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As mobile sports betting and online gambling increase in popularity in the U.S. so too does a broad range of illicit activities from identify theft to payments fraud and proxy betting, gaming industry executives warned Monday (October 10).
“In terms of what we see of fraud in this space, we see payments fraud, credit card fraud, account takeover. We see identity theft … we see some money laundering,” said Danny DiRienzo, senior director government relations with GeoComply.
Speaking at the Global Gaming Expo (G2E) at The Venetian Expo in Las Vegas, DiRienzo said “what we see in this e-commerce vertical is no different than what I worked for 25 years [in law enforcement] in every other retail e-commerce environment.”
“The difference is this industry has a lot of data at its fingertips to help identify and mitigate the fraudsters in a very quick manner,” said DiRienzo, a former sports-betting investigator with the Tennessee Education Lottery Corporation and agent with the U.S. Secret Service.
He said a lot of times GeoComply uses the data it acquires to help its clients identify the fraud and where it is coming from which is something that other e-commerce verticals do not have.
“Amazon or Apple get hit by fraud, they’re lucky they can give you an IP address and that address may come back to an address that’s hidden in Russia,” DiRienzo said. “We have geolocation [which] is extremely valuable to investigating fraud.”
DiRienzo participated in a panel discussion with Laura McAllister Cox, chief compliance officer with Rush Street Interactive, Michael Fritz, Bank Secrecy Act/anti-money laundering officer with Bittrex, and Dominick Squeo, a consultant with Eilers & Krejcik.
Bob Boyle, a senior manager at EY, moderated the discussion titled “Combating Financial and Cyber Crimes in the Growing Digital Age.”
“We are in this business, the operators, to make money and to offer a great product and bring a great experience to our customers,” McAllister Cox said. “In my role as chief compliance officer, I’m the one who gets everyone’s backs and make sure we know what the rules are, and we are playing by the rules and the customers as well.”
She said Rush Street Interactive has tools at its disposal to ensure customers are playing buy the rules, including terms and conditions that are approved by the regulator.
“We try our best to balance those competing needs but the vast majority of the people who play on our site are not fraudsters,” McAllister Cox. “We are constantly dealing with … fringe cases but they are dangerous. One bad case can take it all down, so we take it very seriously.”
DiRienzo said it is no mystery to anybody that the know your customer (KYC) process in a digital world is not perfect but “if you think about the actual percentage of fraud that’s committed versus the number of people that are onboarded through KYC processes, it’s actually a really small percentage that skirts the system that we have in place.”
“That said, we want it to be perfect,” DiRienzo added.
He reminded gaming executives and regulators that the industry needs to continue to leverage technology to improve the authentication piece. DiRienzo said it is about evaluating location and device data not only to flag potential fraudsters but to streamline those trusted users.
“What scares me from a perspective more than anything is account sharing,” he said. “It is where you have people on your platform, and you have absolutely no idea who they are because they didn’t go through the authentication process.”
DiRienzo said they see some activities from prisons, which from a law enforcement perspective is troubling for several reasons.
“One, they are a hot bed for fraud and two every account that the prisoner has is funded from the outside,” DiRienzo said. “So who is injecting money into your platform from the outside? Has that person been [checked] and are they a convicted money launder. Those are the things that from a risk perspective scares me.”
McAllister Cox reminded attendees that the customer journey just does not end with the KYC proven at the beginning but is a continuing task to monitor what they are doing. She said it is about looking for anomalies and relying on more than one source of identity verification.
“You need multiple layers to get as reasonably comfortable as possible that this is the right person,” she added.
