Alec Cudworth at LexisNexis Risk Solutions, says operators have been locked in a long battle with promo abusers but the combination of technology and smart processes can help them mitigate risk and losses and still acquire new players at scale.
Bonus abuse has been a thing since the very first online casinos and sportsbooks launched more than 25 years ago. A small group of players hunt bonuses and look to exploit them as much as possible, causing significant financial loss to the operator.
Interestingly, our latest cybercrime report found that bonus abuse makes up more than 50% of all fraud cases in the gambling sector.
But given just how important bonuses and promotions are when it comes to customer acquisition and retention, the need to mitigate the risk of bonus abuse while still onboarding new players at scale is mission-critical and is a balance operators find hard to strike.
To find this balance, most operators add preventative measures to help combat bonus abuse, but this often leads to restricted gameplay and greater friction, which in turn negatively impacts the overall player experience to the point where they can drop the brand in favour of another.
While this does prevent bonus hunters and promo abusers to some extent, it also hurts new and loyal customers who are looking to legitimately take advantage of the welcome offer or loyalty scheme provided by the sportsbook or casino.
Some operators reduce bonuses to such an extent they ultimately offer very little value to the player, and this hands a major advantage to their rivals. Others are simply resigned to the fact they need to write off the expense incurred due to bonus abuse.
But this needn’t be the case. With the right platform and processes, operators can detect bonus fraud and take action in a way that doesn’t impact regular users. Before discussing that in more detail, let’s first look at the various ways in which players abuse bonuses.
Synthetic IDs – players create multiple accounts using manipulated synthetic identities to take advantage of sign-up bonuses, supplementing fake data with real identity information to elude detection. In most cases, the information is stolen or illegally accessed.
VPN usage – fraudsters utilise technologies such as VPNs to exploit loopholes and take advantage of sign up bonuses and other monetary incentives used as part of an operator’s marketing efforts across different jurisdictions.
Bonus hunting – repeat users take advantage of free bet bonuses, casino offers or a promo code. They are often existing customers that may play across different operators to leverage the various bonuses up for grabs and make quick cash outs.
Chip dumping – this sees groups of people working together or a single player with more than one account play social casino games with one intentionally losing to the other, placing bets and pocketing the free cash.
Spotting the signs of bonus abuse early:
Being able to detect the first signs of bonus abuse as new customers sign up or throughout the customer lifecycle is key to preventing this type of fraud. Identifying the warning signs of bonus abuse fraud – and doing this early – is the only way to minimise and mitigate the risk.
This is certainly the case when it comes to spotting when a player is creating multiple accounts, signs of identity theft, stolen credit card details or other suspicious patterns.
With the competition among operators so high, a low friction experience for legitimate players is essential for successful onboarding and negating churn – operators invest millions in customer acquisition and then need to maximise this and deliver a strong ROI.
That’s why any additional checks to prevent fraud and bonus abuse must be effective, efficient, and occur in the background.
For example, operators can leverage device intelligence to identify indicators of fraud or fake accounts without requiring frequent identity verification checks or invasive checks.
Combining an individual’s digital identity with device fingerprinting and velocity rules allows for the tracking and flagging of suspicious accounts, multiple account openings and other behavioural patterns.
Of course, it’s likely that fraudsters will find new ways of exploiting online gambling operators and the bonuses they offer, but there are a few common factors that operators can monitor to further mitigate the risk of bonus abuse.
As a baseline, operators should be using proactive measures and creating rules that help them to identify sign up bonus abuse including unusual or high risk IP addresses, fake or disposable emails or multiple applications from the same device or IP address within a short space of time. Then they should create flags when information is being used across more than one account.
There are three key areas operators can focus on and bring together.
Location – a proxy or VPN can be deployed in an attempt to hide the user’s real location. However, building a picture of the digital footprint of the device can help provide insight into locations to prevent bonus abuse fraud and cases where the location may deviate from the norm, such as in the event of an account takeover.
Transactions – large or unusual velocity of transactions should be a red flag. Suspicious account activity or large transaction volumes are often a signal of account takeover with the fraudster hoping to take advantage of a person’s account to access bonuses, promotions and rewards.
Data – accurately verifying a player’s identity at account opening and log-in is highly effective at preventing bonus fraud. By leveraging rigid KYC processes, device intelligence and multi-factor authentication, operators can build an accurate image of a player and use this as insight into potential synthetic identity fraud.
Use all available tools
By using state-of-the-art technologies combined with a deep understanding of bonus abuse and robust processes, operators can identify nefarious players and block them/close their accounts before any damage is done.
This in turn means they can continue to offer bonuses and promotions to legitimate players and enjoy the powerful acquisition and retention opportunities they provide.
By Alec Cudworth at LexisNexis Risk Solutions
