How to Find and Stop Bonus Abuse in the iGambling Industry

The good news for online casinos and iGambling establishments is that business is booming. Sitting at around $45.8B last year, the market is expected to be worth $87.75B by 2024.

But the Fall 2019 Online Gambling Quarterly Report also cites two major concerns for operators of online casinos and iGaming businesses. First on the list is a challenge in riding the new wave of government regulations. Second is an increase in competition and tougher markets.

To make matters worse, fraud still eats away at operators’ profit margins. And while payment fraud and chargebacks are something every fraud analyst should understand, bonus abuse is harder to track and curb.

How and Why Bonus Abuse Works

Bonus abuse goes by many names: promo abuse, bonus hunting, bonus whoring, casino whoring, and bonus abusing.

Essentially, it’s all about finding marketing offers for new users and signing up for them multiple times. In fraud terms, this process is known as multi-accounting, and it often targets no deposit bonuses such as free spins or free cash.

The problem? It encourages fraudsters to create as many new accounts as possible, relying on stolen IDs, synthetic identity, and prepaid credit card details to bypass the KYC checks.

More sophisticated criminals can also have the resources to use emulators, virtual machines, and even residential like IPs, such as Socks5 proxies or mobile networks to leverage fresh IP addresses.

Bonus Abuse: Changing, But Still There

Aside from no deposit bonuses, bonus hunters also create fraudulent accounts to increase their chances of winning.

This method worked because, historically, bonuses were big, had low wagering requirements, and no restrictions on allowed games.

This pushed fraudsters to use multiple accounts for collusive play methods, such as arbitrage, or chip dumping.

So it took a while, but casinos eventually worked out how to solve their promo abuse:

• More complex bonus rules: strict withdrawal requirements and rollovers where users must play the bonus amount several times before they can receive it.
• Lowering bonus payouts: a quick fix to stop haemorrhaging cash.
• Block risky locations: most operators, for instance, will not offer bonuses to new Russian / Eastern European users, who are historically prone to bonus hunting.

Affiliate Fraud — When Marketing Backfires

Another issue with bonus incentives is that it makes it easier for fraudsters to direct, or control traffic for affiliate fraud. Criminals can signup to casinos and iGaming operators’ affiliate programs, and:

• Send leads who are only interested in the signup bonuses, which qualifies them for a CPL commission,
• Generate fake traffic to earn commissions on CPC,
• Redirect traffic towards websites that qualify for CPM commissions.

This all adds another layer of complexity in filtering legitimate new users from bad, or fake ones.

Balancing Incentives, Security, and Friction

The problem with tweaking bonus rules is that they become less attractive to users with each new condition. Circling back to the issue of competition and tougher markets, it’s easy to see why casino marketing managers are at pains to balance incentives and security.

Then, there is the issue of managing security and friction. Every operator knows that simplifying the onboarding process is the best way to grow your user base. But when KYC processes are involved for regulatory and security reasons, they also have a choice to make:

• Heavy KYC: more thorough and safe. Taking on average 1–5 min, so a very long time for users, which increases churn. One example would be to ask for an ID verification or selfie at the signup stage.
• Light KYC: offering a smoother user experience, around 1s per verification, but also riskier, as it lets fraudsters sip through the net. It is often performed by looking at a user’s digital footprint and enriching the data.

There are a lot of forces at play, all of which make it increasingly hard to react passively to the problem of bonus abuse, instead of taking a proactive approach.

However, it is possible to combine both heavy and light KYC if your system knows what signs to look for. Reaching a certain risk threshold, for instance, can trigger additional rules and verification checks that legitimate users don’t have to go through.

The Solution? Automated, Flexible Fraud Prevention

At SEON, we’ve thought a lot about the challenges of curbing bonus abuse for online casinos and iGambling operators. This is why we built a fraud prevention tool that lets you:

Best of all, it is designed with specific features for online casinos in mind as we help meet regulations and self-exclusion rules, create a balanced customer journey, and of course, reduce payment fraud, chargeback rates, and multi-accounting.

You can learn more about the benefits of using SEON in the iGaming industry here.

Originally published at https://seon.io on November 7, 2019.