Scams and Fraud in Travel Industry and How To Prevent Them

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Travel Industry and How To Prevent Them
Back view of a senior lady with a trolley suitcase and a man with a boarding pass

The expansion of technology has given rise to digitalization and moved everything online. Businesses have shifted their presence in the online market to expand and grab more markets. Just like every industry, the travel industry has moved online to make traveling easy and use online document verification for convenience.  

The commercial sector is smoothing out business activities and contacting clients more effectively as a result of technology innovation. In any case, there is always a bad use for everything, and current innovation is no exception. While businesses focus on finding better ways to improve operations, fraudsters employ complex methods to track down their unlawful thought processes. The trend of cyberattacks is on the increase and damaging every sector’s finance and reputation. In the modern world, businesses are not always shielded against scams and fraud, and the travel industry, unfortunately, faces some severe difficulties.

Travel Industry Importance in Global Economy

The Travel Industry is the 10.2% contribution of global GDP. Many countries collect a large part of their revenue through traveling. Their economy is hugely dependent on the visitors coming into their countries. However, fraudulent activities cost 28 billion US dollars in the global economy. The numbers are expected to grow because of an increasing trend in the traveling industry. 

Fraud and Scam in Travel Industry

Every industry has been a victim or a threat of fraud. In the digitalization era, businesses are required to take extreme safety measures to protect themself from becoming a victim. The Travel industry is one of the profitable industries and a lot of people’s financial lives are associated with it. The huge amount associated with it attracts fraudsters to gain monetary rewards out of it. Some of the common frauds are written below.

Payment Fraud

This is the most well-known technique in the travel industry, especially in the hotel sector. Scam travel agencies are causing a lot of problems for hotels. Vacationers are accompanied by fake hotel reservations, and the management has taken account of the costs. If they don’t, they’ll lose a lot of customers and ruin the company’s reputation. 

In addition, fraudsters promise refunds or chargebacks in order to take advantage of the hotel’s free services. Aside from these two types of payment, paying with fake or stolen credit or charge cards is also common in this area.

Money Laundering through Hotel

Money laundering is the activity of hiding illegally obtained assets. The arrangement, layering, and integration are the three stages that launderers go through. Hoteling is perhaps the finest target for fraudsters who want to layer money in multiple places. To avoid dirty money entering the accommodation records, hotel operators should identify laundered money on a regular basis.

To launder money, money launderers employ a variety of identities. As a result, airplane terminals require enhanced security procedures to combat sophisticated money launderers.

Identity Theft

Clients nowadays expect everything to be digitized, and the travel industry is doing everything it can to provide improved exchange methods. In any event, it allows scammers to carry out their evil schemes with greater ease. Advanced registrations allow customers to avoid the issues associated with manual booking and over-the-counter installments. They are no longer required to stop at the gathering to obtain the room keys.

Online application is a powerful tool to better communicate with customers and provide efficient services. However, It allows fraudsters to use fake characters and obtain certifications from other legitimate clients. The gathered personality data is then used for dependability focuses and other benefits, putting the hotel’s executives vulnerable to chargebacks and other frauds.

Prevention of Fraud

Frauds in every industry have cost billions of losses to the global economy. The travel industry is experiencing it a lot because of the popularity of traveling among customers. A high technological advance system is being used by fraudsters to commit crimes. The fraudster’s advanced technology must be put against a high technology system to fight. Following are some of the measures that can prevent fraudulent activities

Identity Verification

To authenticate an end-legitimacy, many web-based services demand identity verification during onboarding. This helps the companies in guaranteeing the identity of legitimate customers and preventing fraud. Verification at the initial level can prevent hackers from committing any terrible crimes.

Know Your Customer (KYC) verification is the process of verifying a person’s identity in order to complete his validation. Online KYC verification is required for organizations that conduct business online. KYC compliance is used by a variety of companies, including banks and financial institutions, to verify customers. The Travel industry must adopt KYC verification services to prevent any fraud that can enter their platform. 

Document Verification

Online traveling platforms that book traveling services online, must verify if the customer is authentic.  It is important to identify if the customer is who he claims to be. One way of identifying is by document verification.

Verification of documents is a common practice at airports, banks, and financial institutes. Organizations ask for government official documents from customers for verification purposes. AI-based algorithms scan the document and verify its originality. The results are given within a minute. 

This exercise makes sure that the customer is real and reduces the involvement of fraud. The documents collected for this exercise depending on the nature of the business. The most common documents collected are ID cards, passports, driving licenses, social security numbers, etc. It is important to know if the order is made by the real customer online by monitoring transactions. Collecting documents can help in identification.  

Face Verification

Face verification is a biometric confirmation technique that combines artificial intelligence and human logic. Face verification is perhaps the most effective way to verify a person’s identification. The use of this AI algorithm will allow fraudsters to be identified before they enter the system.

While a client is signing in, developers can add facial verification confirmation to the application. Because of the locked screens on cell phones, people are well aware of this verification, and it is widely used. Making it essential while making an order can protect the hotels from any fraudulent activities.

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