Angie White is product marketing manager of iovation, a TransUnion Company. It is an authentication and fraud prevention provider that protects online business from account takeover, digital theft, and all types of fraud and abuse.
Operators must focus on authorization and authentication at ‘risk points’ in the customer journey whilst offering an omnichannel experience to punters if they are to minimize the potential for fraud – from friends as well as foes.
Whilst classic cases of credit card fraud continue to rise, so-called ‘friendly fraud’ is emerging as a major headache for many operators, according to iovation product marketing manager Angie White.
Friendly fraud occurs when genuine punters try to rein in their losses after the event by disputing charges that they know are legitimate.
Friendly fraud, or as it’s commonly referred to, ‘Monday morning chargebacks’, are a common problem, White explains. These happen when players return to normality at the start of a new week and regret their losses over the weekend.
Some friendly fraudsters have offered weird and wonderful excuses, says White, who recalls one operator being contacted by a customer who insisted that an unsuccessful and expensive bet had in fact been placed inadvertently by a baby crawling across a laptop.
However, the issue is serious and time-consuming for those at the receiving end of such stunts.
Chargebacks911 published a recent study that revealed that 86% of chargebacks are a result of probable friendly fraud, which has itself rocketed by 41% over the past two years.
At the heart of the issue is the challenge for operators to identify which disputes are legitimate.
This task is made more difficult by the simultaneous increase of instances of credit card fraud, which appears to have slipped out of public consciousness and been under the radar in recent months.
According to figures reported to iovation by operators, credit card fraud is a bigger problem than ever before, having continued to grow at a rate of about 39% annually over the past five years.
“Interestingly, although we hear from a lot of operators about it, people might not think about credit card fraud as much as they did, simply because there are so many different types of fraud nowadays,” White says.
Some instances of fraud are easier to spot than others, although there are particular red flags that set off alarm bells.
“We find a very high correlation with new email addresses being used for fraud,” White adds.
“If there’s a long history with an email address, it is more likely to be a legitimate player. If the email account is long established, we can also track if fraud has been associated with it in the past.
“Geolocation anomalies and unusually high bets should also require further investigation.”
White highlights the fact that often “there might not be a realization that a transaction is fraudulent until a chargeback occurs”, but adds that it is important for operators to do as much as they can to limit the possibility of fraud before such an eventuality materializes.
“It is vital to be able to reduce chargebacks in the first place by implementing solutions such as authentication and push authorizations as these steps provide nonrepudiation. This means that if someone has placed a bet, they are not going to be able to deny it,” she adds.
“The key is to adopt a layered approach, combining authentication with fraud prevention whilst implementing appropriate authorization based on transaction risks.”
According to White, the first step concerns identifying and acting where the risk points are on the customer journey, starting with logging in to the account in the first place.
Authorization can be applied in a variety of forms, from thumb print requests to push messages via text or email that ask the customer to confirm information that only they could realistically know. Facial scans can also be utilized to add a further layer of protection for genuine customers, as well as operators.
After all, with anti-fraud measures in place, customers will benefit from greater protection against potential account takeovers, which are increasingly common.
“Strong authentication creates a tamper-proof record of approval by the account holder, so it is irrefutable and strong,” White says. “It is not just about protecting logins, but can help protect the entire player journey. For example, authorization can also be requested if an unusually high-value bet has been placed.”
Authorization and authentication steps can also reduce pressure on call centers – another positive and money-saving element of a holistic fraud-prevention strategy for operators.
Whilst reducing incidents of fraud is important for the operator and customer, ensuring that the strategy does not have an adverse impact on the experience of the individual is crucial.
For this reason, an omnichannel approach to authentication and verification can help to build trust with the customer, according to White. White cited a study by the Aberdeen Group which found companies with a strong omnichannel strategy saw an average customer retention rate of 89%, compared with 33% for companies with weak omnichannel strategies.
“If you can keep the process as frictionless and automated as possible, it will benefit all concerned,” White adds. “It gives the players more choice, as well as opportunities to become more invested in their experience.”
“The goal is to provide a smoother and more frictionless player experience, from expediting on-boarding to being able to carry out these types of fraud prevention checks easily.”
“Customer expectations are rising. The operators that are going to have an edge in the market are going to be the ones thinking about how to take a mobile experience and extend it to all parts of their business.”