SEON CEO Tamas Kadar talks to Casino Review about the changing faces of online fraud – and how to strike the right balance between vigilance and inclusivity.
Casino Review: What are the main pain points in terms of fraud for online gambling operators looking at the oncoming year?
Tamas Kadar: One of the trends we’ve been paying close attention to for the past few years is bonus abuse. What’s interesting to me is that, combined with multi-accounting, it costs gambling operators significantly more than payment fraud – and yet very few people give it their full attention.
So while we’ll still see the industry fight against chargebacks and affiliate fraud, I think bonus abuse will be one of the main fraud trends to watch out for in 2020.
CR: Why do you think bonus abuse is the most common type of fraud and how come ID verification is not a solution for this problem?
TK: The online gambling world is extremely competitive, and attracting new customers is where the battle is won or lost. So launching exciting promos makes a lot of sense. The problem is that the strategy often backfires, for a few reasons.
First, it seems unfair to old, loyal users. Why shouldn’t they enjoy free spins or a nice little extra deposit bonus? They feel left out and create fresh accounts to reap these rewards.
Then there’s the bigger problem of organized fraudsters. We’re talking multi-accounting syndicates who have ways to bypass ID verification, create several or hundreds of accounts and cash out, or resell them (although luckily, these are easier to spot with the right tools).
On top of that, online ID verification is not as strong as people think. It’s actually fairly easy for individual fraudsters and organized crime to get their hands on stolen or photoshopped ID scans like passports.
Finally, operators want to create a frictionless journey for new users. So they often compromise between strong fraud prevention measures in order to create a simple onboarding process that avoids churn.
CR: What else can be relevant when it comes to risk assessment, other than ID?
TK: To tackle fraudulent accounts, it’s primordial to use alternative authentication methods. For us, it’s all about enriching basic data points via tools like device fingerprinting, IP analysis, email profiling and even phone analysis. We can also look at user behaviour, which is extremely important.
But one point I’d like to emphasize is that these tools must build a wide-scope profile while being frictionless, so you only trigger dynamic verifications based on risky data. The right tools will let you know and mitigate risk before asking users, for instance, to upload an ID / selfie, which we all know can be a strong obstacle at signup.
I’d also recommend gambling operators focus their efforts on the registration stage. It’s the first customer access point, and the one that will help you stop as many fraudsters as possible, as early as possible.
CR: So if ID is not foolproof, how can new verification regulations be managed while also ensuring a smooth customer onboarding experience?
TK: As I already mentioned, there’s a constant tension between smooth customer onboarding and risk assessment. So the onboarding experience needs to be carefully planned, including ways to dynamically remove risk.
One of the strategies I recommend is to group authentication methods based on the friction they create. This is why we often refer to light KYC processes, such as device fingerprinting or email analysis, and heavy KYC, like ID checks and 2FA.
The main goal should be to use a combination of light and heavy KYC to create a balanced onboarding process that is both safe and improves customer satisfaction.
CR: So what are the advantages of integrating a solution like SEON and how can you calculate ROIs?
TK: I’ll answer this question based on our real case studies and client data. The main thing we found is that a lot of gambling providers still rely heavily on manual reviews. They prefer spending more time checking actions like registration, withdrawal or deposit, rather than declining them outright.
So while only 1- 4 percent of user actions are declined, an average of 8-12 percent of all actions go into manual review. That’s a huge, time-consuming task for the fraud prevention teams.
Where SEON comes in is by assisting these teams make decisions faster, more accurately, and with less doubt. In short, we empower them to speed up manual reviews down to seconds instead of minutes, and with a better accuracy.
This is all done via automation, which saves time by redirecting risky customers towards the right KYC processes. Our machine-learning tool also helps create and refine rules, which means time and effort dedicated to manual reviews decreases overtime.
In fact, SEON customers see a positive ROI in less than three months after integrating the solution. It saves them on bonus abuse expenses, which also decreases chargeback and payment fraud losses by keeping bad players at bay. And the longer the system runs, the more it helps gambling operators decrease churn, onboard new customers, and reduce all the costs associated with fraud.