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Betting sites balance fraudster nab and customer loss

Tricky job? You bet

3 Big data security analytics techniques

Online gambling sites are fighting ever-sharper fraudsters, forcing them to balance stricter anti-cheat measures against the risk of alienating some of their best customers.

Last week's Betting and Gaming 2010 Conference ran just days after it was revealed bookmakers Ladbrokes was investigating the loss of thousands of customer details from one of its databases.

It reassured gamblers that the information did not include bank details or passwords. The security breach was revealed by The Mail on Sunday which was approached by an Australian man named Daniel who claimed to have access to Ladbrokes' database of 4.5 million customers. Daniel gave the paper 10,000 customer files to show he was serious.

In an interview prior to the breach being revealed, John O'Reilly, managing director of Ladbrokes' online business Ladbrokes Remote, told us: “As security technologies improve, so do the fraudsters. They are getting sharper and bloody sharper. This is what we see for sure.

"Combating fraud is a big part of what we do - not a very visible part, but it's a huge task for all of us.

“It's a significant level. We've all got armies of people combating fraud in real time, stopping people getting in and cheating our sites.”

The classic methods used include chargebacks, chip dumping, card tumbling - “a whole bunch of stuff”.

The false chargeback scam involves tricking credit card companies into paying back losing bets. Chip dumping occurs when one poker player passes their chips to an accomplice by deliberately losing - money can be laundered this way. Card tumbling is a trick whereby programmers run algorithms to generate a correct sequence of numbers that will validate a card.

According to APACS, the UK payments association, card fraud in the UK cost the gambling industry over £21m in the 12 months to June 2008. A good industry rule of thumb is that fraud costs two to three per cent of a business's revenues.

Handling major and minor fraud issues is a regular chore for the sites. At the conference two security managers conceded they wouldn't immediately bar a VIP customer caught chip dumping. It can occur without criminal intent, but just to fund a friend's play.

Motie Bring, head of transaction services at poker site PKR, said he'd make sure the customer knew that the site knew what he'd done. “We'd shut them down for a day or two and inconvenience them, and issue warnings. We wouldn't immediately exclude them.”

Though believing strongly that “security supports the business”, Lennart Ehlinger, senior compliance and security advisor for Unibet, recognises that commercial considerations mean you wouldn't automatically exclude a VIP customer for chip dumping.

“There have been cases we've had to argue with the marketing department when someone's used a stolen credit card and they want to keep this guy,” he said. “You're banging your head against the wall when you have these discussions.”

Account theft is another classic gambling site fraud and Dennis Luckett, head of fraud for Victor Chandler International, said he'd certainly noticed a big increase in this in the last few months. “We're getting one a fortnight at the moment, and a year ago it was around one every two months. But maybe we're just being unlucky,” he said during a panel discussion on minimising risk and keeping customers happy.

3 Big data security analytics techniques

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