Callcredit Blog

Is e-gaming an open beta for fraudsters?

Fraud & Verification

Fighting fraud in the world of computer games

Money mules is a largely unreported crime playing an integral role in money laundering, a criminal activity the National Crime Agency estimates costs the UK economy £100billion each year. A joint initiative by TransUnion and Cifas provides new insights into money mules, a crime that’s difficult to identify and puts forward ideas on how it can be tackled effectively.

For those combating fraud, whether working for credit card providers or within the gaming industry, e-gaming is an expanding frontier for cyber criminals, who employ money mules and other fraud techniques to clean money.

A new type of pirate – how money laundering operations are using e-games to clean their loot

Gaming culture has grown from the roots of Pong, the 1985 debut of Nintendo’s seminal NES console, early computers such as the Amiga and Atari ST and the 90s N64 masterpiece that was split-screen GoldenEye 007. It’s become a rich and broad subculture, built around different hero games and platforms, each with their own language, currencies and fandoms. By the end of 2019, it’s estimated the gaming industry will be worth a massive $152 billion.

Different monetisation models, such as FIFA Packs and Fortnite Bucks, e-sports competitions and social media influencers, have helped e-gaming grow. An unfortunate by-product of payment innovations, such as players paying for game ad-ons, unlocking new items or trading in-game currency, is the opportunity it offers tech savvy fraudsters. Recent news coverage indicates gaming platforms and third-party marketplaces are being targeted by criminals because they know these less regulated, unsecure environments can be exploited to clean cash. Known activities that are happening include:

  • Credit card fraud – using stolen credit cards to buy in-game assets and then trade them in bulk, via the dark web, at a ‘discount’ to genuine gamers. Additionally, fraudsters may build up a game account to sell for real cash on an e-gaming marketplace to other gamers.
  • Social media scams – using the lure of in-game assets at low prices, fraudsters obtain personal information, passwords and credit card details. Younger gamers are particularly vulnerable, especially if they use their parents card details for purchases. Once details are compromised, the criminals defraud accounts or use them to launder funds through the system.
  • Money mules – mules are a hot topic for fraud professionals and online computer games provide an ideal platform. They offer criminals the ability to pay-in funds, transfer them or buy and sell items virtually, and then withdraw real money back into the physical world. Sometimes unsuspecting gamers help money launders ‘clean cash’ by partaking in these transactions.Criminal gangs will also use platforms to transfer virtual currency around different accounts and across different territories to help launder the proceeds of criminal activity. For fraudsters the endgame is to make money appear clean and enable withdrawal of funds. Often these funds are funnelled into bigger organised crime activities.

Preventing fraud in e-gaming

Reducing the lag to stop fraudsters from exploiting a weak spot in gaming

A lag, in gaming terms, is the delay between an input or action and its corresponding result, most commonly in an online environment. It’s a handy metaphor to explain the current gap between fraudsters exploiting the e-gaming world and the pace at which platforms and services are responding.

As happens in other sectors, we’re seeing providers change T&Cs but these may not be enforceable or a true deterrent. Another option is to restrict the sale of specific items within a game, but a blanket removal of certain ad-ons could damage the game experience, impacting genuine players and their loyalty.

It’s obvious that less intrusive solutions that maintain the customer experience (CX) for genuine gamers and reduce the risk of fraudulent activity should be explored. Harnessing such approaches could support card providers and marketplaces combat e-gaming related crime.

For John Cannon, Head of Fraud and ID, e-gaming is an evolving digital arena that’s attractive for opportunistic fraudsters: “Crimes such as money mules or identity fraud are an ever-changing issue. Fast expanding digital ecosystems such as e-gaming, which do not capture as much focus from the regulators, are attractive to criminals and present new challenges for those fighting fraud risk. We think increased media focus and education around who the environment is used by and how criminals are exploiting weaknesses, could create a safer experience for genuine players.

“Working across sectors, such as retail and travel, our data and analytical expertise has helped evidence predictive characteristics to combat fraud. Through this work we’ve uncovered new behaviours and insights to better arm organisations against financial crime. It’s evident that there are similarities in the ways criminals are looking to use e-gaming as they do other sectors. That means valuable learnings and insights can be leveraged to design approaches that strengthen defences and maintains the desired CX.”

Some considerations should be to implement robust controls and obtain deeper, actionable insights through a combination of the following types of verification methods:

  • KYC and email validation – for when a player logs in, for risk assessment and to check they ‘are who they say they are’ to check they ‘are who they say they are’.
  • Bank and Card – to check and verify payment detail, along with confirmation of ownership of the account or card.
  • Device risk – to risk assess the device interacting with the site in order to ensure that it can be trusted.
  • Multifactor authentication – to ensure that the account can only be accessed or that activity can only be authorized by the correct, trusted device.

Strengthen your defences against fraud

Power up – strengthen your defences against gaming fraud

Although instances of e-gaming fraud were being reported as long ago as 2013, recent media coverage indicates that the current environment is an open beta for fraudsters and f work needs to be done to make it unattractive to criminals. There’s a clear need for an increase in the level of awareness and a discussion on the topic within the e-gaming sector, and that this needs to drive positive action that deters fraudsters.

As the content of our joint webinar with Cifas demonstrates, crimes such as money muling can be costly. As Cifas’ advertising spells out, an individual who decides to make fast cash via money muling can be rewarded with 14 year prison sentence. And the wider, negative impact the activity has on society can be wide ranging and includes funding human trafficking and terrorism.

Understanding potential threats and their impact on your business is key. Working with partners who can pinpoint the right data points so you can deploy the right technology to deliver the right, actionable insights and strengthen your defences can help you do this.

If you work within e-gaming and related industries and would like to find out our more about tackling active fraud threats get in touch or download our latest insights.

Fighting fraud in e-gaming

Download the iovation gaming report

Leave A Comment

Your email address will not be published. Required fields are marked *