Defending your business from fraudulent activity is part and parcel with owning an e-commerce business. Travel merchant services providers and those in the online travel business, unfortunately, know this better than most merchants. They tend to attract more fraud than the average online merchant.
This very fact is evident in a recently released whitepaper from eNett, a travel merchant services provider, which detailed why and how travel agencies are so susceptible — and what travel merchants and their payment processors can do about it.
Why the travel industry attracts fraudsters
For consumers, traveling is expensive: airline tickets, hotels/lodging and transport are all large ticket items that add up to the thousands. Therein lies the main attraction for criminals: large ticket purchases. One fraudulent transaction can be a substantial gain for a criminal and an insurmountable setback for a travel merchant.
Additionally, with online travel agencies simplifying booking processes for consumers by offering online forms for reserving vacations, the criminals are largely anonymous, hacking from afar and thus difficult to catch. Booking vacation plans and travel itineraries happens quickly, as do the transactions. Thus, travel merchant services providers and their merchants have a short window to examine transactions.
Moreover, many criminals go through third parties to get at online travel merchants, by hacking into the airline partners they have. Or the hotels and timeshares and car rental agencies with which they do business.
Defensive suggestions for travel merchant services providers and merchants
Methods of authentication: Using tools such as IP geolocation, AI and machine learning are currently all the rage and can help a merchant too busy to vet incoming reservations while keeping false positives to a minimum. IP geolocation tools enable a merchant to track where reservations are coming from while AI and machine learning schemes are customizable, enabling different criteria and settings for each merchant.
Join (or create) a forum: Fraud is at a level in which travel merchant services providers, competing agencies, hotels, airlines and others in the industry need to collaborate on recognizing and stopping the bad actors. Sharing stories and instances of fraud can only help the industry.
Social media: It is our long belief that criminals enjoy showing their ill-gotten goods and wares on social media. The seedy practice of purchasing an airline ticket, followed by filing a bogus chargeback, can be foiled in two ways:
- Checking the suspect consumer’s social media channels for photos and other proof of airline ticket use,
- Requesting the airline to consult the flight manifest for the consumer’s presence on the plane (which airlines began doing recently).
3D Secure 2.0 is an option: When 3D secure debuted, merchants saw it as more of a hindrance than a fraud solution. Back in 2015 – before the debut of 3D secure 2.0 – fraud/chargeback fighter Cardinal Commerce and Amtrak teamed up for a study on the use of Verified by Visa (Visa’s 3D secure solution). The result was a 2.4 percent increase in consumer authentication and an 80 percent decrease in fraudulent chargebacks.
3D secure has come a long way since its rocky inception – it is a much smoother, consumer-friendly process, and a viable option for travel industry merchants.
Team with a third-party chargeback management firm: Contracting to firms which are experts in chargebacks and fraud is never a bad idea. For many merchants, it’s an education, something merchants can eventually do themselves. Are such firms costly? The answer to that age-old question is relative to the amount of revenue you feel your losing. Partnering with a chargeback management firm should be considered an investment in recovered revenue.
Navigate your travel business with Instabill
Because of high ticket items, chargebacks and fraud, the travel industry is regarded as high risk. Instabill, however, continues to be among the best travel merchant services providers in the business with domestic and offshore merchant accounts, chargeback protection and live customer support. Our merchant account experts are available Monday through Friday from 8 a.m. until 6 p.m. U.S. eastern time.
Our merchant account relationships always start with a 10 minute conversation.