Sumsub
The Sumsuber

Best practices for KYC/AML

Games
2022-09-06
4 min read

Know Your Enemy: An Interactive Guide to Online Gambling Fraud

Chip dumpers, arbitrage bettors, identity thieves—there are so many fraudsters seeking to exploit online gambling. Learn the schemes they use and how to avoid them.

Fraud is on the rise in the gambling and gaming industries. In Q2 2021, the suspected digital fraud attempt rate rose 393% year-over-year. Meanwhile, in Q1 2022, there was a 85% increase in fake account registrations compared to Q4 2021.

To avoid fraud, businesses should know their enemies by face. That’s why we’ve gathered all the gambling fraudsters in one room.

Click on each one to get to know them (and learn how to stop them).

Name: Multi-accounter
Industry: Gambling (casinos, poker, etc.), fantasy sports and sports betting, gaming, lotteries
Fraud scheme: Multi-accounting is when a user registers several accounts to take advantage of an online service. This is done to repeatedly benefit from free trials, discounts, and welcome bonuses, or to continue using the service after getting banned.
To create accounts, scammers can use the personal data of friends and family or even stolen credentials bought on the darknet.
Scammers create multiple accounts for the following purposes:
Bonus hunting—benefiting from signup bonuses and other special offers. Chip dumping—making multiple accounts to participate in the same game and deliberately lose to a designated account (this practice is common in poker and other card games). Getting around limits and blocklists—multi-accounting allows individuals with bad credit histories, driving records, or gambling bans to continue using services.
How to avoid it: Employ identity verification with face authentication to ensure that the account holder hasn’t previously registered with your platform.
face authentication involves real-time biometric analysis of a user’s face to ensure that the true document holder is present during verification. This check can be employed at the withdrawal stage as well, ensuring that the person withdrawing the winnings is the one who registered the account.
Name: Chargeback fraudster
Industry: Gambling (casinos, poker, roulette, etc.), fantasy and sports betting, gaming
Fraud scheme: Chargeback fraud can take two forms:
Criminal fraud—when a fraudster performs transactions using stolen credit card information, after which the victim files a chargeback claim. Friendly fraud is a form of intentional chargeback fraud committed by the actual cardholder. Here’s how it can work: the user plays a game → realizes they’ve lost too much money → contacts the bank to claim the charges were unauthorized.
How to avoid it: Employ automated bank card verification, which ensures that a bank cards are genuine and corresponding to the identity information received from the applicant during ID verification.
As a final step, the customer needs to take a selfie with their card or pass face authentication. The system automatically compares this image to the one provided during registration, analyzing the customer’s unique biological identifiers. Depending on the result, the system either allows or rejects the transaction.
Sumsub’s anti-fraud solution protects gambling businesses from illegal chargebacks. Talk to our team today.
Name: Arbitrage bettor
Industry: Sports betting
Fraud scheme: Arbitrage betting is a gambling strategy that involves placing bets on all possible outcomes of an event in order to guarantee a profit. This could mean, for instance, placing three bets on the outcome of a football match: one on each team plus one on a draw.
How to avoid it:
face authentication. This biometric user identification solution confirms account ownership and prevents multiple accounts per user.
AML Screening. Searches across external databases and adverse media to reveal a bettor’s past involvement in online casino fraud or other crimes.
Name: Money launderer
Industry: Gambling (casinos, poker, etc.), fantasy and sports betting
Fraud scheme: Money laundering in gambling can take these forms:
Criminals can deposit money with illicit origin to an account and deposit it soon after. This is done to disguise illegal funds as legitimate winnings from online gambling. Criminals “clean” illegal money by placing bets with low-risk outcomes. They won’t win much, but the money they get back will now appear legit.
How to avoid it:
Liveness. As criminals may use third parties or stolen documents to open gambling accounts, advanced facial biometric checks are key to fighting money laundering.
AML Screening. This can help evaluate the risks associated with customers, such as presence on global watchlists (sanctions lists, PEP lists, adverse media lists, etc.).
Suggested read: Casino Compliance: 6 Common Mistakes and How to Avoid Them.
Name: Identity thief
Industry: Gambling (casinos, poker, etc.), fantasy and sports betting, gaming
Fraud scheme: To trick gambling platforms, sophisticated fraudsters don’t just use falsified documents. Instead, they buy real ones on the darknet. So even the most reliable systems won’t detect anything suspicious because no document manipulation has occurred.
How to avoid it: Introduce face authentication. This check takes just a couple of seconds to ensures that the true document holder is present. Businesses can use face authentication during onboarding or later on, when a player wants to withdraw their winnings.
Protect your platform from identity fraud with Sumsub’s verification solution. Get a free demo.
Name: Hacker (account takeover)
Industry: Gambling (casinos, poker, etc.), fantasy and sports betting, gaming
Fraud scheme: Cybercriminals gain access to the accounts of honest gamblers and use them to place bets, gamble, and get prizes.
How to avoid it: Ongoing monitoring of user behavior and big data analysis. This includes examining:
IP geolocation and device location; Device fingerprints (detection and analysis of a device’s operating system, the type and version of its web browser, language setting, etc.); Other changes in user behavior (e.g., a user links several new bank accounts, follows new betting patterns, etc.).
Sudden changes in such data may indicate that an account has been hacked.
Name: Malicious affiliate
Industry: Gambling (casinos, poker, etc.), fantasy and sports betting, gaming
Fraud scheme: Affiliate marketing can be a good revenue stream, but some unscrupulous actors use illicit tactics to get unearned commissions.
For instance, some hand-enter fake leads into a business’s CRM, while others generate traffic through bots. Such bots can even register accounts and make deposits.
How to avoid it:
Analyze where traffic comes from and when; Track the behavior of new customers coming through affiliate marketing and employ device fingerprinting. Introduce face authentication at the withdrawal stage to ensure that a real person withdraws the money.

How internet gambling fraud impacts platforms

So, what are the consequences of gambling chargebacks, unauthorized gambling transactions, and other online gambling scams?

AML compliance issues. The gambling industry is growing rapidly, and is predicted to surpass $172.2 billion by 2030. Therefore, regulators are taking a closer look at compliance among gambling platforms, imposing heavy fines for violations of AML and responsible gaming requirements.

In 2022, the owner of Ladbroker was handed the biggest fine in UK gambling history—a record £17 million ($20.6 million)—for AML and responsible gambling failures. In 2022, 24 gambling platforms have already received fines totalling £48m in the UK alone.

Bad reputation among partners and users. Gambling platfroms that experience high fraud levels and numerous chargeback disputes earn unreliable reputations with banks and processors. This results in penalties, fees or outright denial of services. Worse yet, honest users move onto competing platforms.

Looking for online gambling fraud prevention and AML compliance? Talk to our team.

Share