Third Party Reports Emailage Whitepaper | Page 5

Online Gambling Survey Report 8 Fraud impacting the business Detecting more fraud at the first point of customer contact – registration – alleviates the burden on fraud detection at later points in the journey. But even with a best case of 90% of fraud being stopped, there is still 10% getting through the system. According to our experts, the top three areas where fraud is impacting the business are bonus abuse, account takeover and ID theft. Bonus abuse There is little data from trade bodies on the proliferation of bonus abuse within online gambling, but operators across the industry continuously cite bonus abuse as a top business concern, as highlighted in our own survey results. The practice of multi-account betting, or “gnoming”, is prohibited by most operators and is clearly outlined in the terms and conditions. To ensure customers enter their genuine details and not that of an alias many have enacted the “one account per household, IP address and access device” requirement. However, this policy does have its downside.If you live in a flat-share or have a spouse with an account on the same gambling site, for example, it could lead to a potential ban or worse, a loss of winnings or deposits. Additionally, this prevention may cause a loss of revenue for the owners of the site, causing a false positive and preventing genuine customers from taking part. Many operators suffer as customers share their personal documents used in the Know Your Customer (KYC) onboarding process with fraudsters in exchange for money. The fraudster then uses the customer’s identity to reap the benefits of bonuses that the customer would otherwise receive. By doing this, bonus abusers can use the identity of many customers and collect the winnings generated without having to invest their own funds. Many of those committing bonus abuse will be repeat offenders. They often work together to commit their fraud, using various tactics and methods to go undetected. Although they can 9 Online Gambling Survey Report target any operator, the biggest impact will always be felt by smaller operators as they often have to provide the same generous bonuses to compete with larger rivals, but they don’t have the capacity to absorb the lost funds or to prevent it in future. This vulnerability, of course, attracts further abuse down the line. Account takeover In addition to bonus abuse, our ongoing conversations with operators and industry experts have identified two distinct types of account takeovers as being of serious concern. Many of our contacts mentioned VIP account takeovers, where a fraudster will gain access to the account and withdraw all funds to their account or use it to funnel money from illicit sources. The second type of account takeover is when a fraudster uses stolen credentials to create or maintain a new account. Regardless of the type of takeover, fraudsters have a large range of methods for acquiring these details, either by purchasing credentials or hacking public Wi-Fi networks. This means operators need a wide range of tools for spotting and acting on this type of fraud. ID theft Both account takeovers and bonus abuse can occur when a fraudster uses stolen credentials and sometimes this can include cases of ID theft. In most cases of potential ID theft in the online gambling customer journey, indicative high-risk or fraudulent behaviour is either identified at registration, if using Emailage, or is spotted at the deposit/withdrawal stage. With the new UK Gambling Commission requirements this must happen almost instantly, because operators are required to establish identity prior to any gambling taking place. Our experts said that ID theft is a large business concern for several reasons, including the cost of manually verifying identity and determining if the customer is genuine or using fake details at somewhere along the registration process. Detecting ID theft is undoubtedly one of the more costly parts of the online gambling industry, but with the new regulation new innovations and integrations are likely on the horizon. This  will make the process more accurate and cost efficient.