How can choosing the right payment methods help operators eliminate bonus abuse?
Having worked with gaming operators for many years, aligning payment services with their needs, I have had many conversations about how to limit exposure to fraud and in particular – bonus abuse.
Enticing new customers with a hook like a bonus is a tried and tested method of locking new customers in. It’s most effective when players don’t really understand the system and see a bonus as free money. Those that do understand how it works typically fall into two camps: people that want to play anyway and will either take or refuse the bonus depending on their personal preferences; and those that want to beat the system.
The latter could be a bonus abuser. They also view bonuses as ‘free money’, but instead they want to win against the operator and keep that money, not get locked in.
Bonus abuse is often viewed as a ‘victimless’ crime, where no one gets hurt. For this reason few players that practice bonus abuse would consider themselves to be acting fraudulently or criminally. Yet, as we know, bonus abuse does have a victim – the operator’s bottom line.
The problem for operators, and why abusers get away with it, is that bonus abuse can be a bit of a grey area. Arguing that a betting pattern is abuse rather than normal play is not easy. Moreover, you risk wrongly accusing someone and then having to deal with the reputation fallout that comes with that.
You might employ technology to identify bonus abuse, using algorithms to spot unusual behaviour. Great, however these are not fail safe; you risk false positives where a genuine player is flagged up as being an abuser. Again this can have a negative impact on an operator’s reputation. In fact, when trying to put a figure on what bonus abuse costs an operator, along with actual tangible costs including fraud prevention tools and the cost of offering bonuses, reputation damage for falsely accusing players is also a significant cost factor.
For this reason, many operators err on the side of caution and don’t aggressively pursue abusers. Taking legal action, even when you’re confident that a player is playing the system, is also expensive and complicated – especially if you operate in different markets, across different jurisdictions.
For a long time I have been interested in how payment methods and processing can be aligned with the various challenges operators face, and particularly bonus abuse. It seems to me that Know Your Customer (KYC) checks could hold the key, but currently they don’t offer enough of a deterrent to committed abusers.
New account sign up processes may meet compliance requirements but they don’t provide data that can help you identify players with a history of bonus abuse. By the time they’ve signed up and taken the bonus it may be too late. Bonus abuse is a fraud pattern that requires scale to be profitable for a fraudster. Part of achieving such scale is the payment method that the fraudster chooses to facilitate the abuse.
This is a crucial point. A professional gaming payment product needs to maintain the convenience, versatility, real-time nature and wide acceptance whilst ensuring that it cannot easily be complicit in fraud. It’s a fine balance to strike but it can make all the difference.
Therefore, if the payment method used provided either the data needed to identify serial abusers or to deter fraudulent behaviour; that could reduce bonus abuse significantly. This kind of solution doesn’t have to complicate the signup and payment transaction process either. It could be as simple as only offering bonuses to players who sign up with a payment method that has the right technology in place to discourage fraud.
That’s exactly why we have developed our e-wallet solution with dynamic customer authentication methods including device pairing. By linking a player’s mobile phone to their MuchBetter account we make it much harder for abusers to beat the system. Players become more visible and accountable, and this discourages fraudulent behaviour. We also provide operators with access to useful customer data through our open API – with appropriate consent. This can help operators identify the player, gain insight into player behaviour and validate bonus allowances. It also enhances compliance and KYC levels and increases transparency and integrity. Besides account and account holder-related information, we also provide access and insight to indicators for collusion activity between accounts or payment methods used, cash-out behaviour and indication of activity levels of individual accounts.
This type of preventative solution means that genuine players are happy too. They get the rewards they want, bonuses and other incentives offered through the app; as well as a convenient payment method to help them manage their iGaming accounts. Along with reducing bonus abuse, MuchBetter also offers operators other benefits through our open API that increase confidence in the transactions processed.
A final but vitally important note is that we are not like other gaming wallets which stand to make money from each and every transaction. Unfortunately, this includes fraudulent activity such as bonus abuse, and some wallets actually exacerbate the issue for their operators. They do not actively clamp down on players with multiple accounts, while they do encourage players to move money in and out of this account as often as possible. Our unique net deposit transaction fee model means that we only make a profit when our operators do. As such, we have been on a mission since day one to eliminate bonus abuse wherever possible.
Get in touch if you want to discuss how to limit exposure to bonus abuse in more detail.