How to Identify and Prevent Online Travel Fraud: A Guide for Booking Websites

Online travel fraud is an escalating issue, posing significant risks to travel businesses. As travel companies continue to handle high-value transactions and personal data online, they increasingly become targets for fraud. The appearance of synthetic identities and the rise of identity theft facilitated different types of scams, including chargebacks, account takeovers, and other tactics aimed at exploiting booking systems. To counter these risks, travel companies need a more comprehensive method of interpreting alternative data to increase the effectiveness of fraud detection strategies.

What is online travel fraud, and why does it happen?

Online travel fraud encompasses various deceptive tactics used by fraudsters to exploit vulnerabilities in travel booking systems. This form of fraud has become a substantial threat, impacting travel companies worldwide and resulting in considerable financial and reputational damage. The frequency of fraud in the travel sector continues to rise, driven by both the high value of travel transactions and the accessibility of customer data online.

Key factors contributing to online travel fraud

Several elements make the travel industry particularly vulnerable to fraud. High-value transactions are a key factor; hotel bookings, flights, and vacation packages all involve significant payments, making them appealing to scammers. Additionally, customer data, such as credit card information, contact details, and travel preferences, can be readily accessed and exploited if security measures aren’t robust enough.

Beyond financial appeal, the online nature of most transactions makes it challenging for travel businesses to verify identities in real-time. Fraudsters exploit these limitations by using stolen credentials, fake accounts, and proxy tools to disguise their activity, making detection difficult.

Fraud impact on online travel

Research reveals the extent of online travel fraud, with billions of dollars lost annually across the industry. Data compromises were up 14% YOY in Q1 2024 and phishing amounts to the single most common form of cybercrime with approximately 3.4 billion emails being sent every day (source: Identity Theft Resource Centre). Also, according to Booking.com, the well-known online travel website has seen a 500-900% rise in travel scams during 2023/’24. The online travel site claims this is largely due to AI.

Reports indicate that fraud in travel-related purchases and bookings is consistently among the top threats in e-commerce, costing businesses not only in direct losses but also in chargeback fees, operational disruption, and diminished customer trust. As this trend persists, travel companies need a proactive, layered approach to safeguard their platforms against fraud.

What are the most common types of online travel fraud?

Online travel fraud manifests in numerous ways, each posing unique challenges for booking websites and travel companies. Here are some of the most prevalent forms of travel fraud:

Chargeback fraud
Chargeback fraud occurs when a customer disputes a legitimate transaction with their credit card provider after receiving services, such as flights or accommodations. Fraudsters may argue that they never made the booking or claim unauthorized use of their card, aiming to reverse the payment. For travel companies, this can lead to both revenue losses and increased chargeback fees. This type of fraud is particularly costly, as it often involves financial loss after services have already been rendered, leaving businesses without recourse to recover funds.

Loyalty program fraud
Loyalty program fraud exploits rewards systems like frequent flyer miles or hotel points, making it a lucrative target for fraudsters in the online travel industry. A common method involves Account Takeovers (ATO), where stolen credentials grant unauthorized access to loyalty accounts. Fraudsters redeem points for flights, accommodations, or upgrades, often reselling these rewards. Additionally, fake accounts and synthetic identities are used to exploit sign-up bonuses and referral programs, inflating costs for travel companies. Strengthening authentication and monitoring activity in real-time are critical to protecting customers and businesses from these sophisticated attacks.

Credit card fraud
Credit card fraud is one of the most common tactics in travel fraud, where scammers use stolen credit card information to book flights, accommodations, or rental cars. These fraudulent bookings may be resold at a discount or used before the cardholder becomes aware and reports the unauthorized transaction. Not only does this type of fraud lead to financial losses for the travel company, but it also increases the risk of chargebacks and additional fees.

Refund fraud
In refund fraud, scammers exploit refund policies by purchasing travel services and then submitting bogus refund claims. They may use stolen cards or compromised accounts to make a booking, then attempt to cancel and request a refund, often claiming service issues or other fabricated reasons. Refund fraud can be challenging to detect, especially when companies aim to provide flexible and customer-friendly refund policies. To discover more on this subject, read our detailed blog post on refund and return fraud. 

Bot attacks
Bot attacks involve automated scripts that target travel websites to scrape data, create fake accounts, or hoard bookings. These bots are often programmed to monitor flight or accommodation prices, fill inventory, or reserving spots without genuine intent to complete transactions. For travel companies, bot attacks result in skewed data analytics, lost revenue from blocked inventory, and strain on their booking systems, which impacts legitimate customers and hinders business operations.

How to spot travel fraud?

Detecting travel fraud requires a combination of advanced fraud detection tools and a keen understanding of suspicious activity indicators. User behavior can be analyzed and interpreted based on account details. Travel companies can identify potential fraud before it escalates. Here are some effective methods for spotting travel fraud:

• Behavioral analysis: behavioral analysis focuses on the actions and patterns of users, revealing inconsistencies or unusual behavior that could indicate fraud.
• Unusual booking patterns: patterns like multiple bookings from the same IP address or email, especially when associated with different names or payment methods, can raise red flags. For example, if several bookings are made within a short period using the same account, it may suggest bot activity or fraudulent intent.
• Odd travel routes: illogical travel routes or last-minute changes to booking destinations can also signal fraudulent activity. For instance, bookings with improbable itineraries or frequent re-routing of travel plans may indicate attempts to exploit the system, especially if paired with high-value bookings.

Verifying user details

Confirming user details is crucial for identifying potential fraud early. This is accomplished by ross-checking information provided by customers, travel companies can spot inconsistencies that might signal suspicious activity.

• Incomplete or fake contact information: fraudulent accounts often contain nonsensical or incomplete contact details. Email addresses that appear random or temporary, and phone numbers that don’t connect, are common indicators of fake accounts used to commit fraud.
• Unusual email domains: temporary or disposable email domains (e.g., @mailinator.com) can signal that a user may lack legitimate intentions. While some customers may use these emails for convenience, they’re also popular among fraudsters looking to avoid detection.
• High-risk geolocations: certain regions are associated with higher instances of online fraud, and bookings originating from these areas may require closer scrutiny. Monitoring high-risk regions can help travel companies better manage risk without disrupting legitimate customer transactions.
• VPN or proxy usage: fraudsters often mask their true locations using VPNs or proxies to bypass location-based security measures. While some customers legitimately use VPNs, consistent detection of masked IP addresses can indicate a user attempting to hide their identity, suggesting potential fraud.

How can Trustfull support the detection and prevention of Online Travel Fraud?

Travel fraud is a persistent challenge, but with the right technology, companies can better protect their systems and customers from fraudsters. Trustfull’s identity intelligence platform provides essential tools for detecting fraudulent activities, empowering travel businesses to enhance their fraud prevention strategies. Here’s this can help:

User verification 
Employing user verification via Trusfull means companies can rely on aspects like methodical interpretation of data breach history. 

Name matching
Beyond data breach history it’s imperative to utilize features such as Phone-to-Name Matching, which uses the full potential of open-source intelligence (OSINT) to reveal the name associated with any phone number globally.

Risk scoring
Trustfull’s account verification capabilities, travel companies can confirm user identities based on their digital footprints. Using a risk-scoring system, Trustfull assesses each user’s trustworthiness by analyzing patterns in their digital activity. This method helps identify high-risk users who may attempt fraud, such as through credit card misuse or bot attacks, and ensures that only verified users are granted access to booking and payment features. In addition, organizations can unlock the application of predefined fraud rules, and assign positive or negative scores to various aspects of the data. Calculation and interpretation of the final risk score are also included - the system creates a detailed explanation of the reasoning behind the score.  

Trustfull helping online booking and travel websites

Online booking platforms such as Lastminute.com have been effectively leveraging Trustfull’s digital identity intelligence solutions to detect suspicious behavior. The online travel website uses the platform to detect synthetic identities via potential fraud signals, such as the use of disposable emails or VPNs, while cross-referencing user behavior to spot anomalies. 

The rise of online travel fraud presents serious risks to the travel industry, impacting both financial performance and customer trust. With fraud tactics evolving and becoming increasingly sophisticated, travel companies need to adopt robust fraud detection measures. Addressing common fraud types like chargeback fraud, account takeovers, and bot attacks, along with spotting telltale signs through behavioral analysis and user verification, can substantially reduce exposure to fraudulent activity.

Trustfull offers a comprehensive solution, equipping travel businesses with identity intelligence, risk scoring, phone number analysis, email address analysis, and user/account verification to successfully counter fraud. 

Ready to protect your travel business from fraud? Discover how Trustfull’s identity intelligence platform can provide the security and peace of mind your company needs.