ovation was set up in 2004. Internet, as well as technologies, and more specifically, online gambling, have evolved dramatically since then. In which ways has the company changed to adapt to present times?
Yes, fraud is constantly evolving which is why you have to take a holistic approach to fraud prevention. This is why we’re constantly analyzing fraud trends and adapting our technology to better defend against fraud. One great example is our new email verification services. With real-time insights into the age, validity, and risky behaviors of an email address, fraud analysts can identify risky behaviors to prevent account takeover and other fraudulent behaviors. We have also made continuous investments in the mobile market, including new capabilities that launched June for tracking anomalous behaviors and risky attributes specific to mobile devices. For instance, looking at what country a SIM card a device is using is associated with, the language a mobile device is using, the currency a device is using and iOS device orientation.
What types of services will you be offering online operators in Pennsylvania? Which specifications would these services have to include to adapt to this newly-emerged market in this region?
iovation was presented with a very unique opportunity when TransUnion acquired us in 2018; to join digital identities with physical identities. Now, through one integrated API operators can solve for a much wider array of issues encompassing identity verification, compliance, consumer authentication and of course fraud prevention. On the identity verification side we can now offer services such as age verification, address validation and phone verification; along with services such as verified pre-fill which allows operators to expedite player onboarding without adding risk. We’re also able to offer more robust solutions to address regulatory requirements such as player self-exclusion, anti-money laundering (AML) and managing play by geographic boundaries. Not to mention that our core value proposition of preventing fraud is also strengthened by adding identity verification checks such as email risk assessment at high-risk points in the player journey. Ultimately, this allows us to take a much more holistic approach to helping operators protect the game while improving the player experience.
Some of the key issues covered by iovation’s 2019 Gambling Industry Report include self-exclusion policies and credit card fraud. Which are the most common problems you’ve encountered in other regions related to these two issues and how did you manage to prevent them and/or solved them? What do you expect to find in Pennsylvania?
Managing player self-exclusion continues to be one of the top concerns we hear from operators. To demonstrate the scope of the problem, we analyzed self-exclusion reports from our network of over 100 gambling operators and platform providers throughout 2018. In that period, we saw 223,000 reports of self-exclusion. Those 223,000 reports were linked nearly a million attempts to access a site in our operator network by devices associated with self-exclusion, an average of 4 attempts per report of self-exclusion. This really highlights how critical leveraging device intelligence is to stopping self-excluded players from returning. Using device intelligence, the player’s device becomes a unique digital identifier that can be used to identify self-excluded players even if they attempt to setup a new account using falsified personal data or a new device.
Similarly, credit card fraud was one of the top three types of reported fraud from our gambling operators in 2018, increasing 155% over the past five years. It will be important for operators to protect against credit card fraud, but just as importantly they’ll need to ensure they can secure new alternative payment methods such as cryptocurrencies, e-wallets and electronic fund transfers (EFTs) to name a few. There are a number of ways that you can combat payment fraud. One of the most effective methods is the use of device intelligence, because it doesn’t rely on personal data that could be compromised. Device intelligence allows you to access the history of a device to uncover, for instance, if it has been reported for credit card fraud by another operator. Other risk indicators such as high velocities can also be used to detect possible payment fraud. If you see, for instance, a single device was used to set up a hundred new accounts in the past week, that’s not a normal consumer behavior and should likely be flagged for investigation. By implementing device intelligence checks at high-risk transaction points such as deposit and cash out, operators can more effectively combat payment fraud.
One important issue mentioned by those worried about gambling harm, for instance in the U.K., is affordability. Are you currently offering any services which help operators prevent bettors from gambling more than they can afford?
We do offer affordability services in a number of markets including iGaming, specifically in the UK. Utilizing current account turnover (CATO) data you can verify income and expenditures that a consumer has in their banking accounts and assign a score range or RAG (red, amber, green) status correlating to the accuracy of their declared income. The service reports levels of indebtedness as well. We offer a range of solutions that allow businesses to evaluate a customer’s risk profile and their affordability and facilitate more accurate, smarter decisions about the likelihood of them fulfilling their credit commitments.
Could you share your views on the evolution of the online gaming market globally as well as in the U.S.? Which jurisdictions offer the most potential for online gambling growth? What similarities and differences have you found in the U.S. as compared to the U.K. or other markets in terms of fraud prevention and consumer protection?
iovation has been helping secure online gambling since it first launched its services in Europe in 2004. In fact, one of iovation’s very first customers was a gambling operator that was suffering major losses from a coordinated fraud ring. There are many parallels between the initial launch of online gambling in Europe and the emerging U.S. market. European operators were all speeding to be the first to launch and didn’t put much thought into controls to prevent fraud, and as new regulations were introduced specifically around responsible gaming, many operators were caught unprepared. Today, you see that the market has matured and operators have put more robust controls in place to prevent fraud, protect consumers and comply with regulations. Operators launching in the U.S. market could learn a lot from those early mistakes European operators made by building fraud prevention/compliance tools into their systems from the start rather than having to scramble to shore up weak points after the fact. There’s also a real opportunity to set up responsible gaming practices early to avoid regulators having to add oversight to protect players. This regulatory oversight has already begun in New Jersey where we’ve seen two recent cases of fines being levied against gambling operators that did not properly enforce self-exclusion.
Are you currently offering your fraud prevention services in any other regulated markets in the U.S.? Could you detail your experience and forecasts for the future in those jurisdictions as well as in Pennsylvania?
iovation has protected more than 4 billion transactions and stopped over 47 million fraudulent transactions for its gambling customers since 2005. We address many of the hot-button compliance and fraud issues in the U.S. such as ensuring gamblers are placing bets within state boundaries, managing self-exclusion, determining when fraud rings are trying to take advantage of an operator and flagging underage gamblers. Since our solutions are custom-built for the US market, we expect to see the amount of transactions we protect grow tremendously as more states continue to legalize online gambling.
According to an iovation Research released in May, people in the U.S. are taking more evasive measures than others worldwide to gamble online. Which are the reasons behind this fact and what can be done to prevent U.S. citizens from engaging in such behavior?
Yes, iovation recently analyzed over half a billion online transactions from our global gambling customers from March 2018 to March 2019 and found that U.S. consumers are trying to bypass system controls to gamble online at a much higher rate than those outside of the use. In our analysis, we saw that 4.13% of online gambling transactions from the U.S., predominantly to European gambling operators, used evasion techniques such as trying to hide their location -- 119% higher than the 1.89% of online gambling transactions from outside of the U.S. which used evasion techniques. This highlights the pent up demand for online gambling in the U.S. and the lengths that good consumers will go to in order to bypass system controls. This is something operators will definitely need to watch in the emerging U.S. market as U.S. consumers may try to place bets from states where sports betting is still illegal. One solution is device intelligence, which alerts operators to the use of evasion techniques, allowing them to deny the transaction if it’s out of jurisdiction or send it to review if there is any question about where the transaction is originating from. Operators will need strong controls to detect evasion attempts and control play by geographic boundaries.