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 platform 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, first-party fraud, 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 Travel Scams and Ticket Fraud Examples
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 of airline ticket fraud 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, moving money or travel credits before the rightful account owner detects the breach. Account takeover prevention is a good first line of defense for any business.
- 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 online ticket fraud.
Fraud in the Travel Industry: Why It’s a Growing Problem
The travel industry is uniquely vulnerable to fraud due to its high transaction volume, global reach, and reliance on digital platforms. Seasonal demand spikes often coincide with surges in fraudulent activity, making it easier for bad actors to conceal their actions amid legitimate bookings.
For travel companies, chargebacks remain one of the most damaging outcomes of fraudulent transactions. In 2023, chargebacks in the travel and hospitality sector totaled approximately $25 billion, with the average value of a single chargeback around $120, which is the highest among major industries. These disputes not only erode margins but also increase operating costs due to the added need for fraud monitoring and stricter security controls.
The reputational impact can be equally costly. Research shows airlines alone lose around 1.2% of revenue annually to payment fraud, and customers who fall victim to fraudulent bookings often hold the legitimate business responsible. This loss of trust can linger, making it harder for organizations to retain loyal travelers and attract new ones.
As fraud tactics continue to evolve, the pressure on airlines, hotels, and travel agencies to strengthen defenses has never been greater. Addressing these risks is now essential not only to protect revenue but also to safeguard the customer experience and preserve long-term trust.
How Avoid Travel Fraud
- 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.
Travel Fraud Prevention: Tips for Businesses
For businesses in the travel industry, preventing fraud requires a proactive strategy that combines technology, process, and education to safeguard both company operations and customer trust.
Advanced travel fraud prevention tools are a necessity for travel and transportation companies. By using AI-backed risk scoring and pattern recognition, device fingerprinting, and behavioral analytics, companies can identify suspicious bookings in real time and stop fraudulent transactions. Just as important is securing customer accounts through measures like multi-factor authentication, which makes it far more difficult for criminals to exploit stolen credentials or loyalty program balances.
Prevention of fraud in travel also depends on internal processes, like regular monitoring of booking activity, stronger payment controls, and the enforcement of secure payment gateways. Solid policies for these aspects all reduce the likelihood of chargebacks and unauthorized purchases. At the same time, clear communication with customers about safe booking practices and official sales channels builds awareness that strengthens the first line of defense.
Finally, collaboration across the industry plays a critical role. Fraud tactics evolve quickly, and businesses that share intelligence through trusted networks can detect new schemes earlier and respond more effectively. Payment protection platforms like Sift are already performing this through their Global Data Network, which gleans cross-industry information to identify and stop fraud trends before they grow too large.
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.
Building a Safer Future for Travel
The travel and ticketing industry faces constant pressure from fraudsters who exploit high transaction volumes, global demand, and rapid digitalization. In this article, we explored the most common fraud schemes, their impact on businesses, and the proactive steps companies can take to reduce risk. From account takeover to payment abuse, the consequences extend beyond financial loss to include reputational harm and long-term customer distrust.
Sift helps travel businesses stay ahead of these threats with AI-powered fraud detection, dynamic, data-based risk scoring, and industry leading databases collected from every industry across the globe. By combining advanced technology with a commitment to transparency and customer trust, companies can prevent fraud, protect revenue, and ensure a safe travel experience for every customer.
To discover the best capabilities for your business, dive into our Evaluation Guide for Online Fraud Solutions.
