Airlines have managed to cut down levels of online fraud by 31% over the past two years, although an estimated $1.4 billion is still being lost annually.
The good news is revealed in the latest annual airline web fraud report from US-based payment management firm Cybersource, a division of Visa, with a substantial drop in recorded incidences of online fraud between 2008 and 2010.
Cybersource says the decrease is due to more airlines implementing fraud detection systems and simply rejecting more bookings due to suspicious payment methods.
Airlines with less than three years of online selling experience have higher rates of fraud than their older counterparts, Cybersource says, with manual reviewing of payments accounting for just 15% of bookings for airlines selling online for ten years or more, compared to 53% for those under three years.
Cybersource, which interviewed 142 airlines to assist in compiling the report, reckons airlines are missing out on using a "powrrful anti-fraud tool": public record searches.
Only 3% of airlines used this method to validate bookings, but so-called "device fingerprinting" and "third party fraud scoring models" are among the leading tools most airlines currently use.
Christopher Staab, managing partner of Airline Information, Cybersource partner in the report, says:
"Fraudsters will move to the weakest link in the chain. And that weak link is most likely going to be the airlines unfamiliar with how sophisticated fraud can be perpetrated with online ticketing sales. That’s why this type of data is so critical for the airline industry worldwide."