Top 6 online gambling fraud schemes & ways to tackle them

Online gambling projects are trying to attract new players with a range of tricks and tactics, but unfortunately, sometimes the cybercriminals in the audience are stealing the show. For instance, there is such a popular marketing ploy as encouraging new gamblers with bonuses and it is extremely vulnerable to exploitation by fraudsters. As a result, gambling businesses are now in a high-stakes game of cat and mouse trying to safeguard their profits.

Every online business resembles an organism, and fraudsters are like toxins attacking it. The good news is that each toxin has an antidote, and those in gambling are no exception. Let’s explore the main online gambling fraud schemes and their antidotes.

Multi-accounting (bonus abuse & chip dumping)

Bonus abusers or hunters usually exploit the system by creating several accounts using their friends' or family members' personal information or purchasing strangers’ credentials on the darknet. These scammers intend to earn chips or bonuses by abusing them and avoid limits and blocklists by changing IP addresses.

??Typical bonus abusers’ behaviour:

• Flocks around specific games (roulette, blackjack, baccarat, etc.)
• Tries to withdraw winnings right after completing the wagering requirements
• Follows specific betting patterns (e.g. max sum allowed by the bonus terms)

Antidote. Personal data and IP addresses are critical factors to consider. Implement identity verification to ensure the account and document owners match and check whether the individual has previously created accounts on the platform. Any discrepancies in the data or IP addresses overlap will let you detect a multi-accounter.

Arbitrage betting

Also known as arbing, arbitrage betting targets mainly sports betting. Usually, fraudsters monitor the odds beforehand manually or using specific automated solutions. To guarantee the profit, they place bets on each possible outcome of an event – each team’s or player’s win and a draw. Some bookmakers even welcome such crafty bettors because they help them sharpen the efficiency of their odds modelling.

Antidote. Implement face authentication to prevent creating multiple accounts per user. Also, AML screening across third-party databases will help you investigate bettors’ past and decide on whether to cancel their bets, provide refunds, or even shut down their account.

Identity theft

Fraudsters steal or buy someone's personal information, such as name, social security number, or credit card details, etc. This can happen through phishing, hacking, or other means. Sometimes, since the documents are not falsified, antifraud systems can’t detect any red flags.

Antidote. Implement face authentication to ensure the document holder is real. You can introduce this procedure at the onboarding or withdrawal step.

Malicious affiliating?

Using illegal tactics, cybercriminals attempt to earn commissions from gambling projects. They can manually enter fake leads into a project's CRM system or generate traffic using a bot that can even register accounts and make deposits.

Antidote. The golden rule is to analyse the traffic in general and the newcomers’ behaviour. You may also implement certain techniques at the withdrawal step, like device fingerprinting and face authentication to ensure that the winnings are withdrawn by a real person.

Money laundering

Fraudsters deposit illegally obtained money to their accounts aiming to bet and capture legit winnings in the aftermath. Usually, they place bets with low-risk outcomes.

Antidote. By implementing AML screening and biometric checks you’ll successfully cope with this online gambling fraud scheme.

Account takeover

This scheme affects the existing gamblers’ accounts – fraudsters just gain illegal access and misuse them. Such actions often lead to chargeback initiation by the real account owners.

Antidote. Track your users’ behaviour patterns, IP and device geolocation, and utilise device fingerprints to detect changes. Implement some automated bank card verification system. This will guarantee that the card is authentic and matches the identity of the applicant. Subsequently, biometric authentication, such as taking a selfie with the bank card, will enable the system to compare the data collected during registration with that provided during a transaction attempt.

How to minimise the fraud threat?

In terms of gambling payment processing I know two great tools that help online gambling projects to substantially reduce the likelihood of fraud and sometimes even prevent fraudulent attempts. These are Firewall and payment routing, and they work best together. And here’s how they can help you: to put it in a nutshell, you set specific rules and attributes for the suspicious payments to be checked by the payment processing engine.

Payment routing and Firewall against fraudsters

I can explain it using Corefy's example. Our processing engine aggregates all transaction data at different stages of a transaction lifecycle and sends it to Firewall. The latter, guided by the decision tree with your customised rules, helps to decide whether this transaction should be declined or accepted.

Now imagine a gambler registering on your platform and trying to make a deposit. The Firewall checks it according to the decision tree with your rules and spots discrepancies: the cardholder’s data doesn’t coincide with that of the gambler in your customer base or the fingerprints of the payer’s and gambler’s devices differ. This means the transaction is potentially fraudulent and subject to decline. You can also add this gambler to a specific list for further automatic checks or auto-declines.

Taking down online gambling fraudsters is like playing a game of poker, but with a much higher stake: the integrity of the entire industry. So, ensure you make most of the antifraud tools available on the market to safeguard your gambling business and the entire industry.

Contact me in DM to get help combating online gambling fraud or solving any other payment-related issues.