The travel industry is one of the largest contributors to the world’s GDP and pledged around $5.8 billion in 2021. Fraudsters are making their way to exploit travel companies’ high-value one-off payments, insurance benefits, and other services. Due to digital bookings, online transactions, and pre-boarding identity verification, the tourism sector has become a huge target for travel frauds.
Criminal threats have been hovering over the tourism industry since the inception of advanced technologies. However, travel companies require efficient identity verification solutions to put counteracts in place to prevent the noticeable surge in fraud. However, after its fall during the COVID-19 pandemic, this sector is all set to rise up again. This article further discusses prominent travel frauds and their prevention measures.
Eminent Fraud Risks in the Travel Industry
The tourism sector is encountering many faces of travel scams with fraudsters emerging as credible passengers. In order to bypass identification checks, they create fake documents, abuse loyalty/bonus programs, take over accounts for self-booking, and perform transactions with stolen credit/debit card details. In return, these scamming attempts not only deprive legit travelers of their rights but also expose the service-providing companies to serious repercussions. The next section provides a detailed review of prominent travel frauds, target audiences, and countermeasures.
Travel Expense Scams
The major victims of this fraud scheme are the employees and firms that require them to take business trips often. The tour is paid and respective companies bear all the expenses. It also provides reimbursement for the cost paid by employees. However, fraudsters create fake invoices and bills to fabricate expense claims. Reimbursement further involves the following document frauds:
- Present a forged invoice that looks believable
- Camouflaging personal expenses with legitimate categories that add as paid by businesses
- Inflating travel expenses by submitting multiple receipts of extra mileage costs
- Tampering with the financial details and transactions to avail extra money
Measures to Counter Criminal Intentions
Travel frauds are challenging to identify as criminals commit document forgery by using photoshop and other sophisticated tampering software. Furthermore, they manipulate company funds by traveling in the economy instead of business class and using the money to buy game tickets or bar passes. Expense manipulation is one of the most difficult to identify travel frauds.
Integrating machine learning-powered document verification solutions can help businesses prevent the misuse of their money. By extracting data using OCR, the system will eliminate information discrepancies. Similarly, mathematical algorithms-based tools critically analyze expense bills to identify travel frauds.
Passenger Insurance Fraud
A man was sentenced in 2021 as he tried to eat forged documents he used for false insurance claims. This imposter applied for medical treatment costs and the disbursal amount was calculated to be around £22,122. Furthermore, this is not the only case, insurers providing reimbursement for journeys often face travel frauds. Criminals create misleading financial statements and forge KYC documents to trick insurers. This type of travel frauds further involves the following false claim schemes:
- Alleged claims for misplaced items by exaggerating their prices that were never in the bag
- Fake claims of losing a bag that is actually present with the traveller
- Cancelling a trip by providing fake medical certificates to back their reason for illness
- Travels frauds and false insurance claims further involve fabricating injuries that passengers say they underwent during their tour
Techniques to Prevent False Insurance Claims
Criminal schemes are hard to detect especially while validating insurance claims as coverage firms will have to analyze every document, invoice, and bill. To ensure seamless authentication and provide reimbursement for rightful claims, insurance companies require AI-powered travel fraud prevention solutions. These IDV services automate the data analysis and cross-verification process by enabling firms to detect criminal activities in time.
Payments with Stolen Credit/Debit Cards
For the tourism industry, travel frauds come in various forms such as the use of stolen credit/debit cards to book tours. Criminals either impersonate banking officials to directly obtain information from customers or buy it from the dark web. In both cases, KYC verification is a must-have not because it is a liability but because it will help ensure the person making a purchase is an actual cardholder.
Criminals make payments at the last minute so that travel agencies, hotels, and other service providers won’t have enough time to cross-verify details. In order to deter travel frauds, AI-powered IDV solutions check the real-time presence of passengers. Furthermore, with face verification, instant cross-checking, liveness detection, and ongoing monitoring, tourism companies can deter travel scams.
The travel industry needs to stay a step ahead of criminals to provide individuals with convenient, secure, and risk-free services. Hence, for combatting scam schemes, tourism companies need to bring in efficient con prevention mechanisms. Integrating AI-powered travel frauds countermeasures detect and detect criminal activities more efficiently. Hence, tourism companies can ensure safe and risk-free journeys.