As the COVID vaccine became available and business restrictions were lifted, people started traveling around the United States again. Unfortunately, scam artists quickly followed, and travel destinations experienced a significant spike in fraud attempts in 2021.
Compared to a year earlier, Las Vegas experienced a 411% increase in fraud attempts, while New York City saw a 396% increase over the same time period. Fraud attempts increased by 251% in Charleston and 193% in Nashville, and other popular destinations also experienced increases in fraud.
To protect the customers of your financial institution, you should understand the general types of travel fraud, and ideally, you should help your customers avoid fraud in a way that also protects your bank. Here is what you need to consider.
Types of Travel Fraud
Scam artists are always looking for the path of least resistance. Their goal is to gain as much money as possible, with as little effort as possible.
A key way to meet this objective is to prey on the unsuspecting. Travelers looking for deals and eager to get away from home are often the perfect victims because they are not on the lookout for fraud.
Travel fraud takes a variety of different forms. The threat starts when victims book their tickets, and it continues until they get back home. Here are some of the tactics travel-focused criminals use:
- Posing as an online travel agency to steal payment credentials or personal details from consumers.
- Stealing payment credentials from websites focused on airline or cruise tickets, hotel rooms, and car rentals.
- Booking trips with a victim’s cards and then refunding the trips onto the thief’s own card.
- Buying trips online or reserving tickets and reselling fraudulent items to unsuspecting victims.
- Installing skimmers on ATMs or card readers in popular travel destinations.
In the current climate, fraudsters are taking advantage of the fact that people have been stuck at home, and they may take chances they wouldn’t ordinarily take.
For example, an unsuspecting victim desperate to get away might book a trip on a website without investigating its legitimacy. Or, they may use an ATM without looking for a skimmer because they just want to grab some cash and return to having fun.
How Banks Can Protect Customers From Travel Scams
Scam artists are increasingly going after consumers instead of trying to directly steal money from banks. They take this approach because it’s the easiest option. It’s much easier to trick a consumer than it is to hack into a bank’s system. Here’s what you can do:
1. Educate your customers
To protect not only your customers but your financial institution, you need to educate your customers. Provide them with safe travel tips such as not carrying large sums of cash and knowing how to reach their card issuers if their wallets get stolen.
Ideally, you should keep on top of the most prevalent threats, and you should keep your customers up to date about them.
2. Invest in fraud detection tools that use machine learning
You also need to invest in fraud detection and prevention tools that use machine learning to get to know your customers. Effective tools don’t simply block transactions if they occur in a different city. Instead, they get to know your customer and their habits, and they also get to know the anatomy of legitimate transactions compared to fraudulent transactions.
For example, if someone books travel insurance and buys a plane ticket using their home IP address, the transactions are most likely legitimate. Then, if they use their card at a restaurant or a store in a different city a few weeks later, that follows a pattern of legitimacy.
However, if their transactions don’t follow a known pattern or if they don’t follow the customer’s usual travel behavior, they may be fraudulent. Ideally, you need fraud detection and prevention tools that can assess this difference.
3. Don’t put unnecessary friction on customers
To be effective, your financial institution needs tools that can detect and prevent fraud without putting unnecessary friction into the customer experience. Fraud solutions that use AI and machine learning can detect real-time threats, while also reducing the risk of false positives.
Contact SQN Banking Systems to Protect Your Customers
At SQN Banking Systems, we work hard to protect our clients from the constantly changing landscape of bank fraud and scams. To learn more about our tools and solutions, contact us today. We look forward to helping you and your customers minimize the risk of becoming victims of fraud.