Online fraud is rampant and travel brands are feeling the pain more than ever before. Fraud attack rates overall have increased by 13% since the beginning of 2017, and these rates show no signs of abating.
Significant data breaches have contributed to the enormous amounts of private data ripe for the picking (and exploiting) by fraudsters.
These online criminals are expanding their fraud techniques, growing increasingly more sophisticated in their methods, and more calculated in their target selection.
Regardless of industry, online brands should be upping their fraud prevention game in order to keep valued customers and stop cunning fraudsters, especially during the busy holiday season.
Fraud trends in travel
Travel brands and online travel agencies (OTA) are no exception to this trend. Rates for this industry have increased in the last year, rising by 37%, almost three times above average.
Fraud in this industry is year-round, but look for seasonal fluctuations to occur in the lead up to big travel dates, like the upcoming holiday season.
Fraudsters who favor the travel industry tend to specialize in the exploitation of this specific vertical. They are well-versed in industry norms and they therefore mount more sophisticated types of attacks to bypass any type of fraud detection. Additionally, travel brands and OTAs are billion dollar marketplaces.
The sheer volume of transactions within this space means that there is more room for fraudsters to blend into good customer traffic.
Knowing what to look for
Brands in the travel space need a better understanding of what kind of fraud typically appears in their industry. Travel sites and agencies may think that protecting notoriously “hot routes” is the singular way to cover their site from fraudsters.
However, it is important to understand what “hot routes” actually mean, why particular routes are risky, and to recognize simultaneously that fraudsters are looking beyond just routes to exploit weaknesses in the system.
As such, it is imperative to look at site data holistically, understanding the people, stories and fraudsters behind the attacks, rather than just seeing the transactions.
Fraud prevention for many travel sites or agencies may simply result in the blacklisting of particular routes. However, this won’t actually stop fraudsters.
They are highly skilled in adapting their techniques, and if they realize that a popular route has simply been shut down altogether, they will look for opportunities along other routes instead, adapting their techniques to exploit other vulnerabilities.
Common travel fraud techniques
Forter’s data indicates that travel fraud knows no borders. While travel fraud is pervasive regardless of region or route, it is possible to point to specific methods that fraudsters favor when attempting to perpetrate travel fraud.
From this understanding of commonly favored fraud techniques, companies can expand their fraud prevention coverage to protect against many forms of online travel fraud.
- The Fake Travel Agent - These fraudsters create fake travel agencies or online groups. They will either purchase tickets or place holds on them with fake credentials, and then sell these fraudulent tickets to travelers. The travelers pay full fare prices for the tickets, only to find out that their airfare is not real or has been reported as fraudulent. When attempting recourse, the traveler will suddenly find that their ticketing agency has disappeared.
- The Refund-ster - These fraudsters tend to purchase refundable airfares using stolen credit card information typically sourced via fraud chat rooms where fraudsters share breached data/credentials. Fraudsters will then make their money by calling to cancel the refundable tickets, cashing in on the refunds.
- The Last-Minute Buyer - This fraudster capitalizes on last-minute bookings by purchasing tickets with departures just 24-48 hours from their time of purchase, using a stolen credit card. Because of the nature of the last-minute booking, the time frame for agencies or airlines to be able to detect the fraudulent purchase is very short. Once a traveler has successfully checked in for their flight, even a confirmed fraudulent ticket cannot be cancelled.
Online travel fraud is not just limited to these forms. As more and more online users become active, new fraudulent techniques emerge and online agencies must understand how to meet these growing challenges.
Ho-ho-holiday travel fraud!
As the holiday season creeps closer, it is important to note that online criminals are just as active during the holiday season as legitimate shoppers.
And as this influx of online holiday traffic occurs, fraudsters are looking to hide amongst the crowd, slipping through the manual fraud review queue cracks. Peaks in online shopping traffic (especially around the holidays) tend to be the most vulnerable times for companies selling online.
In 2016, digital brands lost nearly $7 billion to fraud-related chargebacks, and companies run the risk of shopper loyalty dissipating if an attack occurs on their site.
While there are always risks associated with digital retail, upticks in customer activity can cause chokeholds in the checkout process if businesses do not have a fraud prevention solution that can scale with their increased traffic.
Travel brands are not immune to this trend during the holidays, and they should be prepared to distinguish the legitimate customer from the fraudster - fast.
Protecting your brand
When looking to partner with a fraud prevention provider, there are certain considerations to keep in mind. The partner you select will ultimately help shape your company and can either aid or hinder its potential growth and success, especially during the busiest seasons.
It is vital to look for a fraud prevention provider that does away with rules. Rules-based systems simply will not be efficient nor effective enough to prevent sophisticated fraud or to recognize new and emerging fraud trends.
Instead, online travel brands should look for solutions that incorporate machine learning models and AI, powered by insights from fraud experts.
These systems will be more nimble and far better equipped to deal with big data sets, and they will have the added ability to constantly learn as they see more data and transactions, improving overall decision results over time.
It should be noted that companies who rely on pure machine learning models will only be able to provide results that are as good as the data input and the experts who curate them.
Fraudsters are well-versed in industry norms and they therefore mount more sophisticated types of attacks to bypass any type of fraud detection. Additionally, travel brands and OTAs are billion dollar marketplaces.
Additionally, travel companies should look for fraud prevention providers that automate their review processes. Manual review queues are simply not efficient enough to keep up with the flow of a growing online business.
During peak seasons and heavy traffic times, manual review queues will lead to friction along the path to checkout, creating bottlenecks in the customer experience. Instead, brands should look for providers that are able to empower manual review teams with the tools they need to become more efficient and best serve their business.
An automated provider will ultimately allow brands to achieve fraud prevention at scale, ensuring trust along every touchpoint of the customer experience. With automated fraud prevention, no matter how busy the time of year, there will be no added friction to any part of the customer’s shopping journey.
Leading e-commerce fraud prevention provider Forter, protects against abuse at every stage of the customer lifecycle, ensuring merchants can scale efficiently and securely without jeopardizing customer experience.
Through a unique blend of machine learning and artificial intelligence, powered by the expert research of fraud analysts, Forter’s fraud prevention solution equips online travel sites with the seamless fraud prevention they need. Forter adapts to each business’ risk profile and pain points, resulting in a customized solution that scales as you do.
Fraud prevention means protecting the entirety of the customer journey, and not just focusing on the point of transaction.
Whether shopping for the cheapest airfares or most luxurious hotel accommodations, Forter examines every step in the journey, including account creation, coupon codes, and much more - protecting customers and businesses from the perils of online fraud no matter where in the world they may be headed.
For further details and full insights into fraud trends across the travel industry...