A new era of video gaming demands a new look at fraud prevention

By Mathilde Sarfas and Eliano Rexho, digital content vertical, Worldpay.

We know from talking to many of our video-gaming merchants that squaring up to market challenges can drive opportunity. Real-time fraud detection, biometric authentication and AI-driven risk scoring are essential to protect video gamers and sustain responsible growth.

The global video gaming market is now worth over $200 billion, making it the largest entertainment subsector in the world – but this comes with challenges. As monetisation models evolve, more diverse audiences come online. More people playing means more opportunities for fraud.

Getting wise to it

According to TransUnion, the video gaming industry in 2023 reported the second highest rate of suspected digital fraud attempts at 7.6%. This marks a 33% increase from the previous year, making it the fastest-growing sector for attempted digital fraud. From account takeovers and chargebacks to identity theft and marketplace scams, the threats are growing more sophisticated and more damaging.

The good news is that with adequate fraud detection, merchants can protect themselves.

To understand why fraud has become such a concern, we must first understand how the gaming industry has changed:

• Games are no longer static products. They are dynamic, evolving platforms. Free-to-play, cloud-first and subscription-based models have overtaken traditional one-time boxed purchases.
• Gaming isn’t for just the hardcore.Mobile is the dominant platform, and players span all ages and demographics, with younger users making up a large portion of spending.
• Data drives everything.From personalised game design to targeted offers, behavioral data is used to optimise engagement.

Amid this pressure lies opportunity.

While these shifts have opened new doors for fraudsters, they’ve also fueled innovation to protect against it and even drive growth. “There’s an opportunity for developers and publishers to rebuild and fortify their infrastructure end-to-end, from login systems to in-game payments, driving success,” said Hesper Huang, senior director of digital content at Worldpay.

Forward-thinking developers and publishers recognise that robust fraud prevention goes beyond compliance and cost reduction. It can be a cornerstone for building resilience and fostering player trust in an increasingly competitive market.

Three dynamics fueling fraud

The rise of microtransactions

Today’s gaming economy is driven by a mix of revenue models. Many mobile titles are free to play but supported by in-app purchases and advertising. Console and PC games now favor live service formats, offering ongoing updates and downloadable content. On top of that, in-game and out-of-game web shops have emerged, selling virtual currencies, character skins and loot boxes.

This evolving monetisation landscape has introduced wider exposure to fraud:

• Fraudsters use low value microtransactions to test stolen card data before making larger unauthorized purchases.
• Fake websites advertise in-game items to lure players and steal account credentials or payment information.
• Chargebacks are rising as players dispute charges tied to misunderstood, accidental or unrecognised in-game purchases.

Younger audiences

Video gaming is central to Gen Alpha’s and Gen Z’s entertainment diet. According to Bain & Co., 80% of young people identify as gamers, compared to 35% of those aged 45 and over.

Younger players can lack financial awareness or even use their parents’ payment details, which increases the risk of chargebacks. Exposure to scams, phishing or identity theft is a further risk, particularly on platforms lacking adequate safeguards.

Cybercriminals are aware of this vulnerability. Kaspersky reported a 30% increase in cyberattacks on gamers under the age of 18 in the first half of 2024 compared to the previous six months, translating to 6.6 million attempted attacks.

Because young gamers are a lucrative but high-risk demographic, gaming companies without tailored protection may find themselves at the center of rising fraud incidents and reputational damage.

Personalisation at a price

Behavioral data lies at the heart of some of today’s most successful games. Developers use gameplay analytics to shape difficulty, recommend content and trigger purchase prompts, building immersive experiences that feel tailor-made. This often boosts retention and revenue – but can also open the door to ethical and operational challenges.

The same systems that optimise gameplay can raise ethical concerns and fraud vulnerabilities:

• Games designed with addictive mechanics may encourage compulsive spending, leading to increased chargebacks and disputes.
• Excessive data collection without proper safeguards can result in security breaches, exposing sensitive financial and personal information.
• Regulatory bodies are watching closely, raising the stakes for noncompliance.

As developers push the boundaries of personalised game design, they must embed responsibility and protection at every step. Otherwise, they risk eroding the very trust that underpins long-term player loyalty.

End-game for fraud

To combat the rise in fraud, prevention needs to be embedded into every part of the player journey:

• Secure accounts with strong authentication to ensure users have the right intentions.
• Use real-time data across devices to enhance both gameplay and your anti-fraud models.
• Protect players and communities with robust controls and limits.
• Stay ahead of evolving regulations and build compliance into your ethos.
• Invest in end-to-end payments infrastructure through a payments partner like Worldpay.

In an economy where attention is fleeting and digital trust is everything, investing in secure experiences isn’t just safer, it’s smarter. In today’s gaming landscape, trust may be the ultimate competitive advantage.

Worldpay works with video-gaming merchants across the globe and can help to keep your gaming payments safe, sustained and optimised. Find out more or get in touch.