Payment card fraud is on the rise and nearly all of the increase is in card-not-present channels. The growth in card not present fraud is being driven by increased online spending and the continued adoption of chip-and-pin technology, which is driving fraudulent transactions from physical locations to e-commerce environments.According to statistics the most rapid increase in fraudulent transactions on the internet can be seen by the travel industry as a result of the fraudulent online purchases using compromised credit card data, often stolen through online data breaches. The travel industry faces huge chargeback losses as a result and innocent citizens are affected as their credit card data is misused.It is not a suprise that travel industry is targeted by criminals who provide opportunity to fund activities and manage money tranfers. In many cases it was shown how travel industry fraud is a facilitator of other forms of crime including :
- trafficking of human beings
- illegal immigration
- smuggling of goods
- drug trafficking
- cybercrime
- terrorism
- money laundering
- other fraud and financial crime
As a result, fraud detection becomes the essential tool and probably the best way to stop card not present fraud. The most effective ways for travel companies to detect and manage fraud are ;
- 3D Secure
- Fraud Scoring Models
- Customer Order History
- Blacklists
- Whitelists
- Velocity Limits
- Device fingerprinting
All travel companies should be capturing the IP adresses, email adreses, postal addreses and the Bank Identification Numbers (BIN) on transactions as these can be used to identify whether a booking is being made fraudulenty or not. The high risk transaction is a booking originating from overseas. The biggest threats are bookings from the
- USA
- UK
- Australia
- France
- Brazil
- Canada
- South Africa
Time is of the essence. The fraudulent bookings are often organised within 3 days of the travel industry and are rarely made beyond a week. And also the other important point on the timing of fraud is that fraudulent bookings occurred outside of normal office hours ( i.e. before 8 am and after 6 pm). This method of operating gives the travel companies minimal time to spot and challenge the high risk booking. And the fraudsters know that.
The effects of data breaches; payment card fraud is becoming even harder to fight and online fraud is part of online sales in the travel industry. If travel companies are experiencing zero fraud, the chances are they are losing sales at the same time. To get the best out of the fight against fraud, travel companies need to shift from a risk-averse, threat-detection policy to a strategy that focuses on business growth while risks are well managed.
