Microtransactions fraud, also known as in-app purchase fraud, refers to manipulation and abuse of online gaming accounts where fraudsters target in-game currency, digital purchases, as well as real currency stored in wallets. Given a prolific increase in the value of these in-game assets, this type of fraud is on the rise
Microtransactions and downloadable content (DLC) have become a major source of revenue for game developers. They are now a common feature in free-to-play games that are free to download but need users to make in-game purchases that can either be cosmetic to enhance the gaming experience or affect the actual gameplay by providing a user an advantage over an opponent. They also feature in freemium games where some portions of the game are free, whereas to access the full content, the users need to pay up.
Players can either accumulate the in-game currency through extended gameplay or buy it using real-world currency. They can then use this in-game currency to unlock various characters to elevate their gaming experience or buy assets such as limited edition items, skins, passes, or game awards that enable them to clear the levels more quickly. In addition, there are special communities of professional players who convert their online fortunes into a stream of real money.
Increased spend on in-game assets fuels microtransactions fraud
With the number of users playing video games in the U.S. during the pandemic rising nearly 79%, the time spent on gaming also increased 26% and the money spent increased 33%. It is estimated that children in the US spent more than $100 on in-app purchases in mobile games every month in 2020. Further, 87% percent of gamers in the country purchase downloadable content, which largely comprises in-game currency, cosmetic upgrades, and weapon upgrades.
As the volume and value of in-game assets continue to grow, fraudsters have found an attractive opportunity to make money by targeting these digital money-spinners. For instance, a limited edition item or a rare skin can fetch them thousands of dollars.
Fraudsters create fake new accounts, quickly level them up with in-game virtual currency and digital assets using stolen credit card details, and then sell them online to other gamers. These small transactions, which often go unnoticed by credit card owners, also provide fraudsters with the confirmation that the stolen card credentials can be used for bigger purchases.
Fraudsters resort to phishing to launch account takeover attacks and chase big accounts in order to steal and sell assets for real-world money, apart from selling the login details of such accounts on third-party websites. They also compromise company information to open an account and orchestrate enrollment fraud.
Often fraudsters use bots to scale up attacks and maximize the returns. In 2020, when online gaming was the most attacked industry with the highest attack rate of 32.7%, gaming platforms were barraged with bot attacks that contributed to over 90% of the attacks and attempted account takeover of high-value gaming accounts.
Microtransactions fraud harms revenues
Microtransactions have become an attractive business model in online gaming and eSports industries, allowing them to earn money. Some gaming platforms have their entire revenue coming from microtransactions and DLCs. Microtransactions fraud can, therefore, obliterate their earnings and cause rising monetary losses apart from creating a negative user experience.
In addition to chargebacks arising from fraudsters using stolen credit card details, gaming platforms risk damage to brand reputation and customer churn, which is a big blow given it takes a long time to build a loyal community of gamers. Therefore, the gaming industry needs greater checks and effective measures to stop fraudsters from looting their earnings.
Deterrence is the most effective remediation
Although for medication many gaming companies lock down suspicious accounts, it is not efficient remediation as it can also filter out good, revenue-generating users. Therefore, there is a need to adopt a fresh approach to stopping microtransaction fraud – one that deters fraud for good and provides protection long-term.
Arkose Labs is a trusted partner of leading gaming brands when it comes to protecting their gaming environments and revenues while maintaining a stellar gaming experience they are known for. Arkose Labs strengthens vigilance at both registration and login stages by monitoring new and returning users.
Bankrupt the business of fraud
Instead of blocking users, the Arkose Platform allows users to prove their authenticity by solving interactive 3D challenges. Every incoming user is assessed for risk in real-time and accordingly presented with an enforcement challenge. Bots and automated scripts fail these challenges, while good users find them fun and clear them easily. Human attackers continuously face challenges that become increasingly complex and challenging, making it difficult to clear the challenges en masse or scaling up the attack. With time, efforts, and resources wasted, the ROI diminishes, making the attack unprofitable and forcing attackers to give up and move on.
To learn how Arkose Labs helps gaming companies protect their earnings by fighting microtransactions fraud while delivering a seamless gaming experience, please book a demo now.