How to Fight Airline and Travel Agency Chargebacks

Table of Contents

1. What Kind of Fraud Targets the Air Travel Industry?
2. What Is Friendly Fraud?
3. How Can Airlines and Travel Agencies Fight Chargebacks?
4. The Benefits of Professional Chargeback Management

Airlines and travel agencies are in an unfortunate situation when it comes to chargebacks. They're frequent targets of payment fraud, which means they face a lot of legitimate chargebacks from fraud attempts that sneak through any filters they have in place. They're also frequent targets of friendly fraud from dissatisfied customers that are frustrated with their inability to get a refund when they miss their flight or need to cancel.

This double-whammy makes chargeback management especially important. If merchants in the travel industry don't take effective steps to fight and prevent chargebacks, they can lose a significant amount of revenue.

Both airlines and online travel agencies operate on thin margins, making high fraud and chargeback rates even more impactful. For these merchants, it is extremely important to make use of appropriate fraud prevention methods and fight back against illegitimate chargebacks.

One reason fraudsters like to pick on travel agencies in particular is that they function as intermediaries between the customer and the airline, which can create ambiguities and confusion that the fraudsters will work to exploit.

The fraudster may assume that a small travel agency won’t have the same anti-fraud tools or screening procedures as a big airline, so they try to get travel agents to authorize transactions on a stolen card by impersonating the cardholder.

Online, this can be quite easy to do, especially if the travel agent isn’t following strict procedures for verifying customer identities before processing transactions on their behalf. When the card’s real owner disputes the purchase later, the travel agent’s agreements with the airline may leave them on the hook for the chargeback.

Account takeover is a pervasive threat as well, since frequent flyers often store their payment credentials for future use. If a fraudster gets access to the customer's username and password, they can use those stored credentials to make purchases that can be harder to identify as fraudulent.

Loyalty program fraud is far more common in air travel than in most other industries, since frequent-flyer miles are perhaps the most well-known customer rewards system in the world. Fraudsters will often seek to gain access to a customer's account and use their miles to book a flight, avoiding the more stringent checks on credit card purchases.

One of the most difficult problems to get a handle on, however, is friendly fraud. That's because it can often be indistinguishable from true fraud at first glance, leaving merchants uncertain whether they’re dealing with customers who are trying to abuse the system or those who are victims of fraud.

Sometimes cardholders do this because they’re confused, either about the transaction itself or about how the chargeback process is supposed to work, but sometimes they do it knowing that they’re defrauding the merchant. In many cases, the customer understood the policies they were agreeing to when they agreed to them, but believe that their unique circumstances should entitle them to an exception.

Communication and excellent customer service can usually resolve issues with customers who don't mean any harm. On the other hand, long wait times, limited availability, or unhelpful customer service representatives can often turn a simple misunderstanding into a chargeback.

Chargeback alert services and programs like Order Insight can provide merchants with a window of opportunity to resolve customer complaints before the chargeback takes effect, either by giving them a refund or by clearing up any misconceptions that prompted the dispute.

They can also deter some cases of intentional chargeback fraud by revealing that the merchant is in communication with the bank and has more information than the fraudster might realize.

Unfortunately, those not-so-friendly fraudsters who are engaging in deliberate chargeback fraud aren’t always so easy to neutralize. There are two reasons why it's important to fight these chargebacks: First, because with the right evidence you stand a good chance of winning them and recovering your funds. Second, because merchants who don’t fight back may find themselves targeted by the same fraudster again, or may gain a reputation in these circles for being an easy mark.

Airline transactions are governed by distinct chargeback standards because they involve scheduled services rather than tangible goods. As a result, disputes center on whether the airline made the contracted service available, not simply whether something was “delivered.” If a flight operated as scheduled and the passenger had the opportunity to travel, this alone can be sufficient to challenge a “services not received” claim—even if the cardholder did not board the flight.

For example, airlines can validate fulfillment by showing that the flight departed as scheduled, that a boarding pass was issued or scanned, or that check-in activity occurred. Visa explicitly lists indicators such as loyalty program accrual or ancillary purchases (e.g., baggage fees or seat upgrades) as valid proof that the service was consumed.

Airline disputes also frequently involve transactions where the purchaser and traveler may not be the same person. In these cases, it is critical to demonstrate a clear link between the cardholder and the passenger. This can be achieved through shared contact details, booking records, or evidence of prior related transactions. Networks generally accept that an authorized third party can benefit from the ticket, provided that connection is well documented.

Another key distinction is how partial service is handled. If only part of a trip was completed—such as one leg of a journey—any resulting chargeback must reflect only the unused portion. This prorated approach ensures that merchants are not penalized for services that were legitimately delivered.

In general, the most important points are to prove that the cardholder authorized the transaction, agreed to the terms and conditions, and that the flight they paid for was made available to them. 

Travel agencies may not always have this information, but they may be able to work with airlines to set up systems for accessing important documentation for representment.

There is always some subjective interpretation involved in the issuing bank's decision-making. Compelling evidence isn’t always enough, and it can be difficult to prove that a customer’s identity was verified prior to authorizing a transaction or that the cardholder used the purchased ticket. Here are some other examples of potential evidence for air travel disputes:

• Emails between the agency and the customer
• Photographs, emails, or social media showing a relationship between the cardholder and the passenger
• Copies of the cardholder’s signature
• Copies of the cardholder’s passport, driver’s license, or other identification
• Photographs or social media showing that the cardholder was on board the flight or at its destination
• Receipts for related or previous transactions

If you can compile multiple elements of this list into the evidence you submit, you stand a better chance of beating the chargeback.

The Benefits of Professional Chargeback Management

The truth is that fighting chargebacks is a difficult job for any company. Since chargebacks are decided by issuing banks, who vary in their standards of evidence and have some incentive to err on the side of the cardholder, merchants can often be blindsided by decisions to uphold chargebacks that they thought were a sure win.

Chargeback specialists are experts at preventing and fighting chargebacks. Many of these services use advanced tools like AI and analytics to increase efficiency, improve revenue recovery, and help their clients identify the root causes of their chargebacks in order to prevent future ones.

They also have extensive data on how the major issuing banks decide chargeback cases, enabling them to be far more successful in fighting chargebacks than most merchants.

Doing business in the air travel industry means keeping track of a lot of moving parts, and dealing with the chargebacks and fraud schemes this industry generates isn’t any less hectic. Effective chargeback prevention starts at the policy level, with the procedures you put in place to validate customer identities and document your process so that you can make the most compelling case for yourself when the inevitable friendly fraud chargebacks hit you.

Just remember that there’s always help to be found—the right chargeback management firm can analyze your situation and help you put together the right strategy to maximize ROI for your business.