As the MMO industry continues to develop and grow, sadly some of the ‘darker’ aspects of economies rear their ugly head.  Credit Card fraud has become an increasingly hot topic of debate, with a number of specialist firms engaged in spotting, reacting to, and deterring future fraud in the MMO world.

Chargebacks from fraudulent credit cards are a growing problem for MMO publishers.  Chargebacks are the process by which credit card sales are refuted by the holder of the credit card.  Gamesutra recently sat down with Gene Hoffman, Chairman and CEO of Vindicia, a billing an fraud management company for a Q&A about the state of fraud in the MMO industry.  Hoffman’s views prove to be very interesting:

…. micro-transactions do seem to work fine in, say, Korea!

Gene Hoffman: Americans love “all you can eat”. Even the mobile phone companies have really evolved to all you can eat. We always challenge people to name the bill they get every month or year that isn’t in actuality all you can eat.

Outside of government granted monopolies, most people know what they are going to pay. That said, using a base plus metering can make a lot of sense. It allows you to then offer more subscription tiers that allow your best customers to pay you a higher base and less variable – again much like the plans and pricing that the mobile industry has evolved.

…do you have any response to the MMOG Business Models: Cancel That Subscription! article we recently ran?

Gene Hoffman: Business model flexibility is the key issue for all the various games, and the dynamics of the game itself should drive pricing strategies. When game developers are approaching a more casual market it certainly makes sense to give more access and time to get buy-in and adoption.

It follows something we tell lots of our clients, which is “don’t be afraid of giving away what is free to you to acquire more customers and keep them longer.”

That said, we think that it is better to give people larger doses of time to create a base subscription service using tools like “payment method required free trials” and then stack additional micro-payments on a base of something more like a $5 per time period price. We see a lot of game developers and other merchants being too shy about the value of their game which leads them to under-price.

As virtual economies and the games they serve continue to evolve, so will the criminals trying to fraud the publishers.  Luckily though, through articles and interviews with industry experts like Hoffmann, we all benefit by increasing the visibility of security features on the backend that must be closely monitored and continually improved.  At fatfoogoo we’ve tested, developed, and are continually improving and updating our fraud detection methods, thereby giving the publisher one less thing to worry about.