Suspected instances of digital fraud rose in the U.S. gaming industry in 2023 and the sector continues to be the most vulnerable in the country, according to the findings of a new report from TransUnion.
The newly released TransUnion 2024 State of Omnichannel Fraud Report found that gaming had the highest rate of suspected digital fraud in the U.S. in 2023 at 10.9%, up 9% year over year.
However, while the American gaming industry’s vulnerability to suspected digital fraud increased, globally, the industry saw a fall of 30% year-over-year, according to TransUnion’s findings. The global information and insights company found that the worldwide rate of suspected digital fraud in gaming is less than half of the U.S. industry rate, at 5.3%, but still the third-highest of all industries.
The data also showed that the most common type of fraud seen in the gaming industry in 2023 was promotion abuse, wherein people pretend to be other real or fictitious people to take advantage of sign-up offers.
Globally, retail surpassed gaming as the industry with the highest rate at 8.6% (6.1% in the U.S.), while video gaming is second at 7.6% globally and 5.5% in the U.S.
Across all industries, the study found that 5% of all global digital transactions were suspected to be digital fraud in 2023, with the volume of risky transactions up 14% year-over-year and 105 percent from 2019 to 2023.
Fraudsters targeting new account sign-ups
TransUnion’s report also found that one of the major avenues being targeted by fraudsters within the gaming industry is new account creation via the use of fabricated or stolen identities.
According to the data, one in 10 (10.7%) global transactions in the gaming industry associated with online account creation in 2023 were suspected to be digital fraud. In the U.S. across all industries, the highest percentage of digital fraud in the online customer journey occurred at account creation, more common than account login fraud or financial transaction fraud.
TransUnion suggests this may represent fraudsters placing more emphasis on engaging earlier in the transactional process, such as when a consumer signs up or registers for a new online betting or casino account. Instead of infiltrating existing accounts to commit fraud, they can simply create new ones over which they have full control.
“In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, fraudsters are increasingly choosing to create new accounts that they can control themselves,” said Steve Yin, senior vice president and global head of fraud solutions at TransUnion. “These fraudsters leverage synthetic identities assembled in large part through the use of credentials gathered as a result of one or multiple data breaches.”
What does it mean for gaming providers?
Bettors and gamers, like all consumers, want to be sure that the sites and apps they use are protecting their identities and their data as well as delivering smooth and convenient gaming experiences. Consumers ranked personal data security as the top reason to do business with an online company, ahead of other factors such as convenience, easy payment options, and digital user experience, and 93% said confidence that their personal data will not be compromised is most important when choosing who to transact with online.
Identifying fraudulently created accounts and building robust but user-friendly authentication controls is a vital piece of the data protection and privacy puzzle. Ultimately, neglecting these issues could lose customers in an industry that is not only highly competitive but also comparatively susceptible to digital fraud.
