Casual Disconnect: Fraudsters Take Fun & Profit Out Of Social Games
Scammers threaten to make casual gaming not-so-casual. Virtual goods—the currency of trade for social games are coveted by cybercriminals for their hard cash value. According to a new article in the Wall Street Journal titled Fraudsters Like Virtual Goods, “merchants that sell digital goods lost 1.9% of all revenue to fraud in 2009, compared with a 1.1% fraud rate for companies that sell physical goods online,” based on data from CyberSource Corp. (a ThreatMetrix partner). The WSJ points out “at first glance it’s hard to imagine fraudsters’ interest in items like computerized swords for a fantasy game. But these goods are often easier to obtain.”
Digital goods purchases are different than physical goods purchases. The WSJ reports that PayPal transacted more than $2 billion in digital goods transactions, with a PayPal spokesperson describing the category as having “a higher degree of nefarious activity.”
These transactions are unique in that they cater to the gamer’s desire for instant gratification and low tolerance for hassle getting online. That means fraud prevention measures must be transparent to the gamer and effective at detecting/preventing fraud. Because gamers are especially sensitive to any delay, and because digital fulfillment is typically instantaneous fraud detection must occur instantly—and not simply an accept or reject call, but supporting data that gives the fraud analysts the full context of the transaction (for example, the true IP address and geolocation if the gamer is using a hidden proxy).
Taking the pulse of attendees and exhibitors here at Casual Connect 2010 in Seattle this week, it’s clear that scammers have become a big concern for many from payment facilitators to household name gaming companies. Much more this year than last, they are very aware of the kinds of games the scammers play to rob them of revenue. This fast growing segment of the industry appears ready to do more to blunt the scammers.
- Tom
