MANAGING FRAUD ON TRAVEL BOOKINGS
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MANAGING FRAUD ON TRAVEL BOOKINGS
EXECUTIVE
SUMMARY
The highly competitive travel industry faces a unique set of challenges around payments
acceptance and fraud prevention. The sector is particularly susceptible due to an increasing
number of virtual, remote bookings that offer high-value, low-risk opportunities for
fraudsters to act as intermediaries rather than choosing to travel using the fraudulent
booking themselves.
Whether a merchant is an airline, travel agent, hotel or car hire company, most operators in
the travel industry rely on low-margin transactions and the ability to fill as many customer
spaces as possible, making it critical to strike the right balance between efficiently
processing genuine customer bookings and protecting the company from the risk of fraud.
Despite this, across the sector few sophisticated fraud tools are in use and merchants
rely heavily on manual review processes and card issuer fraud prevention measures such
as address verification (AVS), card verification number (CVN) and 3D Secure. This often
creates inefficient fraud prevention processes, reduces accuracy and acts as a drain on
merchants’ in-house teams. It is no surprise that, for many travel operators, fraud rates can
reach ten times target levels, and many are losing revenue not only to fraudsters, but also by
inadvertently declining good customers.
Here, ACI Worldwide® outlines some of the key fraud management issues facing the travel
industry and provides best-practice tips on how to mitigate them.
ATTEMPTED FRAUD (CHARGEBACKS)
1 TIMING HOTSPOTS 65%
ACROSS TIME TO DEPARTURE
60%
55%
% of Total Chargebacks
TIME TO DEPARTURE 50%
Last minute bookings are a major fraud management 45%
challenge, with fraudsters often making their bookings 40%
35%
as close as possible to the time of travel to improve
30%
their chances of evading detection.
25%
Across ACI’s travel merchants, nearly 80% of the 20%
15%
total volume of chargebacks occur where the time
10%
to departure is less than three days. By contrast,
5%
approximately 4% of chargebacks come from longer
0%
term bookings where the order is processed moreWith last minute bookings also popular with genuine the travel destination. It is also common for fraudulent
customers, merchants have a challenge on their hands bookings to cover travel from a country of high
to distinguish between good and bad bookings. economic prosperity to less developed regions.
For this reason, other trends in each sub-segment
become important in helping to spot the fraudster. For
instance, in hotels, last minute bookings by fraudsters BEST-PRACTICE
FRAUD PREVENTION
3
are often for short stays in desirable locations. For
airlines, these last minute fraudulent bookings are FOR TRAVEL
usually for standard or economy class, to avoid
attracting attention.
COMPANIES
BOOKING CHANGES With effective fraud prevention strategies and
Fraudsters are also well versed in the advantages solutions, travel companies can mitigate these
of changing a booking at the last minute. Here, a areas of risk, successfully increase revenues and
fraudster will make a booking well in advance of the open up new routes and payment channels. To find
travel date, knowing that this type of purchase looks the right balance, ACI analysts offer the following
low risk to a fraud management team and is less recommendations:
likely to be challenged. The fraudster will then change
the booking close to the departure time, with the Move beyond 3D Secure: While the liability shift
knowledge that some travel companies do not offered by fully authenticated 3D Secure (3DS)
re-screen for potential fraud on booking changes. transactions is of great benefit to travel companies, it
is important to use additional measures for a couple of
These booking changes are also often completed reasons:
across different channels, which can make the fraud
harder to spot. For instance, it is a common practice • The rise in dynamic 3DS means consumers are
for fraudsters to make their original booking online having to enter their passwords less frequently,
and then call a contact center to make the amendment which is increasing the percentage of fraud that is
to the booking, because contact center staff are fully authenticated via 3DS.
generally not trained or targeted to look for fraud. A • Fraud which passes through 3DS still counts towards
lack of data compilation and sharing across channels a merchant’s overall fraud level with the card
also means that the fraudulent activity can be difficult schemes, making it vital to monitor and screen these
for merchants and their fraud providers to pick up. transactions to avoid scheme penalties.
• Fraudulent 3DS bookings are a source of fraud
intelligence — merchants must capture this data to
build a more holistic picture and stop associated
2 LOCATION HOTSPOTS
fraud.
Practice positive profiling: Wherever possible, it is
valuable to proactively collect, collate and analyze
as much customer profile information as possible,
High attempted fraud rates on foreign payment
including passenger name reference (PNR) data, email,
cards continue to be a common problem for travel
address information, associated payments information,
sector merchants, creating particularly difficult fraud
customer preferences and booking history. This allows
management challenges for merchants looking to
merchants to build a positive picture of their genuine
expand internationally. However, there are broader and
customers and ensure their bookings are processed
more complex location-related trends which all travel
seamlessly — helping to support loyalty and increased
companies must be wary of.
sales.
For instance, some travel routes are more frequently
Use all available data: Fraud rules and predictive
targeted by fraudsters, with locations such as Nigeria,
models must be built on a thorough understanding of
Egypt, Malaysia, Indonesia, Russia, the Dominican
all available internal and external data. Collaboration
Republic, Ghana, Brazil and South Africa being some
and sharing fraud intelligence among travel sector
of the highest risk, as either the departure location or
companies and other players in the payments chain
3can enable merchants to get a fuller picture of Employ comprehensive monitoring and reporting
customer profiles and fraud trends — supporting processes: Quick and accurate reporting is crucial in
better informed fraud strategies and effective action the fight against fraud, since small increases in fraud
to adjust rules, block fraudsters and prevent further can have a huge impact, eating into already small
losses. margins. Effective and timely reporting allows for
new and emerging fraud trends to be picked up and
Tailor fraud strategies: Using fraud and customer
fraudsters to be closed down quickly. The ability to use
data to create tailored but flexible rules allows fraud
business intelligence tools and analytics to monitor
prevention strategies to be targeted and effective,
transactions and interrogate data in a timely way can
reducing false positives and the impact on genuine
also help to produce fast, actionable intelligence which
customers, while keeping fraud to a minimum. Fraud
can heighten performance and support a continuous
solutions must be tailored to payment type, customer
improvement process.
and card issuer location, timing of booking, etc. and
include customer history and profiling information.
They also must be adapted in line with seasonal
changes and promotions, emerging trends, merchant
KPIs and market developments.
Prioritize high-risk and short-notice bookings:
Real-time screening of transactions is essential for
timely action against fraud and to ensure genuine
customers receive smooth service. Automated
decisioning plays an important role in this process —
particularly for merchants who can’t operate a 24/7
fraud management team. Implementing different rule
strategies for short-notice bookings made outside of
office hours can help manage the potential impact
of fraud and optimize use of internal resources by
automatically releasing or canceling orders. For those
bookings which can be manually reviewed, high
priority cases need to be prioritized in the process to
ensure minimal disruption.
Screen and re-screen: Real-time screening of
transactions is essential, but not sufficient. Fraud
and customer data is constantly changing and
what doesn’t look like fraud at the time of booking,
may look different once new fraud data is added
later. Retrospective screening can help to build a
more accurate, detailed profile of transactions and
associated fraud. In this way, bookings that are initially
accepted and later identified as suspect or confirmed
fraud could still be recovered — by canceling bookings
before the travel date, or, where the travel date has
already passed, initiating refunds and preventing
associated bookings from being processed.
4ACI Worldwide, the Universal Payments®
(UP®) company, powers electronic
payments for more than 5,100 organizations
around the world. More than 1,000 of
the largest financial institutions and
intermediaries, as well as thousands of
global merchants, rely on ACI® to execute
$14 trillion each day in payments and
securities. In addition, myriad organizations
utilize our electronic bill presentment
and payment services. Through our
comprehensive suite of software solutions
delivered on customers’ premises or
through ACI’s private cloud, we provide
real-time, immediate payments capabilities
and enable the industry’s most complete
omni-channel payments experience.
LEARN MORE
WWW
WWW.ACIWORLDWIDE.COM
@ACI_WORLDWIDE
CONTACT@ACIWORLDWIDE.COM
Americas +1 402 390 7600
Asia Pacific +65 6334 4843
Europe, Middle East, Africa +44 (0) 1923 816393
© Copyright ACI Worldwide, Inc. 2017
ACI, ACI Worldwide, ACI Payment Systems, the ACI logo, ACI
Universal Payments, UP, the UP logo, ReD, PAY.ON and all ACI product
names are trademarks or registered trademarks of ACI Worldwide,
Inc., or one of its subsidiaries, in the United States, other countries or
both. Other parties’ trademarks referenced are the property of their
respective owners.
ATL6563 11-17
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