$1.4bn losses last year
Airlines are losing hundreds of millions of dollars every year in fraudulent credit card transactions, a report by payment company CyberSource has said.
Airline Information (Ai), which commissioned the report, said the findings were "staggering" and of "great concern" to the airline industry.
The report found that the world's airlines had lost around $1.4bn in fraudulent bookings last year.
The findings were echoed by speakers at last week's Ai Xpress conference on a-la-carte pricing.
Michael Smith, managing director of airline revenue consultant SeaMountain, said fraudsters were using a number of methods to dupe airlines including fake websites and credit card skimming.
"Fraudsters are targeting airlines and ripping off customers," Mr Smith said.
"What they're doing is starting up false websites. They get the money off customer's credit cards and pay the airlines using other fraudulent credit cards, and then pocketing the money."
Mr Smith said all airlines accepted "a certain level of fraud" and it was more a case of how much they should tolerate.
"There's only one sure way to avoid fraud, and that's to not do any business at all. The big question is what is an acceptable level," he said.
Some airlines attach higher risk levels to bookings from certain countries while others cancel suspicious bookings at different times, Mr Smith said.
Mr Smith added that travel agencies which accepted bookings from fraudulent credit cards were liable and risked a large ‘charge back' fee from credit card issuers such as Visa and MasterCard.
Airlines which accept more direct bookings online are becoming increasingly at risk of incurring such charge back fees where the cost of fraud is passed back to the last merchant.
As a result airlines are becoming more cautious and increasing their level of protection and transaction scrutiny, Mr Smith said.
Mr Smith claimed airlines attached more risk to bookings from certain countries.
But airlines which are too cautious could risk ending up out of pocket by automatically refusing genuine booking, Mr Smith argued.
He also said some fraudsters were targeting travel agents at night or early in the morning when they knew no staff would be there to check transactions.
Mr Smith said finally that US and Canadian card users were more at risk of this type of fraud as their cards still use the old ‘swipe' technology instead of chip and pin.
Airlines and travel agencies could well be including such factors in the special fraud prevention tools they employ.
http://airlineinformation.org/