How a U.K. online game developer dropped its chargeback rate to 0.2%
It was 2009 when U.K. online game developer Jagex Ltd. was first hit hard with a string of fraud attacks.
Criminals were using stolen credit cards to buy paid memberships on its web site—the developer offers limited versions of online games for free, and consumers can buy memberships to unlock the full game. Buying memberships enabled the criminals to quickly earn virtual currency, which they then sold online. Jagex used a homegrown fraud prevention tool to combat the fraud, which is often referred to as “gold farming.” The effort worked, but only for a while.
Two years later the criminals were back using more sophisticated techniques. “The gold farmers attacked us with everything they had,” says Dave Parrott, Jagex fraud manager. To keep pace, Jagex added payment processing rules that led to it rejecting more consumers’ credit and debit cards. While that helped beat back the criminals’ attacks, it also led to Jagex rejecting legitimate consumers’ cards, he says.
“We were missing out on sales,” he says. “Our rejection rate was too high.”
The online game developer then began working with a fraud prevention service from Kount Inc., which Parrott says Jagex chose because the vendor makes it easy to modify rules. That’s important, he says, because criminals are constantly changing their techniques.
Jagex used Kount’s techniques, which include device fingerprinting, which enables a merchant to trace the transaction history of the device being used to initiate the transaction, as well as risk-scoring tools, to flag suspicious transactions and refine the rules it used to reject suspicious orders. That helped the retailer cut its rejection rate in half, while also reducing its chargeback rate to 0.2%. Fraud triggers chargebacks when the legitimate consumer whose credit card number has been used to make the purchase complains to his card-issuing bank, which then retrieves the money from the merchant via a chargeback.
Because more legitimate shoppers’ orders are getting processed since Jagex enlisted the help of Kount, the online game developer says its revenue from credit card orders rose 4% last year.