The International Air Transport Association (IATA) estimates that payment fraud costs the air travel industry $858 million annually, with the bulk of that being born by airlines themselves—but the actual costs may be even higher. That’s because with air travel, the fraudulent purchase of a ticket doesn’t just result in lost revenue and costs associated with the chargeback, it also means a lost opportunity to sell that seat to a legitimate customer.
And in an industry where loyalty is critical, that could mean the very real possibility of losing that customer to another airline for good.
Of course, the customer loyalty factor also restricts the lengths airlines can go to in order to prevent fraud in the first place. Place too much friction in front of a customer, and they may decide that booking with your company is simply too much hassle.
How can airlines fight fraud while ensuring their customers have a seamless booking experience?
Customer profiles help spot red flags
Certain types of travel inherently raise more red flags in the system, but because there’s no one “typical” style of airline travel, it can be tough to pinpoint fraud.
For example, when a fraudster gets ahold of a compromised credit card, they’re going to make their purchases as quickly as possible before the bank notifies the cardholder of the suspicious transaction. For airlines, that translates to same-day flight purchases. Or, a fraudster may purchase a ticket that doesn’t regionally line up with their credit card, IP address, and billing address.
Of course, these purchasing patterns can belong to perfectly legitimate customers, as well:
- A sales rep from New York may be in London when she books a flight from Atlanta to Milwaukee in order to see multiple accounts.
- A family emergency may prompt a college student in Los Angeles to use his father’s credit card to book a same-day trip back to Boise.
- A business owner may accidentally book a flight for August 3rd rather than March 8th, then change the date at the last minute.
- A bargain hunter may decide at the last minute to spring for a weekend trip to visit his significant other in another state.
Any of these situations might sort an order into the review queue. In order to quickly make a decision on these orders, one airline who works with Ekata starts by looking at their own data. As a large airline, they can count over half the population of the United States as a past or present customer. This helps them build customer profiles they can reference in order to understand whether or not an order is fraudulent.
Comprehensive data creates a turbulence-free customer experience
In order to decrease friction on customers, this airline also makes all fraud determinations after the point-of-purchase. Which means they have to be quick—especially in cases of same-day travel.
If the order has really good data (meaning, a good history with the airline) and it looks like they’re planning a vacation three months out, the order is automatically pushed out of the review queue. But if the customer is new and trying to leave within a few hours or a day, their order is flagged for immediate review. If anything seems incorrect, the customer service team gives the customer a call to confirm.
Because of the rich amounts of data this airline has at their fingertips—including order history, name, email, phone, IP address, and billing address—they’re able to keep their customer insult rates incredibly low. Before implementing modern-day fraud solutions, they received complaints from at least one or two insulted customers each week. Now they have anywhere from four to six a year.
By complementing your company’s order history data with linkages between data like email, IP address, and physical address, your fraud prevention team can get a full profile of customers, allowing them to make lightning-fast decisions that prevent fraud while preserving a good customer experience. With our “one stop shop” identity data, this airline was able to consolidate vendors to focus on the full picture that Ekata Identity Check provides for a crystal clear picture of your customers.