Travel Purchases and Fraud

As a merchant who counts on travel and tourism, this is one of your busiest times. Customers are frantically wrapping up summer vacation plans, and some might even be planning for excursions in the fall. This is good news for your business, but as you know this busy sales time means your risk for fraud and loss is likely to increase. You’re extra busy, your customers are out of their comfort zone and a bit stressed, so you push aside second thoughts about a customer’s lack of documentation for transaction authorization, and then a few weeks later you learn you’ve become a victim of chargeback fraud.
The success of your business relies on the ability to meet the needs of your customers quickly and efficiently. The increase in online sales and websites that enable travelers to book their own hotels, flights, cruises, car rentals, and other travel needs makes it more challenging for you to carefully review each purchase.
Travel typically comes with big ticket price tags. For example, a cruise package that includes flights, a couple nights in a hotel, port excursions, extra boat perks like WiFi, and then a post-cruise tour of the home port can add up to a very large sale. Just as your customer invests a lot in their cruise vacation, you must spend a lot on resources to find the best package for your customer—and as you know, the profit margin is tight with today’s competition in online sales. This adds up to a lot of risk and the need to be vigilant with your customer authorization and authentication process.
Be on the Alert for Fraud
It’s too easy to become a victim of chargeback fraud, particularly when you’ve got stressed out customers who want to book last-minute flights or desperately want to buy tickets to the latest big show or event. Understandably, it’s challenging to take a step back to remind yourself of fraud prevention best practices. To that end, keep in mind the following fraud warning signs:

  • Rushed purchase  Often a fraudster will contact you in a panic, rushed to set up accommodations for their traveling party. Make sure you take the time to validate the credit card, passport details, and other relevant verification documents. If you’re operating your business without a proven payment solution in place, be cautious of the credit card being used—often these fraudsters are using stolen credit cards.
  • First-time customer  Folks who regularly travel often establish a relationship with a specific travel company, allowing the merchant and the customer to build on that relationship which fosters customer loyalty. Be aware of a first-time customer who calls you or contacts you online to make a large purchase. As always, collect all necessary verification information, and especially take advantage of a merchant payment solution such as Verifi’s Order Insight to help prevent chargeback fraud.
  • Customer location  We’ve all heard the stories of Internet requests for money transfers to a foreign country or the plea to send money to free a trapped relative. Today’s fraudsters have learned that VoIP phone service can be the ideal tool to hide their true location, tricking a sales agent into believing they are calling from a local number. If you have concerns over the customer’s location, seek to provide for the customer to come into your shop to pick up goods or services, or request a signature for delivery.
  • Conflicting billing and delivery addresses  When a customer enquires about a cruise package, for example, but wants the tickets delivered to an address that is different from their billing address, red flags should go up. This is one of the most common fraud techniques, using different addresses for billing and shipping.

The common element in these fraud prevention tips is about making sure you don’t let the customer pressure or rush you into approving their purchase. It’s vital that you follow best business practices, including requiring necessary travel documents (passport, driver’s license, etc.) and not skipping any steps in the credit card authorization and authentication process.
Chargeback Fraud and Travel Purchases
Recent research has revealed that the items sold most frequently—cruise packages, flights, and resort packages—are impacted most by chargeback fraud. These are typically big ticket sales that require the most work on your part, so be sure to remember our chargeback fraud prevention warning signs and take extra steps to protect your business.
The travel industry is not immune to fraud, theft, and the threat of chargebacks. The simplicity of CNP sales and the prevalence of phone bookings make it easy for fraudsters to prey on travel merchants. Take the steps you need to be confident and comfortable with each sale.