Online travel platforms are expected to reach $1.3 trillion in 2032, a valuation that makes the travel and ticketing industry a prime target for fraud. In 2023, over 36% of transactions in the sector were flagged as potentially fraudulent, making it one of the most exploited industries globally.
According to TransUnion’s 2024 Omnichannel Fraud Report, approximately one in seven new travel-related accounts are likely fraudulent. Fraud in the travel and transportation industry leads to significant financial losses, erodes customer trust, disrupts operations, increases operational costs through necessary security measures, and damages the company’s reputation due to potential data breaches and fraudulent activities.
You can keep your business’s systems secure by understanding common travel and ticketing scams, deploying advanced fraud detection technologies, and making better fraud decisions through identity trust.
Read on to explore the key types of travel and ticketing fraud, how these scams operate, and learn actionable strategies to protect your customers and business.
What is Travel and Ticketing Fraud?
Travel and ticketing fraud happens when bad actors deceive businesses or individuals in the travel and hospitality industries for financial gain. These scams include fake bookings, payment fraud, loyalty program abuse, and ticketing schemes designed to exploit vulnerabilities in online platforms to unlawfully obtain free services, refunds, or rewards from airlines, hotels, ride shares, travel agencies, and other service providers.
Industries at risk include airlines, lodging, vacation rentals, tourism, and any travel or hospitality business that takes online bookings. Companies lose revenue from unpaid services, while legitimate customers are subjected to increased friction or stricter policies due to fraudulent activities.
Common Types of Fraud in the Industry
The travel industry faces high online fraud rates due to large transaction volumes and seasonal demand spikes. These conditions make it a prime target for sophisticated attacks. Below are some of the most common types of fraud affecting the industry:
- Loyalty Program Abuse: Occurs when individuals exploit reward systems through fraudulent activities such as creating fake accounts, using bots to accumulate points, or manipulating program rules to steal benefits without earning them through legitimate means. Examples include redeeming rewards for personal gain, selling stolen points, or exploiting loopholes to obtain free goods or services.
- Payment Fraud: Fraudulent activities where cybercriminals make unauthorized purchases using stolen payment information, resulting in chargebacks from the legitimate cardholder and a loss for the business.
- Account Takeover (ATO): When fraudsters gain access to user accounts via phishing or credential theft, redeeming loyalty points or travel credits before the rightful account owner detects the breach.
- Cashout Fraud: Involves fraudsters exploiting compromised accounts or payment methods to obtain travel services, tickets, or other valuable assets, which they then convert into cash or other benefits.
- Last-Minute Bookings: Making last-minute bookings to avoid detection, often within 24–48 hours of departure with stolen payment methods. Because these bookings are made close to the travel time, there’s less time for the legitimate cardholder or business to detect and report the suspicious activity before the fraudster can use the services.
- Fake Travel Sites: When fraudsters sell tickets at low prices using professional-looking sites or social profiles pretending to be from legitimate travel agencies or agents. This can lead to a loss of trust and damage the brand’s reputation, even though the legitimate company had no involvement in the scam.
- Reselling Fraudulent Bookings: Scammers book travel services using stolen credit card information and then resell these bookings at a discount to unsuspecting buyers. By the time of the flight, victims find out their tickets aren’t real or have been reported as fraud.
The Impact of Fraud on the Industry
As online bookings continue to grow, so do vulnerabilities. Here are some of the major issues:
- High Refund and Dispute Rates: First-party fraudsters exploit lenient policies by making reservations and requesting refunds after benefiting from the services. This leads to revenue leakage and needless processing costs.
- Disrupted Inventory Management: False bookings, no-shows, overbooking, and last-minute cancellations due to fraud leads to inaccurate demand forecasts and lost revenue.
- Loyalty Program Vulnerabilities: Designed to retain customers, these programs face exploitation from account takeovers and rewards theft.
- Complex Cross-Border Fraud: International transactions create challenges due to differing legal and regulatory frameworks, allowing fraudsters to exploit jurisdictional gaps and evade detection.
How to Detect and Prevent Travel and Ticketing Fraud
Preventing travel and ticketing scams requires understanding how fraudsters operate and implementing effective strategies and solutions to safeguard operations. Here are actionable steps to minimize fraud risks:
- Analyze Booking Behavior: Use tools to identify unusual booking patterns, such as bulk purchases for the same flight or trips made with different credit cards.
- Geolocation Verification: Cross-check IP locations with billing addresses, especially for high-value transactions or last-minute bookings.
- Secure Loyalty Programs: Monitor account activity for rapid loyalty transfers or unauthorized reward redemptions, and implement stronger account protection policies like multi-factor authentication (MFA) to prevent takeovers.
- Chargeback Prevention Measures: Clearly convey refund and cancellation policies to protect against illegitimate chargeback claims.
- Monitor High-Risk Destinations: Pay close attention to bookings for regions with a high incidence of fraud or for one-way tickets purchases.
How Sift Can Help You Prevent Travel and Ticketing Fraud
As online bookings and mobile transactions improve travel, fraud grows with it. Scammers aggressively exploit digitization through tactics like fake reservations, payment scams, and loyalty program abuse.
Here’s how Sift prevents travel and ticketing fraud through its advanced features:
- Real-Time Fraud Detection: Sift’s Global Data Network processes one trillion events per year to spot anomalies in bookings, payments, and IP patterns, minimizing false positives while ensuring swift action.
- Dynamic Risk Scoring: Transactions are assigned risk scores, enabling businesses to quickly flag and block suspicious actions, such as bulk ticket purchases with stolen credit cards.
- Account Takeover Protection: Sift uses device fingerprinting and behavioral analytics to detect unauthorized account access or loyalty point abuse, safeguarding customer trust.
- Payment Fraud Prevention: Reduce losses, automate operations, and unlock growth with an intuitive platform that proactively stops payment abuse at the source.
- Industry Collaboration: Tap into the real-time insights of Sift’s Global Data Network while automatically accounting for the unique nuances of the travel and ticketing industry.
- Customizable Rules and Workflows: Tailor fraud prevention workflows for high-risk scenarios, such as one-way bookings to flagged destinations or last-minute hotel reservations.
- Scalability and Adaptability: With AI-powered solutions, Sift adapts to new fraud tactics, protecting your businesses as you expand offerings and regions.
To discover the best capabilities for your business, dive into our Evaluation Guide for Online Fraud Solutions.
