Gaming is in hyper-growth, and with it, fraud

New gamers try their hand at fraud

Since early 2006, the gaming industry has seen explosive growth and fraudsters have come along for the ride. From ACI data, we see that 28% of all fraud attempts in gaming are from people with no previous recorded history over the last two years. This means that new gamers are 3 times more likely to attempt fraud than previous customers.

Merchants usually have at least some sort of recorded history of their customers. Used wisely, with incremental machine learning models, positive profiling, multi-acquiring, and more, this data can help reduce friction and insult rates. ACI’s Gaming Merchant approval rates average 98%.

Fraud in Gaming poses unique challenges 

With so many event or purchase types and currencies that cross platforms, we need to take a focused approach against fraud in gaming without impacting genuine players. Here are some areas where ACI helps:

Secondary markets. Some players purchase virtual currency with stolen payment cards and sell the purchased items to others via marketplaces. To combat this, ACI works closely with its Merchants so that they are equipped to work with marketplace leaders, ensuring there is no value to resold items, and to actively remove illegal items from accounts. 

ACI also advises on consumer education practices. The company educates on ways to dissuade the purchase of illegally gained currency. One effective tactic is posting on discussion boards informing consumers that the items are illegal. Often, the purchasers are not aware that the goods are stolen, and they just want to carry on playing. But once they realise, they move on. 

Account Takeover (ATO)

Account takeover has grown by 114% year-on-year in 2020 and is not slowing down. ACI helps by looking for changes in purchasing behaviour, location, or devices, that are all tell-tale signs the accounts are being illegally accessed.

Another way to curb ATO is to use incremental machine learning models and positive profiling, along with intelligently orchestrating the use of 2-Factor Authentication and biometrics for additional decisioning.

Many different types of gaming payments

In gaming, there are many types of purchases. From traditional retail payments to consumption, digital download, micro-transactions, and in-game currencies. Digital currencies, or points, are unique as they can be transferred between users. So, they need to be treated like cash. The golden rule is always fraud screen.

As these currencies are valid across gaming platforms and companies, the complexity of fraud and anonymity increases exponentially. It is essential to screen all event types (purchases, transfers, redeeming etc.) and to work closely with partners to reap the benefits of shared intelligence. 

A multi-acquirer strategy also improves acceptance rates – a critical KPI in gaming. SCA Exemption handling, acceptance of wallets, dynamic retry, dynamic routing, localised acquiring, offering popular payment methods such as Buy Now, Pay Later, and a partnership approach to chargeback processing and reporting, all help to drive an optimised payments and fraud strategy.

One size does not fit all

With different types of payments and purchases in gaming, we help our Merchants take an individual approach for each product, region, payment type, risk level or market, or indeed a tailored approach for a combination of factors. Taking each payment type individually ensures maximum revenue and acceptance and minimum fraud and expenses.

A successful game depends on customer loyalty, return, and so much more. So, it is essential to build strategies on several aspects, like customer event and transactional profiling, keeping a focus on high approval rates. This requires understanding positive and fraudulent data points and combinations of data over extended periods. For example, browser language, password reset, or the card country, all go to define a complex strategy – both to detect fraud and enhance approvals.

Strategies that enabled decision tree logic, combined with different route and decision paths, enable optimised payment acceptance while maintaining visibility of emerging trends for both consumers and acquirers. Making real-time calls pre- and post-authorisation increases decisioning accuracy. Different games, add-ons, products, or channels have different purchase behaviours in terms of the number of attempts as a ratio to the number of successful purchases. In gaming, successful micro-transactions can be made multiple times in a short space of time. With physical goods, we see a much lower velocity of purchases.

Different regions and fraud types call for orchestration

It is good practice to use different features, methods, and acquirers in different ways for different fraud types.

With ATO, ACI helps Merchants use profiling tools and device fingerprinting to help identify changes in behaviour, location, or devices, which might be a signal of fraudulent activity. ACI can then use intelligent tools to act with third party call outs, 2-Factor Authentication, or even manual checks when the risk is greatest. 

For new consumers or those that have recent account changes, we recommend different strategies which utilise different features, authentication, and verification methods. Device fingerprinting for example, but differently – Have you seen the device before? Are there characteristics of this device that match previous or ongoing fraud trends? The company also suggests integrating third party checks and ACI's global consortium database.

An all-encompassing approach 

It is important to employ an all-encompassing toolset. Machine Learning with Automated Strategy Management applications helps as it encompasses all transactions and can be tailored by any number of combinations. This drives efficiency in decisions that would otherwise be ineffective. Given the number of data points, both external and internal, transaction types, payment options, multiple acquirers, and more that relies on automated technology for simplification and scale, the oversight and validation of an expert is now essential. 

Using ACI’s agnostic payment and fraud applications, all transactions, transfers, shares, or any other message can be screened in real-time; bringing payment and event data together to make an all-encompassing intelligent decision on whether any given electronic message will bring additional revenue or new losses. 

Conclusion

Partnering with dedicated Payment Optimisation Experts ensures the highest acceptance rates, lowest friction, and chargeback rates at the lowest cost. Working with an ACI Payment Optimisation Expert will not only provide experience borne by ACI’s global reach but also provide expert payment and fraud strategy analytics as fraud trends mutate and genuine patterns change in an ever-volatile world. 

About Erika Dietrich 

Erika manages a global team of Certified Fraud Prevention Analysts located in six different countries who service thousands of hosted Merchants and FIs' fraud prevention strategies in a partnership approach. She drives a consistent fundamental approach to deliver high-quality Risk Services Globally, ensuring that client strategies and Key Performance Indicators (KPIs) exceed market performance on ReD Shield and Proactive Risk Management (PRM).

About ACI Worldwide

ACI Worldwide delivers the software and solutions that power the global economy. Our mission-critical real-time payment solutions enable corporations to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk.