Before an effective fraud prevention strategy can be implemented, common schemes and attack vectors must be understood. Here are the top 5 techniques used by scammers who target the airline industry:
1. Transactional fraud
Stolen credit cards are frequently used to purchase flights. In many cases, these itineraries are booked at the last minute—or booked well in advance and then exchanged for a more immediate departure—to avoid scrutiny.
2. Account takeover
Many fraudsters hack into loyalty and mileage plan accounts to access accrued miles. Once they are in an account, they can use the miles for flights and marketplace purchases—or transfer them to a different account to avoid detection.
3. Loyalty program fraud
Loyalty and mileage plan accounts are often established to make fraudulent transactions look more legitimate. In many cases, stolen credit cards are utilized to purchase miles, which are then used or resold.
4. Rewards abuse
Some fraudsters purchase high-priced tickets to attain points from their credit card company, and then cancel the ticket after those points have been used or sold. This creates unnecessary churn, taking up valuable seats and resulting in lost revenue.
5. Counterfeit card fraud
With airline websites and call centers becoming more sophisticated and secure, many fraudsters are going straight to the ticket counter to book flights with a fake credit card. Because most ticket counters have yet to implement EMV chip technology, they don’t have the ability to quickly detect counterfeit cards and transactions.
Airlines need to identify and thwart these schemes without creating a negative experience for their customers. Data is the key. The more data sources an airline can correlate and analyze, the easier it will be to detect and prevent fraudulent activities and transactions. Aligning the departure city, credit card holder location, customer loyalty history, and IP address, for example, can often reveal abnormal behavior and possible fraud.
Fraud prevention experts with experience in the airline industry can facilitate data capture, correlation, and analyses. They can help implement monitoring and authentication measures to confront the latest trends and tactics. And they apply machine learning to industrywide data to stop more fraud and identify emerging trends sooner. Additionally, they can facilitate best practices sharing across the entire airline community.
After all, airline fraud is an industrywide problem that must be confronted collectively. There is strength in numbers and insight in data—and help is available to leverage them both.
Accertify, Inc., a wholly-owned subsidiary of American Express, is a leading provider of fraud prevention, chargeback management, and payment gateway solutions to merchant customers spanning diverse industries worldwide. Accertify’s suite of products and services help e-commerce companies grow their business by driving down the total cost of fraud, simplifying business processes, and ultimately increasing revenue. For more information, please visit www.accertify.com.