How to Fight Airline and Travel Agency Chargebacks
The complex and fast-paced world of air travel is an irresistible lure for fraudsters. Keeping flights full requires selling plane tickets through a variety of channels and dealing with fluctuating prices, limited time frames, and many layers of regulations. This is an environment that fraud, identity theft, and black marketeering always finds ways to thrive in. For airlines and travel agencies, combating fraud and chargebacks can be an ongoing headache. How can participants in the air travel industry fight back more effectively against criminal fraudsters and customers who abuse the chargeback process?
Travel fraud comes in many different forms. Some fraudsters take over accounts in order to trade mileage points and other loyalty rewards on the dark web, others use the high transaction volume and frequent cancellations of the travel business to test out stolen card numbers without arousing suspicion, and some really just want to fly somewhere for free.
According to the International Air Transport Association, airline fraud costs airlines and travel agencies more than $800 million per year. While airlines may be able to bear some of these costs, it’s much harder for smaller, independent travel agencies who operate on slender margins to survive under high fraud or chargeback rates. For these merchants, it is extremely important to make use of appropriate fraud prevention methods and fight back against illegitimate chargebacks.
What Kind of Fraud Targets the Air Travel Industry?
One reason fraudsters like to pick on travel agents is because 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, especially for booking sites with stored payment credentials and airlines or hotels with customer loyalty programs. One of the most difficult problems to get a handle on, however, is chargeback-related fraud. That’s because so-called “friendly fraud” can be indistinguishable from true chargeback fraud at first glance, leaving merchants uncertain whether they’re dealing with a salvageable customer service problem or a purposeful scam.
How Can Airlines and Travel Agencies Fight Chargebacks?
“Friendly fraud” refers to situations where a cardholder receives a chargeback that they aren’t really entitled to. For example, they might falsely claim that they did not authorize the charge when in fact they did, or they may say that the merchant is ignoring their emails when in fact they never reached out to the merchant at all. 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.
Communication can resolve issues with the friendly fraudsters who don’t actually intend harm. Chargeback alert services and programs like Visa Merchant Purchase Inquiry 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.
Those not-so-friendly fraudsters who are engaging in deliberate chargeback fraud aren’t as easy to neutralize. There are two reasons why it is very 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 find themselves re-victimized by these fraudsters again and again.
To fight a chargeback, you must represent the charge and provide compelling evidence that proves its validity. When travel agents fight chargebacks, they should submit documentary proof that they validated the cardholder’s identity, that the cardholder authorized the transaction, and that they agreed to your merchant terms and conditions before finalizing the transaction. All agents should be trained to follow and properly document these steps in case a chargeback ever arises.
Many ticketing-related chargebacks can be defeated if you can provide proof that the customer was a passenger on the fight involved. Travel agents may not be able to verify this information, and airlines won’t necessarily know the name of the party involved in the chargeback to be able to connect it to any individual confirmed to have been on the flight, but when you have it to provide, this information may be sufficient to get the chargeback reversed.
Dispute evidence maybe reviewed by various banks or card networks, and some subjective interpretation is involved in their decision-making. Compelling evidence isn’t always enough, and it can be especially difficult to prove that a customer’s identity was verified prior to authorizing a transaction, or that an unknown party used the purchased ticket. Here are some examples of potentially compelling authentication 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.
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.
Fraud detection tools play another important role by intercepting the true fraud attacks that can’t be fought via the chargeback process. Just remember that if your chargeback rates get too high, 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 get it under control.