Travel Industry Scams

Even with the onset of coronavirus which brought travel near a standstill, frauds in the travel industry are as prevalent as ever. As of 2020, the top fraud categories included travel, shopping and imposter scams. By the end of March, a total of $13.4M was lost to these frauds, which accounts for approximately 3% of the total fraud reported to the FTC (Federal Trade Council). Simple frauds, such as faking date of birth to avail ticket discounts aimed at the younger passengers and using fake identities to travel abroad etc. can be easily avoided using AI and ML technology, such as Age Verification and remote Document Verification solutions, especially when booking for flights or accommodations online.

Travel Frauds On The Rise

Fake Hotels

Fraudsters tend to list a fake hotel online to lure travellers into making bookings at these fake hotels through online travel agents. Fake hotel scams cause more damage to travel agents, as they may receive chargebacks for bookings once the payment to these fake hotels has been made. At that point however, scammers withdraw all the funds paid by the travel agent and disappear from the scene, ignoring any contact attempts and leaving those travel agents to bear financial losses. On the other hand, travellers make bookings for rooms in these hotels and pay for their trips only to find out once reaching at the hotel that no reservation had been made.

Ticket Cancellations

Airlines are increasingly attempting to promote flight credit points to encourage travellers to fly using their services. Fraudsters use this to their advantage by booking flights with stolen credit cards and canceling them, yet still gain credit bonuses. These bonuses can be resold later or used to purchase legitimate tickets.

Hacking of Airline Accounts

With most airlines operating using digital systems, there’s a high risk of system breach by hackers. This causes financial and reputational losses for the airline.

Travel Agency Frauds

Another commonly occurring travel-related fraud includes travel agency fraud. Scammers create fake travel agencies, a fake website that looks authentic, and copy logos and deals from other organisations to seem real. Travellers book tickets and rooms through such agencies by providing sensitive information while making payments, which may include their identity and credit card details. Credit card numbers may be used by these fraudsters or the information could be sold, leading to identity theft scams.

Tackling The Problem

In an attempt to tackle these problems, the following advanced techniques may be used:

Travel ID Verification

By using AI-powered identity verification solutions, travel-related fraud can be reduced. This includes credit card and ID scanning at airports and hotel entrances. Additionally, face verification and document verification through OCR technology can enable authorities to identify scammers before they cause any damage. Here’s how it's done in three simple steps:
  • Customers show their ID documents, such as a passport, to a camera
  • OCR extracts personal identifiable information (PII), such as full name and DoB for verification
  • Customer is automatically verified

Monitoring Transactions

Fraud detection mostly involves identifying unusual patterns, and several of them could appear during the ticket payment process. At this stage, it is necessary to focus on:
  • Amount of transaction and the currency used
  • The type of credit cards being used for making payments
  • Geolocation: Certain risky regions worldwide have been identified, where scammers log-in to book tickets

Key Takeaways:

Frauds in the travel industry are as prevalent as ever and need to be managed using advanced technologies for verification

The most common types of travel-related frauds include fake hotels, travel agency frauds, hacking of airline accounts and cancelation of tickets for credit points

Travel scams can be prevented with the help of document verification and face verification