Subscription abuse: a threat to the future of streaming platforms

1 April, 2024
TrustCloud
Identity

In late 2022, the United Kingdom deemed it “illegal” to share passwords for Video on Demand (VOD) platforms, with specific emphasis on Netflix. Since then, the policies of these platforms have evolved to address a problem directly impacting the budgets of streaming giants.

ubscription abuse involves violating the terms and conditions of Netflix, HBO, or Amazon accounts to achieve a reduction in fees or even avoid payment altogether. This behaviour not only harms companies by undermining their reputation and business model but also affects legitimate users by increasing costs and prompting the implementation of stricter measures, such as identity verification. Ultimately, subscription abuse creates a less sustainable environment for all users and jeopardizes the viability of services relying on recurring revenues.

Many people believe it is legal because it is technically feasible, but in many countries, it is already considered another form of piracy. Users often fail to consider the consequences of sharing data such as their account passwords, putting their sensitive information at risk by allowing others to control it.

A label encompassing various forms of fraud

Account Sharing: This is the most well-known type of subscription abuse, where two or more people use the same account, but only one of them is paying the corresponding fee. Throughout 2023, Netflix implemented various measures to curb this practice in several countries. Despite having 230 million subscriptions, 50% of them were shared. As a result, Netflix managed to grow by almost 5% in the first three months of the year, although it fell below projections.
Retrailing (Free Trial Fraud): After exhausting the free trial period of a service, many users unsubscribe and sign up again with a new email address to enjoy the trial benefits once more. To combat this, various platforms request additional information, such as a phone number, credit card, or official identification. They may also limit the number of accounts per device or IP. Other deterrent techniques include reducing video quality or available features or incorporating advertising in free content.
Sharding (Account Aggregation): Some platforms offer different benefits in their group or family subscription plans, such as exclusive content, higher video quality, or access to various devices. Account sharding allows a user to subscribe to different plans and aggregate the benefits of each, as they wouldn’t be entitled to all of them in an individual account.
False Location: This involves using a VPN to deceive the system and simulate that the user is in a different country to obtain the lowest price from that country or access restricted content.

The challenge posed by subscription abuse has transcended the realm of streaming, impacting various industries such as e-commerce, payments, cryptocurrencies, and gambling. Companies like Spotify, Uber, and Airbnb are also affected by these practices.

To mitigate subscription abuse, companies have turned to external providers or implemented internal solutions that meticulously analyze user session data. Surveillance focuses on data such as device information, IP addresses, location, and the use of VPNs, which are detected for their ability to conceal the user’s real location. Data between sessions is compared to identify suspicious patterns, such as access from different locations in a short span, which could indicate improper account sharing.

Identity verification service providers like TrustCloud can be strategic allies in the fight against this issue, offering innovative solutions tailored to the specific needs of major VOD companies.

Streaming services are moving away from traditional username/password and one-time password (OTP) systems, which still allow account sharing. Instead, they are adopting solutions more aligned with the current landscape, ensuring the security of the user community.

Developing a specific identity verification strategy for subscription frauds

In summary, some of the methods that could provide solutions to these forms of fraud are:

Strengthening User Authentication:

Biometric Identity Verification: Implementing biometric authentication methods such as facial recognition, fingerprint scanning, or iris scanning to confirm the user’s identity in real-time.
Multifactor Authentication (MFA): Requiring the combination of different authentication factors, such as a password and a temporary code sent to the user’s phone, to access the account.
Personal Data Verification: Validating the information provided by the user with reliable databases, such as public records or credit information.

Detecting and Preventing Fraudulent Account Usage:

Behavioral Pattern Analysis: Monitoring account activity to identify anomalous behaviors that could indicate misuse, such as logins from different locations in a short period.
Bot and Malware Detection: Using specialized tools to detect and block access to accounts by bots or malware.
Risk Analysis: Evaluating the fraud risk associated with each user based on their profile and behavior.

Reducing Friction in the Registration Process:

Instant Identity Verification: Offering solutions that allow quick and secure verification of the user’s identity.
Passwordless Registration: Implementing alternative authentication methods, such as QR code authentication.

Shared responsibility for ethical VOD business development

The pursuit of fraudulent ways to circumvent subscription terms not only undermines the integrity of subscription-based business models but also has repercussions on the user experience for those who honestly fulfill their commitments. As companies implement stricter measures to counteract such abuses, it is imperative for consumers to become aware of the importance of using services ethically and responsibly.

Ultimately, collaboration between digital platforms, identity verification technology providers, and end-users is essential to maintain fairness and sustainability in subscription usage in the digital world.