Safe travels: How to guard travel and hospitality against fraud

Welcome to the latest issue of the Customer Strategist Monthly, a deep dive into trending customer experience topics. I’m Elizabeth Glagowski , Editor-in-Chief of the Customer Strategist Journal.

The peak travel season will be here before we know it, so there’s no better time for travel and hospitality brands to make sure they have the right fraud-preventing technology and people in place. No matter what industry you’re in, AI-enhanced tools can play a powerful role in protecting you brand reputation and growing customer loyalty.

Safe travels: How to guard travel and hospitality against fraud

By Philip Say, Vice President of Solutions and Product Management, TTEC

The travel and hospitality industry faces unique fraud challenges due to high transaction values and complex booking patterns. The sector loses billions to fraud, and account takeover incidents and chargebacks are on the rise.?

There are fraud patterns in the travel industry, and strategies companies can use to mitigate fraud losses without compromising customer experience along the way.

Common payment fraud patterns are:

• Credit card fraud. This is the most common threat, when fraudsters use stolen card information to make travel bookings, often targeting high-value reservations like international flights or luxury hotel stays.
• Card-testing fraud as a precursor to larger schemes. This is when criminals test stolen cards with small transactions, like seat assignments or baggage fees, typically ranging from $5 to $25. Once they confirm a card works, they proceed with larger fraudulent bookings.
• Refund manipulation to take advantage of complex payment processes. Fraudsters make legitimate-looking bookings with stolen cards, then cancel to obtain refunds. Sophisticated schemes involve multiple bookings with varying cancellation terms to exploit policy differences.?
• Chargeback fraud, or “friendly fraud.” This occurs when seemingly legitimate customers customer dispute valid charges.?A customer might book a non-refundable hotel room, use the service, then claim they never stayed there to get their money back.
• Switching payment methods to exploit booking modification policies.?Fraudsters start reservations with valid payment methods, then change to fraudulent ones closer to service delivery. They take advantage of systems that don't fully re-verify payment methods during modifications.?

Fighting fraud effectively requires sophisticated risk assessment that takes booking patterns and customer behavior into account. Implementing comprehensive transaction screening, dynamic authentication, and multifactor authentication for high-risk transactions can help.

For more on how to predict, prevent, and combat fraud, check out this blog.

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