Staying a step ahead of fraudsters: Beating online fraud with IP decisioning data

By Gambling Insider

By Brian McCann, president of security solutions at Neustar.

Over the last year, the gambling industry has been at the forefront of the shift to digital-first, with the majority of in-person gaming and gambling services moving online to survive the impact of the COVID-19 crisis. Latest statistics from the Gambling Commission, for example, show a 12.5% increase in remote bingo and a 5.3% increase in remote betting.

Simultaneously, organisations across the industry – from lotteries to gambling and esports – are experiencing a surge in fraud, which can largely be attributed to the fact it is more difficult to spot the genuine players from the fakes online. Even before the pandemic, a 2019 study found that one in 20 online gaming accounts were associated with a fraudster.

One way to reduce online risk is by implementing IP decisioning data, which provides crucial, independent insights on each customer.

Online fraud and risk

While combating fraud has long been a part of the gaming and gambling landscape, fraudsters have quickly developed scams tailored to the online environment. In fact, there are now a number of fraudulent activities associated with the industry.

Firstly, when two or more players work together to manipulate a certain outcome or an individual uses multiple accounts to accomplish the same thing, collusion can occur. Another form of collusion is chip dumping, which is when a fraudster launders money to pay for black market services. Here, “players” lose to a single individual who cashes our their apparently legitimate winnings.

Chargeback abuse is another form of fraud. This is when someone contacts their card issuer and denies making a charge they already made – a practice that is especially problematic for offshore websites. Lastly, and typical to all online businesses, is the issue of credit card fraud, whereby fraudulent or stolen credit card information is used.

Unfortunately, many of the methods in place to mitigate traditional in-person fraud are based on physical observations, meaning operators are tasked with finding alternative approaches to reduce fraudulent practices online.

Introducing IP decisioning data

Commonly, the answer to reducing online fraud is ‘get to know your customers better’. In response, most online gaming sites have introduced lengthy registration processes. In a lot of cases, though, these discourage legitimate customers from signing up. Introducing IP decisioning data into login flows, to provide independent real-time insights on each customer, is one solution for overcoming this issue.

Made up of geolocation and risk data, IP decisioning is derived from the IP address of a user’s device without their involvement, so it is friction-free for customers. Importantly, IP data cannot be falsified by the user, although it can be disguised – which, if known, can itself be a helpful insight.

By verifying a user through identifying a physical location of an IP address, geographic location data can help operators assess any gaps. In addition, risk data delivers key insights into the history of malicious data linked to an IP address. Behavioural and network attribute data also helps determine if the IP is being used by a human or a non-human user, streamlining the process of spotting bots.

Armed with this information, organisations can take appropriate action to limit the risk. An IP associated with malicious activity, for instance, can be routed through a secondary authentication process, while IPs with a different geographic location than the one provided by the customer can be flagged for additional attention or review. IP data can also be incorporated into historical customer login records to provide insights into location over time – identifying clues to potential risks based on pattern changes.

The online opportunity

As ongoing lockdown restrictions are put in place globally, the effects of the pandemic on the industry are here to stay. But players still want to play. In a lot of ways, the pandemic has accelerated the massive online opportunity for gaming and gambling operators, so long as it is executed securely.

With the insights derived from IP decisioning data, organisations can not only significantly reduce online risk and, in turn, avoid severe regulatory compliance repercussions, they can boost customer experience and trust.

For more on cyber security within the gaming industry, read our Big Question feature in the latest edition of Gambling Insider magazine. It includes: Ground Labs, BMM, 4Stop, MIRACL, Continent 8 Technologies and TransUnion. 


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