A new era of video gaming, a new landscape of risk

In the first of a pair of articles looking at the new landscape of video gaming, Mathilde Sarfas, digital content strategy manager, and Eliano Rexho, digital content senior strategy manager, explore some of the risks merchants should take stock of.

Real-time fraud detection, biometric authentication and AI-driven risk scoring are becoming essential to protect video gamers and to sustain responsible growth.

The global video gaming market is now worth over $200 billion, making it the largest entertainment subsector in the world. But this explosive growth hasn’t come without risk. As monetisation models evolve, younger, more diverse audiences come online, and, as ever-increasing amounts of data are collected, the industry faces a surge in fraud.

According to TransUnion, the video gaming industry in 2023 reported the second highest rate of suspected digital fraud attempts at 7.6%. This marks a 32.6% increase from the previous year, making it the fastest-growing sector for attempted digital fraud. From account takeovers and chargebacks to identity theft and marketplace scams, the threats are growing more sophisticated – and more damaging.

To understand why fraud has become such a concern, we must first understand how the gaming industry has changed:

• Games are no longer static products. They are dynamic, evolving platforms. Free-to-play, cloud-first and subscription-based models have overtaken traditional one-time boxed purchases, with microtransactions becoming central to monetisation strategies.
• Gaming isn’t for just the hardcore anymore. Mobile has become the dominant platform, and players now span all ages and demographics, with younger users making up a large portion of spending.
• Data is driving everything. From personalised game design to targeted offers, behavioural data is being used to optimise engagement and spending.

While these shifts have fuelled innovation and growth, they’ve also opened new doors for fraudsters, said Hesper Huang, senior director of digital content at Worldpay.

“With these advancements in video gaming come an increase in risk of fraud,” Huang said, “but also an opportunity for developers and publishers to rebuild and fortify their infrastructure end-to-end, from login systems to in-game payments to secure their growth.”

Amid this pressure lies opportunity. Forward-thinking developers and publishers are recognising that robust fraud prevention can go beyond compliance and cost reduction. It can become a cornerstone for building resilience in the gaming industry, serving as a foundation for sustainable growth and providing a significant business advantage by protecting players and fostering trust in an increasingly competitive market.

Three dynamics fuelling fraud

The rise of microtransactions

The days of buying a video game once and owning it forever seem to be fading. Today’s gaming economy is driven by a mix of revenue models. Many mobile titles are free to play but supported by in-app purchases and advertising. Console and PC games now favour live service formats, offering ongoing updates and downloadable content. On top of that, in-game and out-of-game web shops have emerged, selling virtual currencies, character skins and loot boxes.

This evolving monetisation landscape has enabled explosive growth – but it has also introduced a wider exposure to fraud:

• Fraudsters use low value microtransactions to test stolen card data before making larger unauthorised purchases.
• Fake websites advertise in-game items to lure players and steal account credentials or payment information.
• Chargebacks are rising as players – or their parents – dispute charges tied to misunderstood, accidental or manipulative in-game purchases.

In 2023 alone, Roblox reported $136 million in chargebacks, up from $92 million the previous year. As new monetisation strategies continue to be enacted, so too must the fraud prevention measures.

Young players, big exposure

Video gaming has become central to Gen Alpha’s and Gen Z’s entertainment diet. According to Bain & Co., 80% of 2- to 18-year-olds identify as gamers, spending around $250 annually on games. This enthusiastic and highly engaged audience is also more vulnerable to fraud and can unintentionally become part of the problem.

While younger players are drawn to immersive, social-first games like Fortnite or Roblox, they often lack financial awareness or use their parents’ payment details without full consent. This increases the risk of what’s known as “friendly fraud,” where legitimate purchases are later disputed – due either to confusion or remorse.

Other risks include:

• Impulsive spending, triggered by persuasive or addictive game designs.
• Exposure to scams, phishing or identity theft – particularly on platforms that lack strong safeguards.

Cybercriminals are aware of this vulnerability. Kaspersky reported a 30% increase in cyberattacks on gamers under age 18 in the first half of 2024 compared to the previous half-year, translating to 6.6 million attempted attacks. Games like Minecraft, Roblox and Among Us were among the most exploited.

Because young gamers are a lucrative but high-risk demographic, gaming companies without tailored protections may find themselves at the centre of rising fraud incidents and reputational damage.

Data-driven design: Personalisation at a price

Behavioural data lies at the heart of today’s most successful games. Developers use game-play analytics to shape level difficulty, content recommendations and monetisation prompts – building immersive experiences that feel tailor-made. This can boost retention and revenue – but also opens the door to ethical and operational challenges.

On the upside, data enables smarter game design, keeping players engaged for longer, and provides insights into spending behaviour. As the line between engagement and intentionally addictive design blurs, though, these innovations come with increasing scrutiny. The same systems that optimise game play can also introduce ethical risks and new fraud vulnerabilities:

• Games designed with addictive mechanics – such as loot boxes – can encourage compulsive spending, particularly among minors, leading to increased chargebacks and disputes.
• Excessive data collection without proper safeguards can result in security breaches, exposing sensitive financial and personal information.
• Regulatory bodies are watching closely, especially where children’s data and spending habits are involved, raising the stakes for noncompliance.

As developers push the boundaries of personalised game design, they must also embed responsibility and protection at every step. Otherwise, they risk eroding the very trust that underpins long-term player loyalty.

In Part II: Turning risks to opportunities

In a high-growth market with high-stakes risks, gaming companies must act now to protect both their players and profits. In Part II, we’ll look at how to turn these risks into opportunities for resilient, sustainable growth.