In 2021, travel revenue was low — less than half of pre-Covid levels. But a wave of “revenge travel” in 2022 turned the tide, with customers determined to make up for lost time. Almost 70 percent of U.S. travelers said they would take their 2022 summer vacations “no matter what.”
This surge in travel demand caught many merchants off-guard, causing huge disruptions that could last until the end of 2023. Staffing shortages, delays and cancellations have become standard, and travel chaos is hitting headlines. But what about the unseen challenges? How are merchants coping with the swell in fraud?
Online Payment Fraud Takes Off
Online payment fraud isn’t new, but it is rising for half of travel merchants. In fact, around 20 percent of travel accommodation providers said they have seen a significant increase in online fraud activity.
Online travel booking has never been more popular. Over 80 percent of U.S. adults book trips online. But greater online traffic means greater fraud risk. According to the International Air Travel Association, airline fraud losses total at least $1 billion on average per year. In an unprecedented year for travel, these estimates could be conservative.
Friendly fraud rises amid huge dispute volumes.
In the wake of the Covid-19 outbreak, travel plans were inevitably canceled across the world. But aside from early 2020 flight groundings, 2022 is set to be the worst year on record for cancelations.
Cancelations have caused disputes to rise to unmanageable levels. And if disputes go up, so does friendly fraud. Now, 60 percent of travel merchants recognize friendly fraud as a top risk. Customers and fraudsters try their luck when they know dispute teams are overwhelmed, so they’re more likely to get away with it. This behavior is rife. Especially as customers are determined to go away amid times of financial uncertainty.
Refund abuse is rife.
Refund abuse is rising for 56 percent of travel merchants. If customers have a bad travel experience (which is increasingly likely when merchants are under stress), they may feel entitled to compensation even when they aren’t. They’ll take action into their own hands and make false refund claims or find loopholes in your policies.
Hackers love travel accounts.
Around 46 percent of online travel merchants say account takeover has risen. Transport ticketing merchants are a hot target, as fraudsters can steal valuable loyalty points. In March 2021, more than two million travelers enrolled in frequent flier programs had their data hacked and several leading airlines faced catastrophic data breaches.
But fraud prevention isn’t a priority for travel merchants.
Not only do fraudsters love to target travel merchants, but many have left the goal wide open. Fraud prevention just isn’t an industry priority in 2022. Around 56 percent of travel merchants haven’t seen awareness of fraud increase since the pandemic. And only 19 percent say fraud prevention has become more of a focus. It makes sense, you’ve got a lot to deal with! But it does leave you vulnerable.
Editor’s Note: These key findings are drawn from Ravelin’s 2022 Travel & Hospitality Report.
Grace Proctor is senior content writer at Ravelin. She has a first-class degree in English and experience freelance writing for a variety of industries, from mental health in the workplace to fashion photography. At Ravelin, Grace produces educational articles, podcasts and guides on global fraud and payments trends, working with multinational ecommerce merchants like Just Eat.