Gaming fraud is an umbrella term for deceptive or illegal activities aimed at exploiting games - for example gaming payment fraud, cheating, and account hacking. It’s most often perpetrated by players seeking unfair advantages or by malicious actors looking for financial gain.
Since fraud in the gaming industry is much more prevalent than in others, it’s important for game developers to be extra cautious and adopt fraud prevention systems. These practices don’t just hurt game developers by cutting into revenue and lifetime value - they also disrupt the gaming experience for honest players, undermining a game’s trust.
What are common types of fraud in the gaming industry?
There are many different types of gaming fraud. Here are the most common ones:
- Gaming payment fraud: Bad actors use stolen credit card information to make unauthorized in-app purchases - either directly in-game or via online gaming payments
- Chargeback fraud: Gamers maliciously dispute in-app purchases with their banks
- Account takeover: Fraudsters gain unauthorized access to player accounts to make purchases or steal valuable in-game items
- Cheating: Players use automated programs, scripts, glitches or hacks to gain unfair advantages, manipulate game systems, or acquire items without proper payment
How big is gaming fraud?
In 2022, the iOS App Store prevented more than $2 billion in potentially fraudulent transactions. They also rejected almost 1.7 million app submissions for failing to meet Apple’s standards for privacy, security, and content and disabled more than 282 million customer accounts suspected of fraud and abusive activity. Apple also reported that they stopped 198 million attempts at fraudulent accounts before they could even be created.
The Google Play store also prevented more than $2 billion in fraudulent transactions in 2022 alone - including attempts to make in-app purchases with compromised payment methods, request refunds for in-app purchases that have already been consumed, or use scammed gift cards.
Why is gaming more prevalent to fraud?
Here are four reasons why fraud in the gaming industry is so prevalent compared to others:
Virtual economies and in-game assets
Unlike physical goods, game items like gold, swords, and loot boxes exist solely in digital form - making them easier for fraudsters to mess with and harder for developers to track.
Usually, shoppers are required to provide a shipping address when buying online. This is a common fraud prevention tool, called the Address Verification System, which detects untraceable or suspicious addresses.
However, shipping addresses are of course not required to buy virtual in-game items - making it easier for fraudsters to take advantage of these kinds of transactions.
Microtransactions and loot boxes
Many mobile games rely on microtransactions to monetize their player base - resulting in a high volume of small, frequent purchases. Because amounts for these transactions can be as low as $0.99 or $1.99, they can sometimes slip past mobile gaming fraud prevention systems. But their combined value can add up quickly.
Loot boxes, a feature unique to gaming, are particularly susceptible to gaming fraud. Players often make these microtransactions impulsively or without actually knowing what they will receive, as they contain randomized items. This uncertainty can lead to chargebacks and disputes if users aren’t satisfied with what they received.
Unofficial marketplaces
Players may buy, sell, or trade in-game items and accounts on unofficial marketplaces. But because they’re unregulated, they can be a hub for fraud in the gaming industry. Often, these platforms are exploited for money laundering or account takeovers.
Young user base
Children and teenagers make up a significant portion of gaming’s massive audience, with 9 out of 10 members of Gen Alpha and Gen Z having engaged with gaming in some form over the past six months. The young demographic makes gaming much more susceptible to chargeback fraud than others - since parents may dispute charges for in-game items their children bought without their knowledge but already consumed.
Mobile gaming fraud prevention
Clearly, gaming fraud can have severe consequences for both your business and your players. If your game becomes associated with fraudulent activity, app stores or payment providers like Visa and Mastercard may flag or ban it, cutting off key revenue streams and jeopardizing your business’s ability to operate.
Here’s how to safeguard your studio against gaming fraud:
Use gaming-specific fraud detection solutions
Start by choosing fraud protection solutions that are built specifically for games. Like we discussed, games are uniquely vulnerable to fraud - so it’s important the gaming technology you use is built with those vulnerabilities in mind.
This means choosing gaming fraud prevention tools to analyze gaming-specific data and detect anomalies:
- In-game engagement: Incorporating metrics like recent playtime, retention, or gameplay behavior into fraud detection algorithms
- Cross-platform behavior: Comparing a user’s transaction patterns across platforms, such as web purchases versus in-game native payments, to spot anomalies
- Chargeback risk assessment: Adapting fraud strategies to your game monetization model, such as addressing the higher chargeback risks of gacha mechanics compared to more stable models like season passes
Create a tailored fraud detection strategy
Generic, one-size-fits-all solutions can be ineffective and even harmful, as every game, developer, and ecosystem has its own specific risks. Your anti-fraud partner should take a tailored gaming fraud prevention approach, adapting strategies to fit the unique needs of your game and audience.
For example, consider Roblox, which has distinct challenges compared to other games:
- Young audience: High sensitivity to “friendly fraud,” where parents dispute unauthorized purchases made by children
- Creator economy: Increased risk of criminal fraud as users can monetize the platform’s virtual economy, making it a target for money laundering and scams
- Monetization model: Its currency-based system reduces certain risks, such as those associated with gacha mechanics, but introduces other vulnerabilities
Time to fight gaming fraud
Gaming payment fraud can have serious consequences - which is why Stash’s built-in safeguards for online gaming payments and experienced gaming fraud prevention team are here to help you grow your game’s web shop securely. Get in touch to learn more.