The recent rise in card-not-present (CNP) fraud targeting online retailers – and how best to fight it – has been a hot industry topic over the past year, but retailers are not alone in facing fraud and losses due CNP fraud. The travel industry has also become a target for online fraudsters worldwide. Fraud losses eat into margins for hotel chains, car rental agencies and airlines, but the most damaging effects may fall on travel agencies and small hospitality operators. Why is CNP fraud such a problem for the travel business now, what makes it such a tempting target, and how can travel businesses fight back?
Whether it’s scamming free flights with stolen credit card numbers, booking hotel stays to test stolen card numbers’ validity, or falsely claiming fraud after a tour or trip, travel fraud is a big, organized business. Last October, for example, law enforcement agencies from more than 40 countries arrested nearly 200 people in a coordinated operation targeting airline fraudsters. According to Europol, such fraud costs the airline industry more than a billion dollars every year. For smaller operators like travel agencies, the losses are smaller but the stakes are higher.