Michael Reitblat, CEO and co-founder of Forter, examines the challenge of providing friction-free, effective fraud prevention while, at the same time, championing a seamless customer experience.
Fraud on the rise
Criminals seeking to defraud businesses are increasingly sophisticated, and the travel industry is especially vulnerable. Land travel and accommodation providers such as hoteliers, car rental companies, and train service companies saw a 19% spike in attacks from 2017 to 2018.
This could be explained by looking at the correlation between the level of attacks experienced by travel merchants and the exposure of traveller credentials through data breaches. Recent data breaches such as the one experienced by Starwood, a Marriott subsidiary, compromised 500 million guest records, dramatically increasing the volume of traveller credentials available to bad actors.
Travel providers are being squeezed by the need to meet customer expectations with personalised service and seamless transactions, while simultaneously fighting sophisticated forms of fraud that exploit the customer journey. Efforts to meet customers’ rising expectations often are the very thing exposing travel providers to greater risks.
Proof of identity
By removing barriers to seamless customer journeys, such as asking for proof of identity, travel providers are susceptible to a range of different fraud attacks. One example is account takeover (ATO) – the practice of~unlawfully gaining access to exploit a user’s online account in a variety of ways, including to make purchases, access personal details, change account details or steal loyalty points. The number of ATO attacks increased by 45% between 2016 and 2018, signalling a significant threat.
Advance payments for online bookings
Being able to pay for travel or accommodation online is a convenient staple of the industry. However, highly sophisticated forms of fraud have emerged in response to this trend, including fake travel agents imitating known brands to dupe consumers into parting with their cash. Real travel agents then face the possibility of reputational damages from vocal, dissatisfied customers under the impression they’ve paid for a service they have not received.
Loyalty programmes
Businesses increasingly encourage continued engagement with customers through loyalty programmes, wherein points or vouchers are allocated for items purchased. These programmes offer a soft attack point for fraudsters because customers are less likely to closely monitor the points accrued in their loyalty programmes than they would for funds in their personal bank accounts.
Putting the customer first
When it comes to fraud prevention, travel providers must consider the risk of deterring customers with over-zealous solutions, which create cumbersome purchase journeys. This is particularly true for travel -more so than other areas of e-commerce – because consumers often buy multiple tickets, and adjust itineraries in real time, leaving little tolerance for delays or unnecessary friction.
So how can travel providers put customers first while fighting fraud?
Automating the fraud prevention process
Human intervention in the form of manual reviews increases the likelihood of errors, takes extra time, and most importantly introduces friction to the customer journey. By automating the process, travel providers can cater to scale and speed, recognising the frustration a sluggish purchase journey can cause for potential customers, and that instant gratification is the new norm to build customer loyalty.
Monitoring for fraud throughout the customer journey
By analysing behaviour throughout the whole customer journey, businesses can intervene to stop fraudulent transactions early. Moving the emphasis away from the checkout stage will speed up the process for the vast majority of ‘good’ customers who pose a limited risk. To do this, businesses need to have the technology in place to gather data and develop a holistic picture of individual customers. This will help to minimise the number of users who abandon a shopping cart at the online checkout stage – according to a Barclaycard study, almost half of UK consumers (41%) had ‘abandoned a transaction at a virtual check out’ in the previous twelve months.
The best of both worlds
Statistics showing the increasing number of fraud attacks and their growing level of sophistication should spur travel providers into action but their response must not compromise customer experience. In fact, travel providers with proactive fraud strategies in place can achieve the best of both worlds: frictionless customer journeys and strong and effective fraud defences.
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