Wednesday, October 30th, 2019
Travel fraud is rising in unprecedented levels, leaving travelers, hosts, and even businesses vulnerable. With the proliferation of online travel agencies, travelers can book last minute flights at all hours of the day and night, from the convenience of their own home and at deeply discounted rates. This was absolutely unheard of 20 years ago. Unfortunately, it has created a massively profitable opportunity for thieves and con artists alike.
It is reported that thieves steal between $283 and $588 per fraudulent transaction. Fraud is responsible for billions of dollars lost per year. Just the airlines alone have reported losing between $2.4 billion to $4.8 billion to credit card fraud annually.
Without question, this has become a serious problem for travelers.
Just the nature of the attack makes it a very complicated problem to resolve. The fraudulent activity can take place at any point within the customer’s journey, anywhere from the point of login to purchase and even post purchase activities.
Why is the travel industry such an easy target for fraudsters?
Simply put, it is the nature of the product being offered. The booking itself is an intangible item. It doesn’t need to be physically picked up. It is also perishable. Things move too quickly for companies to detect and stop a fraudulent purchase.
Thieves can basically book travel while using stolen credit cards and financial information, thereby stealing a high value plane ticket or a hotel room. Other fraudsters will try to purchase high value travel bookings with stolen financial information, only to return it in hopes of a refund.
Con artist are also notorious for posing as travel agents, scamming travelers in the process. Those who have used stolen information to purchase tickets either use them for themselves or re-sell them to unsuspecting consumers.
It has become disturbingly easy to create a discounted airline ticket website, complete with working payment systems. When consumers purchase their ticket on these sites, they later find that these tickets were purchased fraudulently by the site.
Travelers need to become acutely aware of these scams. If once they make a purchase they don’t receive a confirmation number, there is a really high chance that this was actually a third-party scam.
The traveler will incur a double loss, not only financially, but they will also see their vacation and travel plans disappear while holding a fraudulent and worthless tickets at the airport.
This fraudulent activity is also hurting airlines. The fear is driving airlines to reject as much as 8% to 25% of legitimate online orders due to fraud. The industry has also implemented more processes at every step and level of bookings for any indication of fraud or theft. All this comes at a price that ultimately gets passed down to the customer.
As technology has facilitated the way travelers can book their trip, fraudsters have found ways to scam the system. Travel businesses that are interested in opening up a merchant account must educate its customers to look for signs of fraud and they also have to implement various forms of security to protect both their customers and their businesses.
Having an automated, accurate fraud detection system could be the best approach.