Travel agencies – whether large chains or smaller independent agents – are at high risk of chargebacks and a ‘friendly fraud’ mentality that encourages buyers to issue dishonest chargeback disputes.
Card Not Present (CNP) fraud is hitting the travel industry the hardest, accounting for 70% of gross fraud losses. The UK has been worst hit by card fraud, with the country consistently the highest-ranked in Europe when it comes to losses from fraud, but with a booming cybercrime scene in India, it is set to surpass the UK this year.
What some class as a ‘friendly’ chargeback scheme is actually hitting travel agencies hard. Not just agents but those across the industry such as airlines, car rental companies, hotels, tour operators and more.
Most travel agencies especially live off incredibly tight and slim margins, usually sales commission from travel franchises. With friendly fraud on the rise, how can travel agencies and others in the travel sector deal with chargeback disputes and keep hold of their profits?
A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.
Could your agency be targeted by a chargeback scheme?
Chargebacks are hugely beneficial to people when used honestly and in the right way, but there’s little doubt that the system can also be open to abuse.
So, what are the biggest problems the travel industry is facing when it comes to fraudulent chargebacks?
- Dates between payment and travel: Typically, people book holidays months into the future and may change their mind nearer the time, resulting in a chargeback request from the operator
- Lost/stolen cards: People may make a chargeback request on the basis that their travel arrangements have been paid for from a lost or stolen credit card
- Poor online security: As mentioned, CNP fraud is one of the biggest problems hitting the industry, with people easily able to bypass certain software and systems with fraudulent payment information
- Poor last-minute protocols: The highest rates of fraud come from last-minute flights and deals, with some agencies and operators not having the best systems in place to check for fraud in such a short window of time
- Not having chargeback insurance: Agencies can be at risk of being hit from a chargeback request when something beyond their control (and not their responsibility) happens, such as a tour operator going bust
Be on the front foot when it comes to travel chargebacks
The diversity of the services offered by the travel industry means that most companies working within it can create a bespoke system to combat the types of fraud they face that’s most relevant to how they operate.
Online operators, for example, can reduce chargeback requests by implementing up-to-date software and algorithms specifically designed to combat friendly fraud and constantly adapts to new strategies that card fraudsters may adopt.
On a more basic level, improving your customer service skills and clearly outlining your terms of service can not only help to resolve payment conflicts more quickly, but also reduce the amount of chargeback requests you may receive.
A combination of company policy, improving customer relationships, implementing the right technology and more are the best ways to combat travel fraud and reduce any potential chargeback requests travel providers may be susceptible to.
Do you operate in the travel industry and want to reduce the frequency of fraudulent chargebacks you receive? Contact Fibonatix to find out more.
A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read ‘What is friendly fraud and how do chargebacks work?’ to learn more.