Canada’s Agents Beware: Credit Card Fraud is Growing

Credit card fraud in the Canadian travel industry is growing, with professional fraud teams all over the world getting a lot smarter than they used to be

That’s the word from Robyn Cino, chair of the Association of Canadian Travel Agent’s (ACTA) fraud prevention committee, which was established earlier this year. Cino is also director of operations and agent support for Hamilton, Ontario-based Tripcentral.ca.

Travel agents are sometimes the culprits, according to Cino who said Tripcentral has a “set of eyes” that watch for fraud on all suspicious looking bookings.

“Airlines have put methods in place to protect themselves, so the fraudsters have moved to OTAs which don’t have the same infrastructure for checks and balances,” Cino said.

“This is a multi-billion dollar business worldwide. The police don’t go after cases unless they are huge, so we have to look out for it ourselves.”

Splitting the cost of fraud

According to Marco Pozzobon, ACTA’s director, digital & communications, the association has acted as a mediator between agents and suppliers to try to split the costs when agents get hit by fraudsters.

All suppliers are getting hit with this issue, said Cino, not just the airlines. “We know of one tour operator who has a blacklist, but the fraudsters keep changing their patterns, and they are very, very clever.”

When in doubt

Keith Murray, manager, Able Travel in Mississauga, Ontario, said his agency has procedures in place to detect fraud.

 “If we get requests by email, especially for flights in business class from outside Canada, we ask not only for a billing address, and photo of the front and back of the credit card, but also for a matching driver’s license,” Murray said.

“That usually stops them, as they cannot produce that.”

Agents have to be able to say “it’s not worth that sale” if it looks wrong, said Murray.

 “With anyone we don’t know, we ask them to establish an account with us before we can sell them the tickets.  Usually that stops them if it’s fraudulent and we ask for several pieces of ID.”

Credit card fraud

Craig Kijek, vice president, independent travel at Travelbrands, said credit card fraud is a big issue facing agencies and consolidators. 

“We need to work together; agents are so keen to make the sale,” he said.

“We tell them that we know its fraud but some just want that sale regardless.”

Agency managers take the issue seriously but agents on commission will sometimes just take the sale anyway, Kijeck added.

The enemy within

The Travel Industry Council of Ontario (TICO) has cases where travel agency employes—and even owners—have committed fraud.    

“Credit card fraud has been an ongoing problem in the industry and there have been many cases of abuse by registrants and by employees of registrants,” said Michael Pepper, TICO CEO and Registrar.

“Usually the abuse takes place where consumers’ credit cards have been used multiple times for additional transactions – transactions for other consumers who may have paid cash.”

Chargebacks

Dorian Werda, TICO’s vice president of operations, said TICO mainly receives complaints about credit card transactions when a registrant accepts a third party credit card and then receives a chargeback after the consumer has travelled.

It’s very difficult to trace email requests for tickets, according to Cino.

 “They use Internet cafes so they cannot be traced,” she said. “They will offer friends a cheap trip or special deal for, say, $2,000.  The friend pays cash, they pocket the cash and use a stolen card to pay for the trip.”

In this scenario, the friends who travelled were not aware their trip was paid for with a stolen credit card.

Not responsible

Christine Chilton, ACTA’s director of education and a member of the committee, said one of the problems with an online booking is that agents only see the first and last four digits of a credit card number.

“When it is processed online in Softvoyage, [a provider of IT and distribution solutions for the travel industry] for example,  the credit card number goes directly to the processing house for compliance reasons, and the agent simply gets a verification code,” Chilton said.

“Then if it turns out to be fraudulent, the credit card processing companies take no responsibility.”

Tracking types of fraud

The committee is trying to determine the different types of fraud in the industry, Cino said. “We want to educate, share information and look at developing trends so we can alert agents.”

The committee has representatives from travel agencies, airlines, wholesalers, Softvoyage, and the Canadian Association of Tour Operators (CATO), she added.

“Our goal is to create a lot more awareness so agents know what to watch out for.”

The committee has already identified a situation likely to pose a problem: This is where the billing address, phone number area code and departure code do not match.