Sightline: Finding the balance between friction and fraud prevention

Sightline holiday fraud online gambling
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One of the biggest complaints from US bettors is that there are too many hoops to jump through in order to deposit and bet. On the other hand, customers are also rightfully upset when their accounts are attacked or they are victims of fraud.

This can prove complicated for both operators and payment processors, as it is difficult to streamline the account creation process without sacrificing the necessary Know Your Customer (KYC) protocols and anti-fraud measures needed to protect an account.

Fraud always on the rise during the holidays

It is a tricky problem, and one top of mind for Sightline’s SVP of Strategic Development and Government Affairs Jonathan Michaels given both the recent bouts of fraud and the season.

“Fraud on the payments side is on the rise everywhere. That was part of the reason we sent a customer bulletin out to let customers know the safety and security measures that we put in place,” he explained, referencing an email sent to Play+ customers about security practices.

Those practices include never storing bank account information, maintaining FDIC insurance, and requiring different Play+ accounts for each sportsbook the company works with. This differentiation across platforms prevents the kinds of hacking that took place on certain Global Payments accounts, where account information was stored and accessible across multiple online gambling operators.

Even with these measures in place, there is still a team on the lookout for fraud, as there are still hackers and scammers trying to get into accounts.

“You’re monitoring for trends,” Michaels explained. “At the end of the day, we want to make sure our customers’ funds are safe and secure, that is our primary responsibility, and putting in place different processes to make sure that exists both in terms of how we create our solution, but also to understand what’s happening in real time is really important.”

Customers want security without so many friction points

Sightline does a lot of work, but Michaels echoed what many others in the industry have said, which is that it does require some good cybersecurity hygiene on the part of the consumer. Players should enable two-factor authentication, use robust passwords, and not repeat passwords across accounts.

“Pretty much every person’s information can be found on the dark web. So you have to be diligent about it,” he cautioned.

Which brings back the friction of signing up and funding an account and finding the balance between adding in protective layers, like 2FA, and not making it so complex it deters people from signing up.

“The way our system or programs work with Play+ is we have different bands of deposits. The lowest of those, if you would set up an account, you can’t deposit more than $2,000 a day. We have the ability for you to deposit more. We’re even working on ways to increase that even higher than what it is today. But for you to be able to deposit more, there are additional KYC checks and identity verification and any number of things that you need to go through to be able to do that,” Michaels explained.

The question for Sightline is how much should these KYC checks be frontloaded at the beginning of the registration process. And that is a question with a complex set of answers that could change as the industry develops.

Gambling payment processing continues to improve

After all, even four years ago, getting money into an online gambling account was massively more difficult than it is today.

“In 2018, debit acceptance was around 60% because a lot of issuing banks didn’t want to do business with it. Today, it’s in the mid-90s, so it really is a different environment for payments,” Michaels recalled.

The good news for customers doesn’t stop there either. The assumption may be that gambling has higher fraud rates and more attempts to hack into accounts, but in this respect, Michaels said the same safeguards and KYC measures that can be frustrating for customers are working.

“It’s actually surprisingly lower in the gaming industry than a lot of other segments. We track that via chargebacks and fraud incidents, so gaming incidents are about 50 basis points or a half a percent. That’s lower than high-end retail and a lot of other sectors. Gaming is considered a high risk merchant category code, or MCC. There are additional fees that are associated with that, but in terms of fraud, it’s actually lower than a lot of sectors. Some of that is because of the necessary friction that exists to create an account.”