Credit card fraud and chargebacks: Staying protected

Credit card fraud is one of the biggest problems associated with chargebacks. Last month, the Casino Affiliate Programs blog provided an intro to chargebacks and what they mean to gaming affiliates. Today, we’ll look at the larger problem of credit card fraud and how it can be avoided.
For starters, a chargeback is when a credit or debit card purchase is refunded. Chargebacks are fairly rare, and tend to come about only when a legitimate mistake has been made, such as a human error or technical glitch causing the wrong card to be charged.
In some cases, though, chargebacks are signs of a deeper problem: Credit card fraud. Though rare, chargebacks as credit card fraud can occur in the gaming affiliate space. Here’s what to do about it.
How does it work?
First of all, let’s examine what credit card fraud is, and how it’s connected to chargebacks. Unlike the more common reasons for chargebacks, credit card fraud is the deliberate misuse of credit cards to get something without paying for it.
Credit card fraud usually crosses over into casino affiliate marketing these two ways:
1. Players use stolen or invalid credit card numbers to essentially play for free. The danger of this in gaming is when players sign up repeatedly using different credit cards to get their deposit bonuses.
This is rare today: Payment processors monitor suspicious activity very closely, and these patterns are usually easy to spot. Plus, it’s hard for thieves to get anywhere with invalid credit cards today; they simply don’t work. Card numbers are typically validated before any charge is made. (Although in rare occasions, a player may receive a deposit bonus just for entering a card number, even if it’s invalid. Those are the potential problem areas, and it’s wise for affiliates to be aware of operators’ policies on that point.)
And given the fact that payment processing for online gaming in the U.S. is almost nonexistent, this isn’t as closely guarded as it could and should be. As an affiliate, you should monitor your monthly statements for any patterns that would suggest this sort of activity.
2. Affiliates themselves make fraudulent purchases to earn commissions. This is rarer, because it’s harder to pull off. In verticals other than gaming and poker, commission rates are much lower, meaning an affiliate would have to perform this action on a huge scale to even turn a profit. Those unprincipled affiliates who prefer short-term cash over long-term sustainability tend to turn to easier and safer methods, like PPC fraud.
How can you fight it?
As an affiliate, you know that, of the two points listed above, the second spells instant disaster. If you’re taking the time to read this article and educate yourself, chances are you’re not the type who would even consider it.
But the first point remains a real, if rare, threat. What can you do to make sure credit card fraud chargebacks don’t happen to you?
As we mentioned last month, the best way to monitor your account for credit card fraud or any suspicious chargeback patterns is to look for these elements: The timing of the charges, the consistency with which chargebacks are made, the amount charged back, and any other patterns that present themselves in your statements.
“If you see inconsistency, particularly with the same operator, or if you realize you’re getting more chargebacks now than you were before, and those are all coming from the same source, that’s a warning sign,” as we wrote back then.
Final point of advice
Stay in contact with your affiliate manager. Make sure you fully understand what kind of payment processing your affiliate partners use, especially your biggest earners. If you’re not comfortable with what you’re seeing, either ask them to explain it, change it, or get a new operator.