It's crunch time for credit fraud

It is an indication of how serious a problem fraud has become to the African travel trade that it is now an almost permanent topic at conferences where airlines and travel professionals gather.
The problem has become so great that some airlines have started to take electronic ticketing systems off-line, forcing prospective passengers to go back to the traditional method of travel agents to book journeys, said one specialist in the field.
“It’s standard credit card fraud,” said Ciaran Wilson, sales and account director for Middle East and Africa of Cellpoint Mobile, which provides digital payment solutions.
Credit cards are stolen or cloned, he explained. The thieves or fraudsters buy an airline ticket with the card, then sell it on at cut-price rates to someone else, who uses it to fly. By the time the charge for the ticket has gone through the payment system and is discovered to be fraudulent, the passenger has made his trip and is untraceable, while the airline never gets paid for the trip.
With most airlines existing on slim profit margins, losing income like this is a significant problem.
The situation is particularly serious in certain countries such as Nigeria and Morocco, said Wilson. Some carriers, particularly smaller ones, were either closing down online sales channels, or restricting them or banning online ticket purchases for certain particularly badly affected routes.
The International Air Transport Association (IATA) says that, while it cannot give specific examples, “We are aware of situations in which airlines have had to temporarily close some of their online channels (or call centre sales) because of the volume of fraud attacks.”
Anca Dolocan, IATA’s portfolio manager, card & fraud services, added: “No sooner does an airline manage to disrupt a fraud attempt then the fraudsters are at it again with a new method.
“It is also sometimes expensive for airlines to have the latest fraud prevention tools in place. Therefore, it can happen that they choose to suspend some sales channels while revamping their fraud prevention systems or training their call centre staff. However, these are very rare circumstances and also very specific to certain ‘fraud-hot’ destinations.
“It is an enormous challenge to be constantly under attack from fraudsters,” Dolocan continued. “We often say that fraud has no boundaries. All airlines are hit by the same fraudsters. However, there are some locations more exposed than others in terms of fraud.
“In general, ‘card not present’ fraud remains one of the top trends and the reasons are obvious. But there are many more types of fraud out there and each one of them is equally important for our members.”
Airlines often have teams that try to claw back money from banks after frauds are discovered, but this involves further costs in time and money.
As a result, many African airlines are turning to additional forms of payment (AFPs) such as ‘mobile wallets’ like ApplePay or local equivalents, Wilson said. These tend to have higher levels of security, such as biometric identification, making it more difficult for fraudsters. They also have the advantage for airlines of having lower commission fees – typically half of the 2-3% charged by traditional credit cards.
Cellpoint Mobile gets involved as a technology partner: “We have a payment platform where we integrate with the airline’s website or mobile app. We plug into the airline’s platform and integrate payment methods on a website’s payment page,” explained a spokesperson.
While there are few statistics available on the extent to which AFPs can cut fraud, “where we see the significance of this is the number of requests [we have] coming from airlines.”
Dolocan added: “The airline business is very complex and so is prevention. Refusing sales is definitely not an option. Joining forces, sharing best practices, educating the staff, these are appropriate solutions and at IATA we’re working on offering our members the appropriate channels and environments to foster these activities.
“IATA encourages regional communities of fraud prevention investigators and subject-matter experts to meet and regularly discuss and share best practices and knowledge. We do this at regional but also at global level as there are no boundaries when we talk about fraud.”