Micro-laundering Through Video Games | TeleSign

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INT. The Safehouse – Night

The Door FLIES OPEN to reveal bruised and bloodied MAD DOG DONAHUE (44) He throws a SACK of cash on the ground and lights up a cigarette.

A TELEVISION in the corner drones on about a bank robbery. A suave man in a suit we will know as MORDECAI MONROE (50s) spins around in his chair.

MORDECAI

You know the rate?

MAD DOG

25% and in less than a month…how do you do it Mordecai…how do you wash so much cash?

MORDECAI

Buying gold…

Mad dog shakes his head and turns to leave. Mordecai spins around to address a laptop where he begins buying hundreds of thousands of dollars of fake currency on a video game, all the while laughing maniacally…

FADE OUT

Wait, what?

What happened in the above scenario? Why was Mordecai buying up a bunch of gold on a MMORPG? What is this Breaking Bad sequel that no one asked for?

Gather around my friends, let me teach you about all the rage in money laundering…micro-laundering through online games! AKA buying fake in-game currency with dirty money and then selling it to back to gamers at a discount.

Yes, you read that right, drug dealers are cleaning their money with the help of teenage gamers (with access to their parents’ credit card) all over the world and the set-up is remarkably easy.

In the recent past many online games, specifically massive multiplayer online role-playing games (MMORPGs) have adopted micro transactions. Using real world money, you can purchase credits that can be redeemed for in-game items: a new outfit, a sword, a castle. It’s likely an evolution of the old Islamic banking scandal Hawala ie moving money across borders, without ACTUALLY moving it. Micro-laundering through video games is a digital version of this hawala scheme.

Unwitting Accomplice

If you have ever bought discount video game credits off the internet, it’s possible that YOU are involved in international drug trafficking…cleaning money for terrorists, dealers and some garden variety fraudsters. More often than not, these fraudsters are preying on children or other people that don’t think of the implications of buying heavily discounted items from the darker trenches of the internet.

That’s a bit dramatic, but the point stands that fraudsters have evolved. Something as innocent-ish as the freemium online gaming model is now under attack by some that have very real criminal ties.

The scam is simple. Let’s say I buy 1000 pieces of ‘gold’ for $1000. I then send that gold to another account that I control. I then send that gold to yet another account that I own. From that third account, I sell $1000 were of gold to a player in Slovenia for $800. A great deal for both sides. Our Slovenian friend got a 20% discount, and the fraudster has clean cash. Of course it doesn’t have to be cash. It could be bitcoin or any other type of crypto just for that added level of security.

MMORPGs have millions of players all over the world, typically virtual money can be exchanged among many different people (or many different accounts) until it is converted to real money in another internet transaction, making this type of fraud virtually undetectable.

Or is it?

One way companies are trying to combat this type of scam is making sure these bad actors are never allowed on the platform in the first place.

TeleSign believes in a full mobile identity solution using the phone number as a trust anchor. Verifying users at registration with 2FA can be a very powerful tool in not only protecting your platform from fraud, but keeping fake accounts from spamming legitimate users or even targeting them for account takeover. A variation of this scam has fraudsters looking to take over legitimate accounts linked to legitimate credit cards and slowly siphoning money from them over time, like a leaking sink.

Using a verification solution from TeleSign not only acts as a strong security tool but also as a deterrent. Think, if you were a money laundering drug dealer and a game asked you for your real phone number, you would probably be hesitant to reveal it. That number can be traced to you. Rather than risk an entire criminal operation falling like a house of cards, the fraudster looks elsewhere to build their dubious empire.

Additionally, companies can trust TeleSign’s suite of data products to add an extra layer of protection against fake users, account takeover and even attacks such as SIM swap.

If you have followed this blog at all, you know there is no shortage of creativity among thieves, it is our responsibility as platforms and cyber security professionals to stay one step ahead of the bad guys and keep users safe.

Gaming is supposed to be fun, but it turns into a bummer when international conspiracies are taking place when you’re just trying to clan up and go on a raid. To learn more about TeleSign’s verification and identity solutions foster a safe atmosphere for your platform, click here.

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