Airline Ticket Fraud and How Big Companies Avoid It

This is a guest article by Kelly Davidson from Merchant Savvy

Fraud affects all industries. The airline industry is no different.

Over the past two decades, the airline industry — like many others — has become increasingly digital. Last year, according to Amadeus research, almost 40 percent of all tickets were sold online. This makes the industry a perfect target for would-be frauds. In the last ten years, the situation has gotten worse than ever. Between 2011 and 2020 tripled from $9.84 Billion in 2011 to $32.39 in 2020.

If you’ve read an AltexSoft article on revenue integrity in airlines, you know that ticket manipulations are one of the main sources of revenue leakage. Today, we’re going to see how ticket fraud affects airline companies, and find out:

  • What caused the airline industry to go digital
  • How online criminals commit fraud most often
  • What fraudsters do to obtain tickets and funds
  • How airline security loopholes are caused
  • What online companies can do to prevent fraud

First, we need to discuss…

How Ticket Sales Became More Digital

With more reliable booking systems and superior data analytics, airlines have managed to make their service more personalized. Companies that are more experience-orientated are reaping the rewards, with more than 200 percent increase in revenue compared to competitors.

Different customers receive different offers at different intervals. The airline companies also invested in cleaner, more user-friendly interfaces. These efforts are paying off. By the end of next year, online booking is expected to account for more than half of all ticket bookings.

But everything has a price. With travel agents playing smaller and smaller roles in bookings, airlines are becoming an easy target for fraudsters. Outdated security systems and a decade old IT infrastructure aren’t adequate for fighting cybercriminals.

Some companies even have trouble monitoring their own employees, due to the size of their organization. And when that’s the case, looking out for outside threats is next to impossible.

All of this brings us to the following question.

Common Types of Airplane Ticket Fraud

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Fake Payment Information

Stealing Loyalty Miles

Phishing Employee Accounts

Employee Fraud

Fake Travel Agencies

Customer Account Hacks

POS Machines

In-Flight Fraud

How Fraudsters Obtain Tickets and Funds

By selling stolen goods, credit cards, and personal information. This also happens often in the airline industry. Here are a few ways fraudsters steal tickets, funds, and data.

Card-Not-Present Fraud

The transaction is paid with stolen credit card information. They do this when they know that there are no staff members in the office to manually check any suspicious activities. Instead, everything is sent to less interested and experienced call center operators.

Loyalty Fraud

Once a fraudster gains access to an account, they will purchase tickets and resell them on the black market, book flights for themselves, or redeem stolen miles in another place. Some criminals use loyalty points to book hotels, rent out cars, and even buy luxury items.

Triangulation Schemes

Instantly, the fraudster goes and books a real flight using fake payment information. The tickets to this flight are then sold to the customer with an incredible discount. This is what is called a triangulation scheme, since there are three potential victims: the passenger, airline, and possibly an intermediary travel agent.

What Causes Security Loopholes

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Let’s see how security loopholes in the airline industry come to being in the first place.

Lack of Security from the Suppliers

Poor Consumer Security Habits

Overall Increase in Digital Crime

How to Secure Airline Transactions

Here are a few ways you can secure airline transactions and keep fraudsters away.

Introduce 2-Factor Authentication

Integrate a Booking Platform

Enforce a Series of Security Checks

Incident Management Process

Start Using Fraud Detection

In Conclusion

Airline companies need to educate employees and customers about potential scams. Implementing the right fraud prevention tools is a must. They also need an architecture that will help them prevent fraud, fight fraudsters, and catch them in case something does happen.

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Kelly Davidson is the editor, data whiz and main PR gal at Merchant Savvy, a comparison site that reviews and rates merchant account providers, ecommerce platforms and small business software.

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Originally published at AltexSoft tech blog “Airline Ticket Fraud and How Big Companies Avoid It

Being a Technology & Solution Consulting company, AltexSoft co-builds technology products to help companies accelerate growth.