Why Airlines Need Fraud Protection More Than Ever Right Now
Explore common types of fraud in the airline industry and how airlines can prevent instances of fraud.
Today, airline ticketing fraud is not just a problem for the airline itself, but it has a negative effect on the customers.
The airline industry is global and connects across borders making it unlike other industries and a favorite target for fraudsters.
The International Air Transport Association (IATA) estimates that payment fraud costs the airlines industry about $858 million per year, of which $639 million is borne by airlines.1
Fraudsters target airlines from the booking process to check-in and even boarding. Throughout the process, fraudsters will use complex schemes to manipulate processes, airline employees, third-party agents, and in some cases even government officials.
With this being the case, fraudulent tickets obtained by criminals are often used to commit serious crimes like terrorism, illegal immigration, human trafficking, and drug trafficking.
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Fraudulent use of compromised payment details is the most common type of airline fraud.
In June 2016, police organizations, the government, and airline companies cracked down on 140 fraudsters in a two-day effort. Fraudsters frequently use stolen credit card numbers to obtain airline tickets through the internet. Airlines have been taking steps to combat payment fraud over the last decade to make this more difficult.
Fraudsters have found stealing loyalty miles to obtain tickets as a path of least resistance. In the U.S. alone, $48 billion in loyalty points are collected every year.
There are entire black markets dedicated to airline loyalty miles. Loyalty miles are so popular with fraudsters because loyalty points lack the security and safety measures that are in place for payments. The criminal just needs access to the victim’s account. Once the fraudster obtains the account information, they are able to book tickets bypassing the security mechanisms in place for card payments – committing an account takeover.
Fraudsters target airline employees to gain access to airline systems.
There is no limit to what a fraudster will do. In a recent Phishing attack on airline company employees, $2 million worth of flight tickets were stolen by a fraudster.2 The criminal sent phishing emails that targeted airline employees who had access to the Global Distribution System (GDS). This attack allowed the criminals access to systems used by the airline to carry out various operations, including the booking of tickets. This criminal was eventually caught when trying to travel internationally.
Better security begins with the airline.
Airlines unintentionally are an easy target for fraudsters. Airlines often rely on outdated security for their IT systems and fraud solution that are inadequate for the scale and complexity of their business. Additionally, the size of their organizations makes it difficult to monitor employees and vendors that interact with their booking platform.
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Collecting data from the first point of contact is the key to preventing airline fraud.
Airline fraud is a global phenomenon and airlines need to stay ahead of hackers. Every airline transaction done online has a story, a consumer journey that can be tracked to reveal deep insights. Real-time data analytics is the key to preventing airline fraud. From blocking certain tickets to removing user accounts, airlines need to be able to respond in a matter of minutes at most.
The best way airlines can protect their customers is by using modern fraud protection solutions that can accurately identify which transactions are legitimate and which are fraudulent.
Precognitive’s platform builds a deep understanding of each customer which can detect suspicious activity from the first interaction with the consumer and prevent risky transactions in real-time.
In order for the fraud prevention team to focus on the true criminals, airlines need to accurately separate legitimate customers from fraudsters. Combining device intelligence, advanced behavioral analytics, and a real-time decision engine to detect and prevent fraud, Precognitive can weed out fraud from an airline’s business and conserve real customers.
Airline fraud has real consequences on everyone involved. The most cost-effective way for airlines to decrease fraud is to partner with fraud protection providers that understand the space and the digital infrastructure that powers their business.