Gaming is a multi-billion dollar industry that keeps growing by the day. There are many forms of gaming– mobile, PC, console, etc., and the industry only seems to swell day by day as more cutting-edge technologies like Virtual Reality are beginning to replace traditional forms of gaming. 

The gaming industry is perhaps one of the most lucrative industries with a high deal of loyalty involved. For gaming companies all over the world, fighting fraud means a bigger deal– retaining customer loyalty, maintaining the sanctity of the game and providing a good gaming experience. All this while keeping profitability in mind!

With the number of gamers exponentially increasing every year, the gaming industry has become one of the most susceptible ones to novel fraud. From identity theft to payment theft, the gaming industry’s fraud has been one of the least spoken about. But, of course, a $152 billion dollar industry can’t ignore something that can potentially bring it down. 

So, here we are, with a list of the kinds of frauds in the gaming industry, along with some remedies that can be applied to slow it down. Let’s begin!

Account Takeover (ATO)

The gaming industry experiences a lot of fraud patterns that are similar to the e-commerce industry. Through this list, you can draw a lot of parallels between the types of fraud.

Account Takeover in its simplest form is identity theft. In this scenario, criminals target high-profile gamers with excellent credentials, special strengths, high amounts of game currency, etc, hack their accounts and then proceed to “sell” their accounts to unsuspecting amateur players. We’re using the word amateur is because they are the easiest to target and victimize.

How does the victim find out? In most cases, he/she does not receive the purchase even after the payment is made or is immediately kicked out of the account he ‘bought’ due to suspicious activity.

One way to tackle this problem is to enable two-factor security for login and monitor account activity regularly for any suspicious activity.

One of the biggest contributors to gaming fraud is the preference of online gamers to stay anonymous or use a ‘gaming name’ and many websites work well to facilitate this. As a result, however, this practice opens them up to all kinds of payment fraud. One of the ways for gaming sites to protect themselves from payment fraud is to institute security protocols that verify the identity of the user.

Fake sites

Fake sites are essentially another form of account takeovers. Just like they would be in the e-commerce industry, fraudsters create fake gaming sites that replicate the look and feel of the original site. In this case, unsuspecting users enter their gaming credentials into the malicious site.

Their data is then sold to fraudulent companies and even uploaded on the dark web, after which the credentials are sold to innocent players. Gaming websites must be careful to authenticate their identity before players log in lest a large amount of data is compromised and used for ill intent.

Arbitrage 

Perhaps the most sophisticated on the list, arbitrage just goes to show the extent of technology that fraudsters are familiar with and are not afraid to misuse.

With the advent of different modes of digital payments and suitable game models, the situation brings us a fresh kind of fraud to deal with. In this scenario, fraudsters ‘fill’ accounts with points in one country. Depending on the currency exchange rates, they transfer these ‘points’ (read: another form of currency) back and forth among different types of currencies in order to make unrequited gains.

At this level of sophistication and complexity, fraudsters employ bots to automate the process and multiply profits.

Chargeback (or) friendly fraud

At a smaller level, the gaming industry is faced with a decent amount of chargeback fraud. Akin to the e-commerce industry, chargeback relates to the procedures relating to the authenticity of the purchases.

A chargeback occurs when a digital purchase is made to buy a product, physical or online, and for some reason, does not get fulfilled. This means that the product never reaches the buyer, or is damaged or does not fulfil the promise made by the seller. The charge that is returned to a payment card after a customer successfully disputes an item on their account statement or transactions report is called a chargeback.

There can be two reasons why this occurs. 

The first reason is due to a genuine cardholder confusion where the payment is billed from an unknown source. This can easily be corrected by ensuring that the credit card statement reflects a specific game rather than its parent company. 

The second reason is a little more complicated. This is when a chargeback is misused by the customer for malicious reasons. In this case, the gamer refuses to pay legitimate charges under false claims. 

Since the gaming industry deals with a predominant case of ‘quick’ transactions which are low in value, it makes it difficult for the company to actually prove that every transaction happened. This type of fraud can put a significant amount of strain on the company’s time and resources.

Figuring the way out

While a solid mechanism is not set in place to tackle gaming fraud, there are many companies like Razorpay Thirdwatch developing set standards to tackle fraud.

One of the biggest contributors to gaming fraud is the preference of online gamers to stay anonymous or use a ‘gaming name’ and many websites work well to facilitate this. As a result, however, this practice opens them up to all kinds of payment fraud. One of the ways for gaming sites to protect themselves from payment fraud is to institute security protocols which verify the identity of the user.

They can also utilise Artificial Intelligence and Machine Learning to observe the patterns of the user and analyze network effects across different websites. In any case, gaming companies must look for viable solutions to fight fraud lest they end up losing a lot of money.

Razorpay Thirdwatch utilizes its AI-engine to profile risky users from across hundreds of websites. We have also discovered that observing the user’s activity via an identity such as mobile number, Device ID, IMEI number, etc. can prove as a standard to identify criminal activity. As the gaming industry continues to grow exponentially, it’s important to also create dynamic solutions that grow with it.

Read more about how Thirdwatch helps companies fight fraud here.

Author

Writer. Payments enthusiast. The most curious person in the room.

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