Fraudulent account sharing is bad news for streaming platforms and users

Remember those kids who swindled their way into two-for-one double features, sneaking into a second, likely R-rated, movie they didn’t pay for? (Don’t worry, your secret is safe with us.) Some of those rascals eventually straightened out and grew into upstanding members of society; others found new, circuitous ways to make a buck off of the entertainment industry.

The modern analog for the double feature workaround is sharing login credentials to avoid paying monthly fees for video-on-demand (VOD) services like Netflix and Hulu, or audio platforms like Spotify and Apple Music. Revenue loss is the most obvious drawback for streaming businesses: fraudulent account sharing is estimated to cost Netflix and Hulu over $1 billion per year. Legal claims stemming from regional content licensing violations can also prove hazardous. But the user experience may take the biggest hit of all, ultimately leading to serious customer churn and a negative brand reputation.

Here is a closer look at the multifaceted threat posed by fraudulent account sharing, and how streaming companies can fight back.

Oversharing, under-caring

Credential sharing is rampant in the streaming world. One study found that 80 percent of 13–24 year olds had shared an online video service password with a person outside their household, with nearly a third of 35–74 year olds doing the same. Meanwhile, 65 percent of music streamers also share their credentials.

This is sometimes referred to as casual sharing, a well-intentioned exchange between friends and family members. Costly as it is to VOD and audio platforms, streaming behemoths are doing very little to mitigate unauthorized account sharing. Studying the potential dangers of casual account fraud — which stretch far beyond revenue loss — may change their minds.

Coming up next: The ATO Show

As shared login credentials pinball between more and more users, the likelihood of account takeover (ATO) increases. And once ATO sinks its teeth in, viewer discretion is advised. Post-ATO, the revenue loss resulting from casual account sharing can quickly dovetail into fines related to compliance and content licensing. Paramount, Universal, and other studios won’t be too thrilled if their content is streamed outside of its specified region.

ATO is equally devastating for the user — and user experience.

Joe Fraudster, who could care less about watching Squid Game, might peddle an account on the dark web at a discounted price, or worse, execute a credential stuffing attack and access a user’s bank account(s). This is often quite easy considering 68 percent ​​of users recycle the same password across multiple websites.

A compromised account, and its potential to harm a user financially, doesn’t boost customer morale. Neither does increased friction. Imagine a viewer planning their entire weekend around binge-watching a show, only to log in and see an error screen because too many people are watching at once — i.e. those hacks who bought the account credentials from that Joe Fraudster fella.

Adopting a fraud prevention solution to neutralize account fraud is a no-brainer; otherwise, a customer exodus is inevitable with so many streaming options available. But choosing the wrong approach — like an outdated multi-factor authentication (MFA) tool — only exacerbates the friction.

Teamwork makes the stream work

Some execs are beginning to take streaming fraud seriously. Netflix, for example, is experimenting with account authentication tools. Who knows when the others will come around, but when they do, only partnering with a dynamic, comprehensive, data-driven solution will effectively counteract ATO — without adding friction to the customer journey.

Enter Deduce. The Deduce Identity Network — combining data from 150,000+ websites and apps, 450,000+ anonymized profiles, and more than 1.4 billion daily interactions — processes over 100 different risk factors to authenticate users in real time. If something seems off, the user is alerted for verification purposes. Forgot to log out of that smart TV back at the hotel? Deduce won’t let the next guest in that room access your account. Deduce inhibits promotional abuse as well, utilizing trust signals to ascertain whether users are creating new email addresses to extend free trials.

Deduce’s unprecedented stockpile of data and real-time intelligence also cuts down on false positives. And legitimate users log in much faster thanks to seamless authentication that can eliminate the need for text or email passcode verification. This creates a Trusted User Experience and potentially saves millions by preventing account sharing fraud and the customer churn that follows.

Ready to change the channel on streaming fraud? Tune into Deduce today and request a demo.