A fortnite spending in the world of warcraft, gaming & chargebacks
Netflix series like Stranger Things remind us of a bygone era in the evolution of gaming. Back when arcades were popular, video games would deplete your bank account one quarter at a time. When home video game systems hit the market, individual games could carry a hefty price tag, but once you bought one, it was yours to play as much as you wanted. Now we’re in the extremely online world of 2019, and video games that don’t include digital add-on purchases under a micro-transaction model are a rare breed. As is the case with many consumer innovations in the digital sphere, this has led to some abuses and unintended consequences, and those often lead to chargebacks.
One of the most popular platforms for gaming these days is mobile phones. According to market research firm Newzoo, 2.4 billion people around the world are playing video games in 2019, including 70% of Americans, and most of that can be attributed to the ubiquity of mobile devices. The revenue generated by gamers worldwide is expected to reach $148 billion this year. Whether it’s subscriptions, loot boxes, downloadable content, expansion packs, or customizable characters, video games are moving a lot of digital product nowadays.
With so many ways to spend money on video games nowadays, it’s no surprise gaming generates a lot of chargebacks—and given the immensity of the gaming market, significant sums of money are being forfeited when chargebacks against gaming-related purchases go unchecked.
Always a common culprit for chargebacks, “friendly” fraud is when a customer disputes a legitimate charge, whether out of ignorance or as a premeditated act of cybertheft. Gaming is rife with friendly fraud chargebacks.
One common scenario is that a player will spend a lot of money in the heat of the moment—to defeat a powerful enemy, or to win a hard-to-get random prize—and then regret it later.
It’s also very common for children or other family members to make in-game purchases without the cardholder’s permission.
Once a friendly fraudster gets away with having their in-game charges reversed, they’re likely to keep attempting it over and over again until somebody catches on to them. Some players will brag in the in-game chatrooms about how they’ve made thousands of dollars in purchases and never paid a cent, which often influences other players to follow their bad example. Even in non-gaming contexts, friendly fraud seems to be a habit-forming behavior, with most perpetrators making at least three attempts per merchant unless stopped.
Some of these chargebacks can be dealt with preemptively by providing excellent and easily reachable customer service, and by clearly explaining beforehand what is included in purchasable content, or what the actual odds are of obtaining valuable prizes from a random pull. Remember, it’s always better to give a customer a refund if the alternative is a chargeback.
When a fraudster obtains a stolen credit card number, they never know if it’s going to work or not. It might be maxed out, or already reported, and if they intend to make a big purchase with a stolen card, they want to be sure it will be approved—declined charges may cause the merchant to look more closely at the transaction and realize that fraud is involved. That’s why many fraudsters engage in “card testing,” where they make small, one or two-dollar purchases on a card to verify that they can use it.
Mobile games are a fantastic resource of card testing. With thousands of games offering 99-cent transactions, it’s easy for fraudsters to test as many cards as they need to, and never have to worry that the game publishers will notice anything unusual going on. But once they use those cards to make big purchases and the cardholders take notice, every single one of those 99-cent purchases can turn into a chargeback.
Fraud prevention tools are really the only effective defense game companies have against card testing.
Good tools will include velocity checking, which looks at how many transactions are coming from a particular IP address and how many cards are associated with each user account. This can give you the information you need to identify and block card testers.
Many people consider their online gaming accounts to be unimportant, or they have so many that it’s too hard to keep track of separate passwords for each one, and so their accounts reuse usernames and have very simple passwords. It’s not difficult for a hacker to obtain access to accounts as poorly secured as these.
Once inside the game account, the hacker may be able to make in-game purchases, or use up resources that the account owner already purchased. In either case, once the owner realizes that their account has been compromised, they will often dispute any charges that may have been made or exploited by the hacker.
Requiring two-factor authentication will stop most account takeover attempts cold, but this can also alienate players who don’t want to bother with complicated login procedures every time they want to play a match-three game for five minutes. At the very least, 12-16 character password requirements should be instated.
It can also help a lot to have a proactive and involved customer service team that will work with compromised account holders to restore any in-game resources that might have been lost or expended.
Online gaming will always be a tempting target for fraudsters. The market pressures that lead game designers to remove any barriers to logging in and making purchases nearly always have the unintended effect of facilitating fraud and making it harder to stop bad actors from taking advantage of you. Take things too far in the other direction, however, and you’ll see fewer players and purchases across the board. It’s a difficult balance to strike, but game publishers have to do their best.
No matter what industry you’re in, you can prevent many chargebacks simply by providing the best customer service you can. When customers know they can reach out to a company to have their problems and needs addressed, dealing with their bank to dispute a charge becomes a much less attractive option.