Why Travel Is A Popular Destination For Fraudsters

The excitement of the winter holidays is over, and that leaves only one thing: the annual bout of existential dread that comes from all of the cold, snow and ice.

Nah, we don’t really mean that. What the first few weeks of the year really mean — at least according to us cheerful, idealistic folks here at PYMNTS — is that it’s time to plan for the trips and vacations that will take place over the next year. This is indeed a big time for families and individuals to start budgeting and otherwise charting out vacations and getaways.

Of course, that also means fraudsters are figuring out how to better steal from those consumers. In a new PYMNTS interview, Karen Webster talked with Yinglian Xie, CEO and co-founder of DataVisor, about some of the new trends in fraud, and why the travel industry is a big target for increasingly sophisticated criminals.

Fraud Types

From a fraud prevention standpoint, among the main weaknesses of the travel industry is that it is complex and increasingly digital and mobile, presenting various ways for criminals to conduct their craft.

“There are a lot of areas that fraudsters can manipulate for financial advantage,” Xie told Webster. Those can include fake and legitimate online travel sites, for starters, allowing fraudsters to pretend to be travel agencies and steal consumers’ hard-earned money.

Indeed, one growing travel fraud trend, according to Xie, involves fraudsters gaining hold of consumers’ payment card data — perhaps via one of those fake travel sites — and then cashing out those cards. But it’s not just so-called cash-out attacks that present threats.

As recent PYMNTS research has demonstrated, other fraudsters buy airline tickets or travel packages and then attempt to refund them on their own credit cards. The scheme is essentially an online version of shifting: going back to the very stores that were victimized and returning the stolen goods for cash. Not only that, but criminals operating in the general travel space will use stolen payment credentials to book a trip online before trying to resell that booking somewhere else at a lower price.

Various methods of travel fraud stand as a constant and growing threat not only to consumers, but also to travel operators, as the industry continues to shift into digital and mobile modes of business.

As if that weren’t enough to worry about, Xie offered examples of other ways fraudsters are making illicit gains from the travel industry. Some of those criminals turn to collusion, she said, which typically means they set up fake travel agencies as a vehicle to gain payment and personal data from unsuspecting consumers.

Fraudsters have also taken advantage of the general trend of cheap fare offerings from online aggregators. The tactic involves criminals buying up inexpensive inventory — supplies of cheap fares for which immediate payment is not required — and then finding ways to push or even force consumers to buy those fares.

As all of that happens, new fraud detection and prevention technologies are slowly making their way into the industry, at least according to what Xie told PYMNTS, but it might be a while before machine learning and artificial intelligence (AI) make a big, global dent in this area of payments and commerce. Sure, as PYMNTS research has shown, some big, famous travel operators are pushing the frontier of fraud detection and prevention. That includes Priceline, which leverages AI to promote security and seamlessness (and is one of the feature subjects of the latest Digital Fraud Tracker from PYMNTS).

Broader Costs

Yet, as Xie told Webster, manual review — and all its potential for friction and false fraud alarms — still has a big role overall in travel. “Manual processes take a long time,” she said, which provides another general advantage to fraudsters. And, perhaps a bit ironically, the way online and mobile tech is opening up travel to more sellers is likely providing new openings to criminals. That’s because many boutique properties and family-operated travel commerce operations — many of them relatively small and new — are still in the process of installing fraud detection systems, according to Xie. “They are just in the early stages of realizing that nobody is immune to (fraud),” she noted.

The travel industry — and it pays to remember that globally, travel and tourism continue to grow — also attracts very smart criminals who invest a lot of time in doing their homework. We here at PYMNTS certainly don’t mean to come off as celebrating that fact. But as fraudsters study the sites and booking policies of airlines and hotels, they find out how much time they might have, for instance, before a hotel bill comes due, or other details that give them the small edge they need to conduct a successful theft, Xie told Webster.

In the end, this is problem for all of us — including those consumers who might gather around the table in the coming weeks to plan out their family vacations. “Consumers lose out because we end up paying more,” Xie said.