An update of Frequent Flyer Fraud
Many of you might know that fraud for airlines (and many online retailers) is a big issue. In fact, according to the survey done by Airline Information in conjunction with Cybersource, it costs at least US$1.4 billion. Which, in an industry with such slim margins is money that can’t afford to be lost.
So, FFP fraud might not seem such a big issue. One of the recent SeaMountain blogs talked about how accounts had been hacked and goods point with points. Now another source of FFP has come to our attention.
Many airlines have started to sell their miles direct to members. Driven, partly by the functionality offered by the likes of Points.com, airlines have seen this as a good way of driving sales. There are numerous offers in the market from the major players with bonus miles on offer for members to top up their accounts.
However, it seems that the fraudsters have spotted a loop-hole (amazing how they always seem to find them!) in some airlines systems. In airlines without a joined up approach to their payments and fraud strategy it appears that the normal fraud checks weren’t being applied on the directly bought miles. This only became apparent when the chargebacks came in and the miles had gone out to members accounts and been redeemed.
This is yet another reason why it makes sense for the airline people who sell miles (and the majority of them are for co-brand cards) to be at the Airline and Travel Payment Summit where they can speak with the payment and fraud managers from airlines. They can help them devise strategies to make sure the income from mileage sales ends up in the bank and not as chargebacks!
More details of the event in Toronto next week by clicking here