When it comes to digital goods, Friendly Fraud isn’t the only concern merchants should have. While industry estimates of friendly fraud range as high as 90% of all fraud, the amount of true fraud isn’t miniscule. And in the gaming world, this fraud typically involves in-game currency.
What is In-Game Currency?
In-game currency is the umbrella term for any money used within a game to purchase items, open loot crates, or unwrap player packs, among other things. It may be referred to as Gold, Points, Coins, or Credits. Games may offer two types of currency – that which is earned (Soft currency) and that which can be purchased (Hard currency). Earned currency typically has less value over a currency purchased with real-world funds.
For example, in EA’s FIFA games, gamers can earn FIFA Coins by playing matches, selling players, and completing goals within the game. But FIFA Points must be purchased, and these can be used to, among other things, open player packs. Similar to trading cards, player packs can contain common or rare players (like Ronaldo). These players can be added to your team, bringing you greater success in future matches, or they can be traded using the in-game Transfer Market.
A player like Ronaldo can net upwards of 90,000 coins on the Transfer Market. Those coins can then be used in-game to buy other players, enter FUT draft mode, and even buy packs.
The primary distinction to be made between Points and Coins is that Points have greater value by virtue of being purchased with real-world funds, versus Coins that require in-game effort to obtain. (See: Grinding.)
The rise of cross-play is also a factor. We see the value of in-game items increase because the origin is irrelevant and the method of transfer is simple.
In-game currency purchased with real-world funds is tricky to monetize and requires actors who can commit fraud at scale. This means having a lot of valid credit cards, accounts, devices, and IP addresses.
Step 1. Purchase the Currency
Fraudsters largely leverage automated or bot frameworks to submit and complete orders using stolen credit cards and newly created accounts. They may vary their tactics by placing low-dollar orders or varying the amounts purchased. Once the order is complete, the player’s account automatically receives the currency.
Step 2. Convert the Currency
Once the currency is available, it needs to be converted into something that can be transferred. This can be accomplished by opening packs and performing a “Quick Sell” of the players to convert their value into Coins. This is usually based on an average price for the player on the Transfer Market. In other games, this can take the same form under a different name. For example, receiving cosmetic items (such as costumes) or upgrades (like weapons or armor), and then reselling them within the game – usually directly to the game’s market (not other players).
Step 3. Pool the Currency (Optional)
Next, some fraudsters like to transfer the currency to a primary account, where they can then transfer the new currency to others without needing to login to multiple accounts to accomplish a large sale. Many users purchase tens of thousands of coins at a time.
Step 4. Sell to the Buyer
There are hundreds, if not thousands, of third-party (or grey-market) websites out there where a fraudster can sell their coins. Players in search of a deal can buy the amount they need to reach the next level in their game by simply searching “cheap [insert currency here].” But, no market is risk-free. In fact, it’s not uncommon for a player to walk away from a transaction empty-handed.
The transaction begins with the customer identifying the product and amount they would like to buy. Then they complete the transaction using the seller’s website. Surprisingly, or perhaps not, these websites often have over-the-top customer verification methods. For example, they might require the purchaser to submit a photo of their driver’s license and/or credit card. Then, at the time of purchase, the purchaser must provide additional details so the seller can locate them in the game or the market.
Step 5. Transfer the Currency
In order to complete the transfer, a typical method is to offer an item for both a very specific value (e.g. 132,374 coins) and far above market price (by selling an item for 10 times its expected value). The seller will then locate the item for sale and purchase it, successfully transferring the coins to the purchaser.
Sometimes it’s even simpler – you only need to locate the player by their in-game handle and transfer the currency to them directly. Very few games support this feature, but it’s still available in some cases.
Other Potential Risks
Allowing players to obtain in-game currency for less than its normal value cheapens the entire market. It allows players with very little gameplay or experience to skip the required effort it takes to become good at a game. And most players consider it cheating. The value held in playing and winning matches, defeating big bad bosses, or completing treacherous missions, isn’t meant to be side-stepped by paying a few dollars to a shady online seller. A similar argument is occasionally made against the same system that allows purchasing “Hard” currencies. But in those cases, the results are primarily luck-based and don’t offer a guaranteed value from the purchase.
This activity can frustrate fair players. They might abandon the game altogether to play something they view as having a better return on their time investment.
It goes without saying that this type of fraud is an easy way for fraudsters to monetize funds from stolen credit cards, but it can also be a unique method of money laundering. Some games allow players to “cash out” their in-game funds for real-world money. While this can incentivize in-game creators, it can equally incentivize crafty fraudsters who need to wash illicit funds.
Punishing Good Customers
Another potential risk merchants take when trying to tackle this type of fraud is to punish the end-user. Some companies apply blanket bans when they receive chargebacks for such products or when they detect players engaging in third-party sales. But another method has been attempted by Fortnite, whereby players who purchase items with illicit sources can have their products taken back by the game. This leaves the player out the item and the money given to the third-party seller. Identifying the right methods of deterrence and punishment requires walking a fine line to keep players coming back to the game while teaching them a lesson.
Detection & Prevention
As mentioned earlier, this type of activity requires fraudsters to act at scale. They must be able to trick fraud detection systems that easily sniff out multiple users on a single device or automatically stop purchases once a single account has made too many. One of the primary keys to catching this activity early is leveraging anomaly detection. Has there been a spike in purchases on a particular product? An influx of new account activity? Is the activity coming from one particular attribute, such as a particular part of the country or payment instrument type? Developing systems that alert you when something is amiss can help you investigate and adjust quickly.
Preventing this type of activity is the other side of the same coin. After detecting the activity, it’s important to adjust your fraud detection systems to reduce accepted fraud transactions. But prevention also means ensuring the product itself isn’t vulnerable. Letting players trade within the game without any item of value to validate that trade can result in rampant abuse and fraud.
Identifying the riskiest games in their riskiest markets and adjusting fraud detection systems accordingly can also help to prevent fraud – since not all games are popular everywhere. Educating yourself and your teams can help you stay ahead of the curve when the fraudsters come knocking.
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