As the economies within online games evolve, gaming companies' efforts to combat virtual fraud are leading to an increase in actual credit card fraud.
These games attract millions of users, who typically charge a monthly fee to their cards to interact with one another, search for magic items, slay dragons, and engage in other virtual activities.
This large and growing market is also proving popular with criminals, who often use stolen card accounts to participate, and observers say their efforts to earn real money by selling valued game items have been facilitated by banks, which tend to dismiss these enterprises as just games.
"Banks need to be a little more aware of the complexity of what's going on inside these virtual worlds," said Steve Prentice, an analyst with Gartner Inc., a market research company in Stamford, Conn.
Online games attract criminals because traditional financial companies do not take the games seriously, and banks should anticipate that some of their customers who play these games are likely to be exploited, Mr. Prentice said.
"Beginners in these worlds are traveling in a foreign country where they don't know the rules and the risks," Mr. Prentice said. And with more people participating in online games, fraud originating in the games is likely to grow, he said.
One of the largest online games is Blizzard Entertainment's World of Warcraft, which in January had more than 10 million subscribers globally, paying about $13 to $15 a month.
World of Warcraft also has a thriving black market for people to buy and sell game items, despite strict rules prohibiting the exchange of virtual items for real money, and over the past year Blizzard has put into place several new policies designed to help the company enforce these rules. Blizzard, of Irvine, Calif., is a unit of the Paris entertainment company Vivendi.
One of the main changes was limiting the capabilities of trial accounts; many people trying to sell items through the game had previously used these free accounts, but when they were no longer able to use them to effectively sell virtual items they were forced to subscribe.
Avivah Litan, a vice president and research director at Gartner, said many of these underground merchants are using stolen card accounts to pay their monthly subscription fees.
"It makes perfect sense that the restrictions of the trial accounts would promote card fraud," she said. People trying to sell online are "definitely going to want to get a real account."
That increase in card fraud prompted HBOS PLC's bank, Halifax, last year to block all credit card transactions initiated by Blizzard.
Halifax cardholders who want to play Blizzard online games can request the block be removed on a case-by-case basis, but the initial restriction was put in place because of "a significant number of fraudulent actions through Blizzard's gaming sites," a Halifax spokesman said Thursday.
(Calls to Blizzard were not returned this week.)
Rodney Nelsestuen, a senior analyst at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said Halifax's decision to block the entire company indicates it must have observed high levels of fraud coming from Blizzard.
As online games become more popular, they are attracting more grifters, Mr. Nelsestuen said. "Fraud rings are trying to penetrate any part of the world's market that they can," he said. "You're getting enough size of a customer base that now there's something in there — there's enough of a market to go into."
Games like World of Warcraft are "a pretty good bet for a fraudster," Mr. Nelsestuen said, "because they've got a lot of dollars involved, a lot of people involved, and I doubt that they're focusing on security."
