Airlines Reduce Online Ticketing Fraud

By John Wagley

Airlines are making progress in reducing losses from online ticketing fraud, according to a report from Cybersource, a payment processing and security subsidiary of Visa.

Airlines lost $1.4 billion to online fraud in 2010, down from $1.7 billion in 2008, a 31 percent decline, according to the report. Reasons for the reduction likely stem from the use of more automated fraud detection tools as well as more experience with online booking, according to Cybersource.

Airlines now use 7.3 automated tools on average, compared with 5.8 in 2008. Perhaps unsurprisingly, the study also found that airlines with fewer than three years’ online ticketing experience incur fraud losses that are three times greater than airlines with 10 or more years’ experience.

The most commonly used tools include Card Verification Numbers, negative lists, and technology that can geolocate computer Internet Protocol addresses, according to the study. These are followed by Verified by Visa and MasterCard Secure Code authentication processes. Shared negative lists are also becoming more popular among airlines, according to Cybersource.

In addition to direct revenue loss from fraud, other costs include the rejection of valid bookings, staffing of manual review teams, and the administration of fraud claims, according to the study. Airlines need to carefully manage their fraud processes to arrive at the best financial outcome, the report states. Airlines should take an “end to end view” of their fraud processes and work to “continually fine tune” them.

♦ Photo by shyb/Flickr


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