Fraud preparation and prevention: Part 2

(Click here to read part 1)

While fraud continues to plague the travel industry as it does in other lucrative segments of the economy, there are many simple measures companies can take to guard against it.

Normand Schafer, a travel fraud prevention specialist with Perseuss (a platform for airlines to both share fraud information and combat such activity), said that a proactive rather than reactive approach is the first step. He said that most agencies fall into two categories – those which are unprepared and those who have taken the necessary steps after learning from first-hand experience.

“A lot of times travel agencies just wait and when something happens, I get calls saying 'What do I do?’ That’s the wrong time to make those plans,” Schafer cautioned. "When it needs to happen is before it happens in the first place. Have strategies to mitigate the damage or stop it from happening.”

Andre Machicao, senior vice-president of CyberSource, said that while there’s no one-size-fits-all technological solution, screening is the first step toward thwarting fraudsters in the digital age.

“We find that fraud management solutions and practices vary by business size, segment and region,” he said. “We sometimes encounter businesses that have adopted strategies that while efficient against chargebacks, may lead to lower conversion rates or higher operational costs.

"Different strategies fit different business models," Machicao continued, "but as a general recommendation, businesses should consider implementing real-time screening tools and processes which take as much data as possible into consideration, and ensure a positive customer experience while keeping operational costs low. With the growth of transactions originating from mobile devices and the differing fraud characteristics and strategies associated with these devices, we recommend merchants track order and fraud activity by eCommerce and mCommerce channels to better hone risk management strategies.”

Robyn Cino of ACTA’s Fraud Prevention Committee said that while such screening measures are important for the retail arm of the travel industry in the Internet age, cost is a concern, especially for smaller agencies; in addition, with fraudsters able to eventually find ways around such measures, agents themselves must remain vigilant for the odd scam that slips through the defenses.

“There’s no one perfect anti-fraud solution,” she said, recommending that agents look over every booking even after it’s been verified by screening software. “There’s still things that slip through periodically; when it comes to cost (of fraud prevention programs), it’s how airtight do you want to make it. But the thing with fraud is that you can’t just throw up fraud prevention and walk away – you have to fine-tune it.... We need more measures in place to prevent fraud but who can spend all that money on technology?”

One of the key measures includes learning from past fraud instances to verify future customers, Schafer said, stating that many travel agents often do not retain the details of a fraud incident for use down the road.

“They say, 'There’s nothing we can do about it, let’s move on,’” he said. “What they need to do is log the incident and create a database indicating profile information for that fraud. Just making notes on the profile allows you to pull up the profile and if you have a new client and recognize the phone number from someone who committed fraud, red flags come up; you don’t have to depend on starting from scratch.”

Part of that preparation is being on guard for multiple fraudulent bookings in short spans of time, Schafer said, particularly with fraudsters that forge relationships with an agent or agency through a handful of valid bookings, followed by a deluge of fraudulent purchases – a practice which he noted has seen several smaller agencies close their doors as a result.

Ultimately, knowledge is power. While companies need to have their own personalized anti-fraud plan, the overall industry is strengthened against such attacks when all businesses come together and pool their information – a notion which served as the impetus behind Perseuss, Schafer said.

“As more and more airlines got involved and saw what was happening," Schafer explained, "the information was getting too much to handle, so that’s where Perseuss was born – a place where travel organizations can collaborate.

“What we’re seeing is while every company should have their own fraud-prevention strategy," he continued, "even if you’re a large company, the moment you start working together that data and information increases a hundred-fold…. Fraud is an area where we can’t be looking at each other has competitors – we need to be working together to help each other and reduce this activity on a large scale.”

For Cino, the recent cooperation amongst the different companies and facets of the travel industry in combating fraud is a welcome sign, after so many years of individual businesses and industry segments trying to win the battle alone.

“We’re talking, we’re all sitting in a room together – it’s a milestone,” Cino said.

In addition to all the fraud prevention techniques and technology in the world, a little common sense can go a long way; when something seems fishy – such as a booking with a phone number, address and billing information in multiple locations – it often is, she went on, and agents should think before trying to make the sale.

“You have to look at all of those components together to see the whole picture,” Cino advised of telltale signs of fraud. “There are often blatant details but sometimes we’re just too busy making a sale to see them.”

More resources for travel professionals

- The Association of Canadian Travel Agents provides a list of fraud prevention measures for agents to keep in mind while conducting business, including detailed descriptions of various forms of fraud occurring in the industry. The information is available at www.acta.ca/travel-fraud-prevention.

- Anyone who has experienced such activity can report it to the Canadian Anti-Fraud Centre at http://www.antifraudcentre-centreantifraude.ca/ or by calling 1-888-495-8501.