The sustained growth of the global online gaming industry has resulted in issues of security becoming more and more important. James Walker caught up with three of the leading players in online theft and fraud prevention to find out about the new services in place to keep both consumers and businesses safe...
Online fraud can affect individuals, government departments and, indeed, any company that operates through the web. Internet gaming is itself an industry of tremendous growth: worldwide revenue has increased from US$30m in 1994 to $10bn in 2005 and is estimated to reach a massive $23bn by 2009. Due to this expansion, issues of security are obviously tantamount to any igaming company, especially as many businesses are dealing directly with online payments.
Fraud is a global problem that will likely never go away. In the US alone, fraudulent activities accounted for nearly $2bn in lost revenue in 2006. “Merchant concern about online fraud and chargebacks has significantly increased as fraudsters become more sophisticated and scheming,” SafeCharge marketing director, Sharon Gal Franko, told iNTERGAMINGi. “Of course, as e-commerce continues to flourish and prosper, the number of instances of fraud and chargebacks will continue to mount higher.”
SafeCharge was established in 2000 in response to the emerging need by the e-commerce world for a reliable and secure online payment system. Today, SafeCharge is a leading payment service provider - integrating high-end payment gateway services with the some of the most powerful online fraud detection solutions available today.
“SafeCharge minimises merchants’ exposure to online fraud and chargebacks by an advanced fraud detection platform specialising in real-time fraud prevention and chargeback detection for all online communities,” Franko explained. “Employing a devoted team of online risk professionals who check merchant accounts online and offline, SafeCharge assures that transactions identified as being fraudulent are not declined automatically by the system.
“Providing the feature of a ‘dynamic descriptor’ is also essential for accurate authentication of the end-user by which the risk of potential chargebacks is additionally minimised, in some cases even prevented. In addition, features like the credit card storage, callback feature and the representment procedure are integral in the daily fight against fraud.
“With the SafeCharge credit card storage solution, clients no longer need to store credit card data. For the usage of ‘credit,’ ‘void,’ ‘settle,’ and ‘re-billing’ transactions, the credit card data of these transactions only needs to be sent once when submitting the transaction for the first time. Upon receipt, SafeCharge will send a token per transaction back to the merchant, which will be used for further transactions as identifying characters.”
When asked whether there were any particular geographic markets where online security is most important, Franko said: “We consider online security and fraud prevention a global task when serving the different online communities and geographic markets. However, SafeCharge’s robust fraud prevention platform is a flexible, web-based ruling system that can amend its rules to different geographic market requirements and different business models of online industries.”
Iovation, a global software company headquartered in Portland, Oregon, has been in business for four years helping companies in the toughest environments for online abusive behaviour. A company spokesperson agreed with Franko, stating: “[Online security] has been and will continue to be a global task. While some geographic locations have accounted for a disproportionate source of online fraud and abuse, fraud management is an international issue for all online businesses regardless of geographic location.”
Iovation provides software and services to their customers in online gaming, banking, payments, consumer credit, social networking and retail. The company’s ReputationManager product exposes hidden associations among fraudsters’ devices and accounts to help igaming sites not only stop fraud and shut down repeat offenders, but also make fact-based decisions whether to allow or deny player transactions, share fraud information among industry participants to stop known fraudsters from victimising gaming sites and protect players’ privacy by not relying on any personally identifiable information.
According to recent research by the UK Government’s Get Safe Online project, around 12 per cent of internet users fell prey to fraudsters in 2006 - a figure that equates to around 3.5 million people. The report, entitled Internet Safety: the State of the Nation, found that on average fraud victims lost £875 as a result.
UK-based GB Group helps gambling companies, high street banks, financial institutions and online retailers around the world to combat fraud and money laundering. The company’s major clients include Betfair, stockbroker TD Waterhouse, top British banks and mobile retailer O2.
GB Group’s core web-based electronic identity verification service, ID3, is used for customer identification and to abide by due diligence laws that have come into effect in the UK and around the world. The ID3 service can confirm the identity of over 800 million individuals living in 26 countries within seconds. The service is being used by over 170 organisations, which includes more than 80 per cent of the world’s online gambling companies.
“The service works by matching an individual’s details against an extensive range of external databases for the country from which they originate,” said Karyn Bright, head of marketing at GB Group. “Within seconds, it provides an authentication score that either confirms or rejects the identity of the individual, enabling the organisation to make an instant decision on whether to accept or decline them.”
While the growth of e-commerce has resulted in the creation of numerous online security companies and services, Franko of SafeCharge maintains that the market is not saturated, as payment processors continue to be chosen not only for their fraud prevention, but for their ideal combination of a complete payment solution.
Bright agrees with this standpoint: “The market is nowhere near saturated. It is still being driven by early adopters and their response to customer ID and due diligence laws both in the UK and globally - which, importantly, are now pointing to the robustness of electronic ID verification.”
Due to the extremely fast-paced nature of the online market, and the internet in general, e-security firms maintain that there will always be room for new players. “As market challenges change, so will the anti-fraud market in the next years,” Franko continued. “At SafeCharge, it is our utmost concern to keep up with the competition and with ongoing changes. As processing experts, we consider our merchants partners in that we provide them technological solutions to their demanding business and processing needs. Always looking for the client’s ‘edge,’ SafeCharge seeks for solutions right before the client expresses the urgent need for it.”
“Fighting fraud takes a layered security approach to stay on top of the fraudsters,” added Iovation. “Device-based fraud management systems are the next evolution of a healthy fraud management industry. Device reputation can be used stand-alone or to augment other tools such as geo-location or block lists. All of this data can be added as additional points of information into the Iovation database to be shared with other subscribers.”
Looking ahead, Franko said that in order to remain competitive online security companies will always strive to offer complete turnkey solutions, combining a powerful payment system with anti-fraud solutions and other embedded technological features.
Similarly, Bright said that GB Group would focus on innovation: “We will continue to second-guess fraudsters, close down the opportunities for fraud and future-proof our technology, not just from a business protection point of view, but with regard to compliance and industry regulation.”
As global companies such as SafeCharge, Iovation and GB Group continue in their quest to protect both consumers and businesses alike, it is clear that their job may never be fully accomplished, as fraudsters continue to find new ways to slip through the ever-complex nets.
“As long as internet commerce flourishes, online merchants and end-users will always have to confront online fraud to some extent,” Franko said. “The best way to cope with it is to find a smart solution being able to identify fraud on time and prevent it by keeping revenues growing at the same time. SafeCharge knows that player’s satisfaction increases at the end of a business day the merchant’s revenues.”
“In the security world there is a saying that ‘security is a process not an event,’ added Iovation. “Essentially, this means that as long as we are dealing with human ingenuity and the potential for making money, we believe fraud will take place and techniques will adapt. The key is to be pro-active and prepared to take advantage of new technologies and best practices to stay ahead of fraudsters.”