Voice of the Industry

Supporting airlines as they defend against pandemic-related fraud trends

Friday 23 October 2020 07:49 CET | Editor: Simona Negru | Voice of the industry

It's likely that fraudsters are taking advantage of the pandemic to target airlines with new and refined tools and techniques. Mark Strachan, EMEA Managed Risk Principal at Cybersource, discusses nine key fraud trends and how to combat them.

 

With revenues under pressure, the last thing airlines want is to lose out to fraudsters. We've identified nine key fraud trends airlines may face and actions they can take to protect their business and their customers.

False compensation claims

Fraudsters submit false compensation claims using details obtained from genuine passengers. To protect against this fraud and its financial impact, airlines should check the validity of compensation claims. Setting up a specific profile in their screening solution allows reconciliation of claims with the original bookings. Tokenized bank account details can also be reviewed for signs of fraud, such as multiple claims associated with one bank account.

Fake travel agencies

Fake online travel agencies (OTAs) pop up offering flights with pandemic-related discounts. These ticketing scams involve fraudulent purchase of tickets for resale to unsuspecting travelers, which can have financial implications for airlines, customers, and card issuers.

We advise airlines to educate customers to beware of deals that look too good to be true. Airlines should also check the email addresses associated with ticket purchases. Terms like 'COVID', 'discount', 'agency', and 'sale' may indicate a fake OTA. 

Targeting vouchers two ways

Vouchers issued for canceled flights are targeted by fraudsters during account takeover attacks. Or a fraudster books a flight several months ahead, then cancels and requests a voucher. They then redeem it for another flight, assuming less scrutiny of a voucher-based booking. 

We suggest that airlines create voucher profiles in their screening solution to compare the original and voucher-paid bookings, and reveal inconsistencies that may indicate fraud.

Refund requests leading to chargebacks

If airlines struggle to issue requested refunds for cancelled flights quickly enough, customers may raise disputes with their card issuers to get their money back. To avoid a rise in chargebacks (which can look like friendly fraud), we advise that airlines should, if possible, refund customers promptly — ideally within 10 days. Additionally, automating the refund process can help streamline it (and reduce operational costs).

Exploiting fee-free flight amendments

Removal of flight amendment fees reduces friction for customers changing flights, but fraudsters may also advantage. They book flights several months ahead, assuming the transaction is less likely to be flagged by fraud screening rules. Once the transaction is approved, they change the booking to a flight leaving within a few days, assuming no screening of amended bookings.

We recommend that airlines screen amended bookings to identify changes that may indicate fraud.

Multiple fraudulent account registrations

Despite fewer bookings, some airlines report high volumes of new customer account registrations. They're typically set up with lots of accumulated loyalty points — likely stolen from genuine accounts. 

We expect these accounts will be used once air travel picks up and the resale value of tickets rises. Meanwhile, genuine customer accounts may have been compromised. A solution that guards against account takeover should also protect against fraudulent setup of new accounts — and help prevent further issues down the line.

Loyalty points at risk

Loyalty fraud puts customer trust at risk, regardless of whether fraudsters redeem stolen loyalty points for flights or retail goods. To help protect customers' accounts and keep loyalty points safe for use once travel is back on the agenda, airlines should consider using a specialised solution that monitors account creation, login, and modification attempts. 

Increased card checking

Before selling on stolen card data, fraudsters may check it by buying tickets for flights they won't be boarding. This means unoccupied seats (impacting margins) and potential chargeback claims by genuine cardholders (causing additional losses).

To help guard against card checking, airlines should ensure their fraud screening solution can use sophisticated velocities to identify typical signs of card testing, such as multiple credit cards used from the same device or IP address within a short space of time.

Machine learning false positives

Airlines whose fraud screening solution depends solely on machine learning (ML) may experience an increase in false positives when buying patterns shift unexpectedly. In particular, quarantine announcements can cause a spike in last-minute one-way flight bookings as people rush to get home. Before the pandemic, such bookings would have been correctly flagged as high risk, but we've seen that's no longer always the case. 

Airlines should consider adding human insight to their fraud screening practices to quickly recognise changes in genuine customer behaviour.

Conclusion

During these challenging times, airlines shouldn't hold back from seeking external fraud management support. Boosting their own teams with additional expertise can help airlines to better protect their customers and their business from fraud, while reducing the operational costs of doing so.  

About Mark Strachan

Mark is the business owner for the EMEA Managed Risk portfolio at Cybersource and a fraud risk professional with over 12 years experience in the card payment and banking industry. His current role as EMEA Managed Risk Principal at Cybersource allows him to work closely with enterprise clients on strategies to reduce risk associated with fraudulent activity and optimise revenue. 


About Cybersource

Cybersource helped kick start the eCommerce revolution in 1994 and haven’t looked back since. Through global reach, modern capabilities, and commerce insights, we create flexible, creative commerce solutions for everyday life-experiences that delight customers and spur growth globally. All through the ease and simplicity of one digital platform to manage all payment types, fraud strategies, and more. Knowing we are part of Visa and their security-obsessed standards, you can trust that business is well taken care of – wherever it may go.


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Keywords: Mark Strachan, Cybersource, fraud, token, bank account, COVID-19, vouchers, account takeover, chargebacks, friendly fraud, machine learning, customer behaviour, fraud management
Categories: Securing Transactions | Digital Identity, Security & Online Fraud
Countries: World
This article is part of category

Securing Transactions