Why chargeback fraud is hurting the gaming industry

Chargebacks and a culture of friendly fraud is growing in the gaming community, hitting developers and companies who make video games for fun and people who provide gaming services online.

The global adoption of the internet has been one of the biggest reasons for the explosion of chargeback fraud, also described as ‘friendly fraud’ by many commentators because of the issuers’ perception that it can be a victimless crime.

Not at all. Fraudulently triggering the chargeback process is a lose-lose situation, with those in the gaming community having to foot chargeback costs as well as being put under scrutiny by their financial institution of choice.

The online nature and growth of the gaming industry has also made it easier than ever before for people to trigger the chargeback process. The chargeback issue is getting worse, hitting gamers, developers and Sony itself.

A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.

How the gaming industry can guard against chargeback fraud

Thanks to the growth of the internet, ‘gaming’ is now a broader term than it used to be. Not only are video game developers being hampered by a dishonest chargeback process, but so are those who operate online gaming sites such as slot machine games, bingo and more.

The internet is a common denominator when it comes to these types of chargebacks, though. So, what can those in the gaming community – software developers, publishers, gaming companies or otherwise – do to protect themselves against the growth of dishonest chargebacks?

Some of the most common chargeback requests those in the gaming industry face are:

• Lost or stolen cards: Online payments make purchasing easier than ever, but unless the system is up to date and the right fraud protection checks are in place, people can issue a chargeback request for lost or stolen credit cards (rightly or wrongly)
• Working with the wrong people: The online nature of gaming means that large audiences can be instantly reached, but sometimes at a cost.
• No real returns policy: Because developers and online gaming operators aren’t dealing with a physical product, they’re often lax on their own returns policy and can neglect customer service issues, resulting in a chargeback request.

Fighting fraudulent chargebacks in a digital age

Not every chargeback request is a fraudulent one, of course, and they’re very necessary, especially in a digital world where fraudulent activity is becoming more common.

Those in the gaming community – whichever part of it they work in – can be more susceptible to chargebacks though because they can appear more ‘faceless’ to people buying products online.

There are ways to fight chargeback culture, though, hold onto your profits and keep customers happy at the same time. Those methods extend to implementing the right payment processes on your website that don’t sacrifice the ease of completing payments, to producing terms and conditions that are easy to digest and understand.

Taking away the faceless nature of your online activities can also reduce chargeback requests, and creating an online customer service policy through avenues such as social media channels can also go a long way to improving customer satisfaction and reducing chargeback rates.

Work in the gaming industry and want to reduce the chances of being hit by friendly fraud? Contact Fibonatix today to find out more.

A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.