Fraudsters are scamming the travel industry out of billions of dollars each year—online card fraud costs airlines more than $1 billion annually, fake hotel websites swindled Americans out of $3.9 billion and some travel agencies have been hit by tens of thousands of dollars in fraudulent bookings. Last October, international law enforcement agencies detained 195 individuals suspected of airline ticket fraud during a five-day sting operation. Monica Eaton-Cardone, an IT executive specializing in risk management and fraud prevention, explains how to identify travel-industry scams and protect against losses.
In January 2016, the International Air Transport Association (IATA) announced that payment fraud cost the travel industry an estimated $858 million per year. Airlines absorbed roughly $639 million of those losses, while travel agents and other travel providers accounted for the remaining $219 million. More recently, the IATA has calculated annual fraud losses to be in excess of $1 billion for air carriers alone. Meanwhile, the American Hotel & Lodging Association (AHLA) found that the percentage of travelers snared by fraudulent websites nearly quadrupled in just two years, from 6% in 2015 to 22% last year, when scammers racked up 55 million hotel bookings worth almost $4 billion. And though there are no definitive estimates of travel agency losses, a number of individual agents admit they were tricked into processing fraudulent transactions worth $20,000 or more.
“Fraudulent travel bookings have become a multi-billion-dollar cash cow for enterprising criminals,” warned Eaton-Cardone, who serves as chief information officer (CIO) of Global Risk Technologies and chief operating officer (COO) of Chargebacks911. “Some book lavish vacations for themselves using purloined credentials; others assume the identity of a real travel agent, use stolen credit cards to book travel arrangements, and resell the flight tickets or vacation package to an unwitting consumer for cash—leaving the traveler or agent to suffer the loss. In some cases, travel providers are defrauded by actual customers who complete a trip and then file a chargeback to obtain a full refund of the purchase price.”
Below, Eaton-Cardone summarizes her top tips for identifying potential cases of travel fraud and preventing financial losses:
“There are many proactive measures travel companies can take to protect themselves against fraud; the examples listed here are just a starting point,” noted Eaton-Cardone. “I urge businesses and travel agents to take the initiative to educate themselves on anti-fraud best practices, emerging scams, and blacklisted domains and individuals. I would also advise them to partner with an experienced specialist who leverages advanced technology and human insights to help them minimize fraud loss, improve dispute win rates and retain more hard-earned revenue.”
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