Fraud schemes are rampant in the travel industry.

Airlines, in particular, are constantly battling fake ticket purchases and even point scams, while individual travelers must be wary of fraudulent travel sites.

Fraud in the airline industry

The airline industry alone is estimated to lose between $2.4 and $4.8 billion to credit card fraud each year. Because of this, according to industry reports, 8% to 25% of valid customer orders are rejected due to fears of fraudulent activity.

There are also additional manual checks in place throughout booking processes to try to filter out these fraudsters. Learn how we can help you save labor costs by implementing automated fraud detection services for preventing OTA fraud.

The Industry Fraud Prevention (IFP) project was launched by the IATA (International Air Transport Association) in 2016. Its mission is to better understand and prevent travel fraud, and it’s essential. The more fraud that occurs, the more prices increase for legitimate customers paying for their travel services.

Common travel fraud schemes

To boost protection against fraud, it helps to have a foundation of knowledge about common fraud schemes. Here are a few to get you started.

Fake travel agents. Fake travel agents run their scheme via online groups or fake travel agencies. Using fake credentials, the fraudsters place holds on tickets or purchase them, and then sell them to unsuspecting travelers. By the time the travelers find out their airfare is fraudulent, the ticketing agency is no longer able to be found. The worst part is that the innocent traveler is now stuck with useless tickets and a lost vacation.

Refund fraud. Refund fraud happens when the fraudster uses stolen credit card information to purchase refundable airline tickets. Then, they proceed to cancel the refundable tickets and cash in on the refund.

Last-minute buyer fraud. Last-minute buyer fraud occurs when the fraudster purchases an airline ticket within 24 to 48 hours of departure. The short purchase window prevents the airline from having sufficient time to investigate potential fraud. If the flight purchase isn’t deemed fraudulent until after the traveler has checked in, the ticket cannot be canceled. Similarly, same-day hotel bookings are up to 4.3 times more likely to be fraudulent than those booked further in advance.

Frequent flyer program fraud. The individual accounts that users create with their airlines are relatively easy for fraudsters to hack, so they can simply log in and “steal” miles to use for themselves. Additionally, some travel agents are actually using the system to steal miles from customers, telling them their travel purchase isn’t eligible and then keeping the reward miles for their own use. Phishing emails are also used to get frequent flyers to willingly divulge their information directly to the hackers.

Holiday fraud. The frequency of fraud increases during the holidays due to increased customer activity and the fraudsters’ ability to take advantage of the vulnerability created by online sellers’ holiday traffic.

These are just a few examples of travel fraud happening today. New fraud schemes are always emerging, so it’s important for online agencies to stay informed about changes in order to protect themselves and their customers.

You may also want to read more about the top 4 OTA fraud threats.

The key to preventing fraud is to understand it. Here at, we work with the travel and hospitality industries to help you do just that. You may enjoy downloading our case study, in which we reduced fraud by 30% in only 90 days for a multibillion-dollar online travel agency.

Let’s see how we can help you! Contact us today for a free demo.