Customer Fraud: A Problem that Must Be Addressed

13 June 2000
The lifeblood of any business is its customers. Without customers, a business doesn't exist. Unfortunately, some customers create more problems than income. Whether they are trying to generate bad press or attempting to scam a business, it only takes a few customers to cost a business big money.

Every operator has his share of nightmare customers. At times, it can be a case of someone trying to pressure casinos into refunding money that was gambled away. For example, a player's husband reportedly emailed a number of sites recently asking for a refund on his wife's $250,000 gambling debt and requesting that the sites pay the cost of her psychiatric treatments.

Then, there's the intriguing offer that was posted in a chat room: Anyone interested in a legal way to rob casino every day $1000, e-mail me at xxxxxx. It is totally free. (An email sent for this tip has yet to be answered.)

Recently, a furor has arisen from customers complaining vociferously about being cheated out of new-customer signing bonuses on some sites. The operators of Golden Palace (GP), one of the most popular gaming sites on the Web, claim that their being hit hard by such complaints. A company spokesman explained that some customers were taking advantage of a 20 percent sign up bonus by opening multiple accounts, using various email addresses, paying with different credit cards, and using variations on their names.

GP at first let the alleged abuse slide--a plan that ultimately backfired. It wasn't long before the site was hit with an abundance of "promo abusers" looking to earn some money illegitimately.

The promo abusers cheated by registering multiple accounts under different names, email addresses, and even using fraudulent credit cards. (GP officials hasten to point out that other operators have been hit with these same problems. The site, however, is one of the largest and thus received more attention. Another operator related hearing of an unnamed site with which one customer open 1500 accounts!)

Additionally, the alleged abusers wagered money on craps and roulette--games that aren't part of the promotion--despite a disclaimer against it on the GP site. GP also complained that the perpetrators recruited family members to register even more accounts, once again disregarding rules saying that only one promotion per household would be given.

When GP retaliated by locking out suspicious accounts, a few players complained loudly and bitterly everywhere. Some even contacted the Interactive Gaming Council to help settle the disputes. IGC deputy executive director Keith Furlong worked with what he called "a small, vocal minority" of players who were locked out of their accounts and had money held back. His response, in part, was an email sent to the players whose accounts were disputed:

"From information received by the IGC it would appear that your account has been identified as one that allegedly abuses promotions by opening multiple accounts, disguising one's identity or attempting to charge back authorized transactions. As you are aware, by playing at a site a person agrees to abide by the Rules/Terms and Conditions for the site. As with any gaming operation the integrity of the operation, including the rules, applies to both the operator and the player."

Furlong stressed that both players and operators must always be aboveboard and fair in their dealings. He asked each player for details about the dispute as part of IGC's work to mediate disputes between operators and players. A key part of the IGC response is to include contact information for regulators in the jurisdictions where IGC members are licensed. Since GP is licensed in Antigua, so Furlong supplied the players with the contact information for the country's Directorate of Offshore Gaming.

GP officials claim to have settled most disputes, although a few players remain dissatisfied. "Any money they have purchased on our casino has been fully refunded to them. The money we have held is money derived from the abuse of our most recent promotional offers," the officials said. "We feel that giving this money back to these players is really out of the question. Instead, we propose, through the Interactive Gaming Council (, to simply give this money--totaling just over $15,000.00-- to charity."

It's been rumored too, that rival sites could have instigated some of the promo-busting activity. "There are enough scumbags, frauds, hackers and scammers out there," one sportsbook operator said, adding, "I place a lot of gaming site operators in one or more of the undesirable categories I mentioned."

Not every operator suffers from fraudulent activities. For example, a Caribbean operator explained his site has developed a thorough software program that virtually eliminates fraud. The operator claims that site has a miniscule chargeback rate and that the software prevents multiple account registration. Curiously, they've refused to sell the software to other sites.

Lasseters Online executive manager David Ohlson said that his company actively looks for multiple account registrations by using software along with other controls to prevent fraudulent activities. "You might get in once, but not twice," Ohlson pointed out.

Echoing that assurance was Alistair Assheton, managing director for "Fraud is a problem for any site that conducts e-commerce," he added.

Assheton says VIP has implemented several strategies to combat customer fraud. A strong security system keeps out hackers, for example. "Everyday there are attempts to infiltrate our site," he said. "They never get in."

The VIP staff maintains a credit card chargeback database and uses eSuccess' Citadel fraud protection program, as well as Casino Watch, a negative database used by gaming operators to track player fraud on member sites.

Assheton also believes that using promos can backfire. "You need to think carefully about the bonus program," he cautioned. "Ask yourself, 'is this bonus really directed toward keeping players on my site?'"

Many promos, he added, are poorly conceived or poorly worded, leaving the site vulnerable to abuse. Their philosophy has been to use promotions to build loyalty among current players, rather than attracting new players.

Happily, not all customers are looking for illegitimate gain. "Most customers are nice, they're people looking for entertainment," a GP spokesman said. For example, many promo abusers weren't doing it for fraudulent reasons. Some people, he explained, were trying to change their luck by using a different account or else mistakenly played games that weren't part of the promotion.

The spokesman continued, "Money wasn't the issue; it was the rules that were being broken."

As a result of this brouhaha, GP has implemented changes. To prevent multiple accounts, they will examine accounts more closely for common threads. Additionally, they'll work harder at authenticating the players. "Some people are going to lose out, but now we're going to be more selective," the spokesman concluded.

Other operators who have been watching the debacle might want to take heed too. Nearly every site is going to be hit with fraud somewhere along the way. Too many people enjoy the thrill of getting away with something, and it could cost your site some big bucks when they do.

Vicky Nolan joined the IGN staff in October 1999. She's best known for inventing fire, the wheel and swiss cheese. She can be reached at