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On high alert: preventing payment fraud in the travel industry

Verifi ANZ Lead Andrew Reszka writes exclusively for Traveltalk on the issue of fraud in the travel industry and how companies can spot and combat it

For merchants who rely on travel and tourism, the holiday season is one of the busiest periods of the year. This is mostly great news for the travel industry, but the busy sales time means the risk of fraud and loss is likely to increase.


Increasingly, consumers are booking their travel arrangements through a range of different channels. While it’s good for sales, it can create challenges for airlines and travel agents in preventing fraudulent transactions online.



Fraud of this nature, known as Card Not Present or CNP fraud, accounted for 78 per cent ($417.6 million) of all fraud on Australian cards in 2016 (Australian Payments Network). It’s clear this trend is likely to affect the travel industry for some time, particularly at this time of year.


So, why is CNP fraud such an issue for the travel industry? The nature of the industry calls for a high level of investment from both the merchant and the customer, which means travel providers need to be wary when it comes to transaction authorisation and authentication processes. Enacting a number of fraud prevention practices can help to reduce the scale and severity of this issue.


Stay vigilant for potential fraud

During the busy holiday season, it can be easy to become a victim of chargeback fraud. Particularly when you’ve got stressed out customers who want to book last-minute flights or travel packages. Reduce the likelihood of falling victim to payment fraud by reminding yourself of fraud prevention best practices and watching for the following warning signs:


  • Hurried purchase: It’s common for fraudsters to contact you in a panic, rushed to set up accommodations for their traveling party. Take the time to validate their credit card, passport details, and other relevant verification documents. If you’re operating your business without a proven payment solution in place, be cautious of the credit card being used – fraudulent actors often use stolen credit cards.


  • First-time clients: Regular travellers often establish a relationship with a specific travel company, allowing the merchant and the customer to build on that relationship. This fosters customer loyalty and allows the travel provider to learn more about their customer’s behaviour and purchasing patterns. Be aware of a first-time customer who calls you or contacts you online to make a large purchase. As always, collect all necessary verification information. To achieve a greater level of security, adopt a merchant payment solution that is designed to capture transaction data in an intelligent manner, to better protect against fraud and unwarranted chargeback claims.


  • Purchaser location:  We’ve all heard stories of Internet requests for money transfers to a foreign country, or the plea to send money to free a trapped relative. Today’s fraudsters have learned that VoIP phone service can be the ideal tool to hide their true location. If you have concerns over the customer’s location, request that the customer come into your ticket office to pick up goods or services. Alternately, ask them to present ID to the post office to receive products over a certain value – like cruise, flight, or train holiday tickets.


  • Inconsistent billing and delivery addresses:  When a customer makes an enquiry about a cruise package, for example, but wants the tickets delivered to an address that is different from their billing address – that’s a red flag. This is one of the most common fraud techniques, using different addresses for billing and shipping. Fraud prevention technologies are advanced enough to help you identify if different addresses provided by the customer are linked to legitimate addresses, like their home or work.


Don’t be pressured to skip the basics!

The common element to these tips is to ensure you don’t let the customer pressure or rush you into approving their purchase. Always follow best business practices. This includes, requesting the necessary travel documents (passport, driver’s license, etc.), and not skipping any steps in the credit card authorisation and authentication process.


The travel industry is not immune to fraud, theft, or the threat of chargebacks. The simplicity of CNP sales and the prevalence of phone bookings make it easy for fraudsters to prey on travel merchants. Take advantage of the solutions out there. You shouldn’t have to fight fraud on your own. Be confident and comfortable with each sale.


Written by: Andrew Reszka
Published: 12 January 2018

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