How Online Casinos Prioritize Tackling Fraud

As the rate of innovation in the digital world continues to evolve at a rapid pace, websites that process sensitive information – like online casinos – become more and more vulnerable to fraud. Fraud cases, including identity theft, phishing, and payment fraud are a growing concern, with online casinos being a prime target due to the large volumes of deposits and withdrawals that are handled daily. Recent findings show that online gambling and betting fraud increased by 80% from 2022 to 2023. 

To safeguard their platforms, online casinos prioritize anti-fraud strategies to maintain a safe and trusted gambling environment.

Common Types of Fraud in Online Casinos

There are several types of fraud that are common in the gambling environment. The six most common types are:

1. Identify Theft

ID theft occurs when personal information, including names, addresses, ID numbers etc are stolen to either create a new fake account based on another person’s identity or to infiltrate an existing account. Once these accounts are created or hacked, the person can withdraw funds and/or claim bonuses, putting the victim at huge financial risk.

1. Phishing

Phishing is incredibly deceptive. Whether it’s an email, text or website,  an individual or individuals will use these platforms to imitate an existing online casino to try to convince players to hand over their sensitive information. This could be anything from banking information, to account logins. If players get caught in the lie and hand over this information, it can, as with ID theft, lead to grave financial loss.

1. Bonus Abuse

Bonus abuse is the practice of creating multiple accounts under different names in order to repeatedly claim welcome offers from online casinos, such as welcome bonuses or free spins. This is stated in the terms and conditions of all online casinos as an illegal practice, as it can lead to financial loss for the casino. 

1. Money Laundering

Online casinos are sometime used to clean funds gained by illegal activities. Players will purposefully lose to another player, and transfer the funds to the winner who then is able to cash out their winnings in a legal manner. Casinos generally catch these practices by monitoring for unusual betting patterns and identifying large deposits followed by quick withdrawals.

1. Payment Fraud

In this case, different payment methods are exploited in order to steal money. This can take place either with stolen cards or card information, or through chargeback abuse. A chargeback scam takes place when someone deposits funds, gambles and then disputes the payment with their card company. This leads to the casino having to pay back the deposit, plus any processing fees or penalties.

Measures Online Casinos Take to Prevent Fraud

Online casinos take a number of measures to prevent fraud. The first and most standard is two-factor authentication (2FA). This requires players to login to their profiles in two steps instead of just one, usually in the form of logins for the first step and then a code sent via text or email as the second step.

Encryption is another crucial technology that protects players’ sensitive information. Secure Socket Layer (SSL) for example, scrambles information as it is placed into a platform so that it can’t be intercepted and stolen at any point.

Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols have been essential in the fight against fraud. KYC is a requirement for the players to verify their identity when signing up to an online casino by submitting legal ID documents. Whereas AML is a requirement for the casinos to monitor all transitions to detect suspicious patterns or behavior.

Last, but certainly not least important, is player education. It helps significantly in teaching players what suspicious activity or illegal sites to look out for. Review sites such as casinor.com provide lots of information on online casinos to help players make informed decisions about where they play. These sites even list blacklisted casinos for players to avoid entirely.

The role of international licensing and regulatory bodies in combating fraud

International and regulatory bodies aid online casinos in their fight against fraud. By ensuring online casinos must be licensed and therefore accountable for their practices, means a fair and trustworthy system for players. 

The main bodies include; United Kingdom Gambling Commission (UKGC), Malta Gaming Authority (MGA), and Curacao eGaming.

Consequences for Online Casino Fraudsters

Consequences for online casino fraud vary depending on the region and the severity of the crime, but can range from a fine to prison time. In the United States and United Kingdom where regulations are particularly strict, fines can amount to thousands and even millions of Dollars or Pounds.

A recent investigation initiated by the Latvian authorities, found that a Maltese financial institution laundered around €4.5 million, most likely more, from 2015.

It was discovered that the institution and its organized crime group offered money-laundering services through a number of fake businesses, after investigations found a pattern of suspicious money transfers. At this time, suspects have been arrested and a number of bank accounts and properties have been seized pending a final outcome.