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Football Season Kicks Off and So Does Online Ticketing Fraud

posted on: Wed Sep 13 2017

The college and pro football seasons have kicked off. And to paraphrase the famous jingle: “Are you ready for some fraudsters?!”   

Football TicketsThe incentives for fraudsters to steal and resell tickets online are lucrative and growing. The average ticket price for a professional football game in 2017 ranges from a low of $131 to a high of $618, according to TicketIQ's Blog. And those are just the published prices. Think about the higher costs that sellers in online ticketing marketplaces can command for in-demand games.

Sports are only the beginning. Overall event ticket revenues will top $10 billion in 2017 with an annual growth rate of 12.2%, which will boost revenues to $16.6 billion by 2021. And where there’s money, there’s online fraud. After all, stealing and reselling tickets online—from the warmth of your home in front of a laptop computer—sure beats standing out in the cold, barking “who needs two tickets?” at total strangers.

In fact, the secondary ticket market has grown to be a $15 billion industry. Major players in the space include StubHub, RazorGator, and TicketsNow and aggregators such as SeatGeek, SeatKarma, Tickex and FanSnap that act like specialized search engines focused on all the major online providers. A quick survey came up with more than 130 secondary ticket sites.

On the esoteric side of fraud is spoof sites, like the largest single ticketing scam centered around the Beijing Olympics. In 2008, a small group of British fraudsters amassed $5 million from fake websites like Bejingticketing.com.

Online TicketsBut for eCommerce ticketing operations selling digital goods online, the main problem remains the common tactic of fraudsters making purchases using stolen credit cards. Further, legitimate orders and fraudulent transactions often share similar traits, making it difficult to separate good orders from bad orders:

  • Purchases are often made at the last moment (which means there is no way to stop or recall a digital ticket delivery)
  • Multiple tickets, groups of tickets, or even blocks of seats are purchased at one time (putting large dollar amounts at risk)
  • Many transactions originate from mobile devices (more than 60% of overall fraud originates on mobile)

This creates incredible pressure on merchants and raises critical issues:

  • Large and recurring losses. A small vulnerability or single weakness can quickly lead to devastating fraud losses, high chargeback fees, and reduced profitability. What’s more, the “chargeback lag”—the approximately 45-day delay between when a fraudulent transaction occurs and when a merchant sees a chargeback report—can mask fraudulent activity until it’s too late.
  • False positives and loss of revenue. To approve or not approve? In an environment where legitimate buyers can click over to a competitor at any moment, correctly balancing risk against reward can be the difference between growth or stagnation. 
  • Higher fraud mitigation costs. With the higher rates of fraud in online ticketing transactions, it’s understandable that merchants would be tempted to implement special tools or processes. But overspending on fraud prevention hurts margins. And any slowdown in checkout from manual reviews hurts conversion rates.

What’s the solution? Enterprise-class fraud solutions like Kount Complete provide a multi-layered approach to fraud prevention that makes it possible for online ticketing businesses to approve more orders from more people in more places, while cutting fraud losses and reducing fraud mitigation expenses.

What’s that look like in the real world of online ticketing?

Hear Brad Rabin of Front Gate Tickets explain how preventing last-minute fraud attacks helped generate a 20% decline in chargebacks or check out another video testimonial.

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