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News

Payment fraud set to hit airlines harder

41st Parameter : 07 August, 2009  (Technical Article)
Survey by 41st Parameter indicates an increasing need in the airline industry for fraud detection mechanisms as on-line payment methods become more varied and risky for the industry
Fraud detection tools and payment fraud losses are at the front of the mind according to a recent webinar and poll of airline fraud investigators. The survey results, released by 41st Parameter, a provider of fraud detection and prevention systems to the Airline Industry, report insufficient rules and defence mechanisms in place at most airlines. The results forecast the continued emergence of new reservation booking vehicles and a shift in payment methods. Additional details include:

* Fraud Prevalent Industry-wide - Every airline reported some measure of fraud within their Card Not Present channels, with nearly one-quarter experiencing elevated percentages.

* Need for More Rules - Over half the airlines reported fewer than 26 fraud rules in use by their existing fraud detection solutions to evaluate the transaction risk.

* Alternative Payments - Alternative payments, such as eBillMe, BillMeLater, PayPal and Google Checkout, are now the preferred form of payment over debit or credit cards for 6 per cent of the airlines.

* SmartPhones and Game Consoles on the Web - More than 30 per cent of the airlines reported up to 5 per cent of reservations come from a mobile device or game console, with another 8 per cent reporting up to 20 per cent of transactions from these devices.

* Airlines report more than a billion dollars annually in online fraud loss. To effectively reduce these losses, each needs to be up-to-date with the appropriate technologies and be prepared for fraudsters to exploit new forms of payment and booking channels.

'The Travel Industry is under siege by well-organised international fraud rings. Without comprehensive technology tools to aid investigators, airlines face a greater risk of fraud succeeding, especially as fraudsters exploit new channels and payment methods which in many cases are not currently detected,' said Ori Eisen, founder and chief innovation officer, 41st Parameter. '41st Parameter utilises over 400 rules in conjunction with sophisticated device identification capabilities to help our customers, including some of the world's largest airlines, prevent fraud before it happens - and significantly reducing bad debt write-offs.'
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