Original URL: http://www.theregister.co.uk/2010/02/05/gambling_sites/

Betting sites balance fraudster nab and customer loss

Tricky job? You bet

By Robert Blincoe

Posted in Security, 5th February 2010 12:30 GMT

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.

Speakers at the conference conceded that gaming firms needed to improve their security, but a major underlying theme was how this might put off customers.

During a panel discussion on integrity Bring said he thought good security could give customers confidence in a site and a competitive advantage, but “we're all being judged in the same way - the industry needs to be a lot more serious about ensuring they have the best technology and best people in place”.

The panel agreed that customers were mainly looking for the best bonuses, and could then be surprised they were having problems getting money out of less reputable sites.

Oliver Eckel, head of corporate security at Bwin, said his firm was playing around with the idea of having various levels of security, with the lowest being a simple login and password and the customer “happy in having a lot of risk”, then going towards using the idea of using tokens like World of Warcraft. “That's something the industry should be moving towards,” he said.

All panel members were resigned to being unable to stop all fraud, and Eckel felt he didn't need perfect security - “it just needs to be better than my competitors'. There needs to be enough of a deterrent to make sure it's not very cost-effective for criminals.”

Ahead of the conference Visa had been showing off its dynamic password technology to the industry. Then on the risk panel Phil D'Angio, director of business development at security business VeriSign thought it “really silly” that the businesses were making a lot of effort in checking who was trying to access their sites, then issuing “the weakest credentials possible – the user ID and password combination.”

“I don't see the point. You have something out there that's fairly convenient, and quite a bit stronger. Taking security up a notch seems the practical thing to do.”

Luckett was not keen, as any increase in security deters his customers - some of whom want to place bets minutes before events start.

“On our side of the fence, anything that makes it harder for customers to log means there is more chance of losing them. Yes you're insecure, but until everyone does it – who wants to be the first? We don't.

“Anything you type into a keyboard is going to be logged by a key logger – if you've got ten layers of security, the key logger will log them all. You might as well use user name and password and let your users get in nice and easy.”

But who else gets in nice and easy? ®