22 Oct Voyage Vulnerabilties

Jason Lane-Sellers, Director of Fraud and Identity, LexisNexis® Risk Solutions, shares the hidden threats posed by fraud in the travel industry.

Fraud in the digital age poses significant challenges across sectors. The travel industry, with its early adoption of ecommerce channels and reliance on high-value transactions, loyalty programs and customer trust, is a prime target, especially in light of new tactics that exploit vulnerabilities early in the customer journey.

How can businesses stay one step ahead of tech-savvy fraudsters? The answer lies in a perfect blend of innovative technologies and industry-wide collaboration.

Rising threats in travel industry fraud

The travel industry has long been a lucrative target for fraudsters and with many operators being early adopters of digital commerce, the sector has long been open to a wide range of vulnerabilities that require strong risk mitigation tools.

I recently had the pleasure of discussing this topic with Gustavo Tonti, Head of Fraud at Destinia – an online travel agency specialising in hotel and international travel bookings – who has been leading the fight against fraud in the travel industry for more than 20 years.

Tonti says that while traditional scams like stolen credit cards or fake booking sites are as prevalent as ever, tech-enabled approaches such as device spoofing and synthetic identities are making them more difficult to detect.

However, fraudsters are not limited to traditional scams. Many have migrated to new routes like loyalty programmes, exploiting weaknesses in security. Tonti explained: “Fraudsters today are not just seeking stolen payment details. Many now exploit generous promotional offers, sign-up bonuses, or vulnerabilities in loyalty schemes. These often lack the robust security measures found in other parts of the customer journey.”

The broader challenge for travel companies is how to effectively defend against such a wide range of threats that include account takeover and first-party fraud?

The cost of fraud beyond financial losses

Chargebacks and cancelled bookings remain a visible fraud consequence, but the indirect costs can be equally harmful. Allocating resources to fraud detection tools, staff training and manual transaction reviews puts significant strain on operational budgets.

The most recent LexisNexis® True Cost of Fraud™ Study for the EMEA region reported the actual cost of a fraud loss to a retail business to be upwards of three times the value of the original fraud, resulting from investigating and managing the case.

Another significant consequence occurs when authentic transactions are incorrectly flagged as fraudulent, leading to customer frustration and operational challenges. Tonti elaborated: “If we unfairly block a frequent traveller, they may not only abandon their current booking, but lose trust in our brand, sending them straight into the arms of competitors.”

In an age where social media can instantly amplify a customer complaint to an extensive public audience, this can quickly escalate to reputational damage, too.

Key technologies for fraud mitigation

In response, travel companies are leveraging behavioural biometrics, machine learning and bot detection.

Tonti said: “Behavioural biometrics learns from the typical signals generated when a genuine customer interacts with their device, then compares those to subsequent login events to determine if it’s the genuine customer logging in. This has become indispensable as a means to distinguish between legitimate customers and fraudsters, especially in cases such as international bookings where there’s a lack of other customer information available to make a clear assessment.”

Companies like Destinia are also exploring AI-driven real-time assistance and open-source intelligence (OSINT) tools to enhance fraud detection and resolve false positives. Tonti added: “Technology is our first line of defence, but collaboration across the industry is equally vital.”

Collaboration is key

Fraud in the travel industry is multifaceted – it crosses borders and involves complex stakeholders, such as airlines, online travel agencies, banks and payment platforms. Tackling it requires collective effort.

Tonti reflected on a recent example in which a €16,000 fraudulent booking was intercepted in Dubai. “By leveraging OSINT skills and building connections within the fraud prevention network, we ultimately protected the cardholder from further damage.”

However, Tonti warned that “to truly stay ahead of fraudsters, regulations must evolve alongside technology and networks, such as allowing behavioural biometrics into permissible evidence for contested transactions.”

Addressing first-party fraud

Existing regulations make it hard for companies to challenge cases of customers disputing legitimate transactions. Here, too, advanced technologies can help.

Analysing underlying device behaviour involves comparing current transactions with a user’s typical activity patterns. This can help identify whether the user interaction is genuine or potentially fraudulent.

Tonti added: “Behavioural intelligence is about bringing the hidden to the surface, which not only helps prevent financial losses but can also protect reputation by demonstrating accountability and commitment to fair practices.”

Building trust through customer-centric practices

If not executed with clarity, complex security protocols can lead to cart abandonment and destroy customer trust and loyalty. “Transparency in the checkout process is critical,” Tonti noted. “Customers should never feel confused or intimidated. Clear communication can alleviate fears and reduce the risk of abandoned transactions.”

For businesses operating in a global market, understanding cultural differences in payment expectations is equally important. Tailoring your customer journey, such as adapting 3D Secure and identity verification requirements to be sensitive to regional and cultural norms, ensures customers feel respected and supported.