SPECIAL REPORT


compromised, since consumers are likely to use the same credentials to log in to many accounts. The fraud can subsequently spiral


into the partner network, leaving all avenues open to attack and the airline liable to further compensation. With the number of unique


passengers travelling on scheduled LJKWV HVWLPDWHG WR LQFUHDVH WR 4.72 billion in 2020, the percentage of those passengers on loyalty programmes introduces an immense quantity of data for criminals to exploit. According to the Loyalty Security


Association (LSA), 1% of today’s redeemed miles are fraudulent — a $3.1 billion problem worldwide.


FRAUDSTERS’ TECHNIQUES


Fraudsters recognise this and have found creative ways to realise the


revenue. Tactics include: Q Account Takeover: where fraudsters access genuine accounts. Once inside, they redeem members’ points for rewards like gift cards. They purchase tickets for travel in the account holder’s name, then later change the name to a third party after selling the ticket.


Q New Account Fraud: this provides fraudsters with an opportunity to liquidate points they’ve stolen from legitimate member accounts. They create multiple fake accounts, occasionally using stolen identities, and use them for a variety of schemes. Fraudsters also use fake accounts to earn and redeem points tied to stolen


credit cards. Q Policy Abuse: this is fraudulent activity by otherwise good customers. Thinking of themselves as savvy shoppers, consumers will overshare coupon or promotional codes, thereby breaching merchant policies. Likewise, online fraudsters abuse coupons or UHIHUUDOV WR JDLQ DFFHVV WR QDQFLDO


payouts or valuable items or services. Q Insider Abuse: this is where employees get in on the action, using any of the above tactics, since they have access to customer accounts. At the 2019 AFCE Fraud Conference, Al Ain Holding Group shared an instance of an employee who created loyalty accounts for customers, but used his own email address for each account, allowing him to accumulate 2.6 million air miles.


AIRLINE AWARENESS


Some airlines are starting to wake up to the issues and are looking at ways to shift points off their books by encouraging customers to redeem their points more frequently. 4XLWH ULJKWO\ FKLHI QDQFLDO RIFHUV


are asking why there is so much risk on the balance sheet, and are pressuring WKHLU PDUNHWLQJ FROOHDJXHV WR JHW \HUV to redeem their points more frequently. Some airlines have brought in new


schemes, but this in turn introduces fresh opportunities for fraud. And fraud doesn’t just equate to a


loss in revenue: it impacts brand reputation and creates a lack of trust. But while some airlines understand


the problem, many still don’t view loyalty as a priority. I say this because you only have to look at Forter’s recent Fraud Attack Index to see how air fraud is escalating. According to the index, fraud attack rates against airlines increased over the prior year by 61%. This increase is attributed to the rise


in loyalty programme issues and some related data breaches. Therefore, loyalty fraud needs to be


tackled urgently. However, many airlines have no loyalty protection in place or, if they do, are using legacy methods that rely on manual processes that do not share information. Airlines need an integrated fraud


prevention platform to gain a comprehensive view of all customers so that they are able to protect legitimate customers from fraudsters. Airlines also need to deliver


decisions in real-time, as consumers H[SHFW LQVWDQW JUDWLFDWLRQ 7KH\ therefore require a fraud platform that enables accurate, instantaneous decisions that don’t get in the way of the buying journey. Finally, any fraud prevention must be able to adapt to the airline’s


changing business requirements. O Stuart Barwood is director of strategic partnerships, airlines & travel, at Forter


TRAVOLUTION.CO.UK — FEBRUARY 2020 — 19


PICTURES: SHUTTERSTOCK


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