of-the-box. Others need more control over the risk rules (to determine how risky an action is).
4. The pricing model: Most legacy fraud detection software locks you into multi-year contracts, and you’re not allowed to test it until you buy it.
5. False positives: If your fraud detection software is too stringent, you might find yourself losing business from legitimate customers. The incentive is particularly strong when your vendor promises to pay chargeback fees.
6. Bundled tools vs pick and choose: While most vendors will split their products into different offers, make sure you only purchase the tools you really need. This is easier to do with modular fraud prevention tools.
We’ve compiled all the information you need to know in a handy online guide.
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Bence is the co-founder and COO of SEON whose vision is to create a safer online environment for merchants in high risk verticals.
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