ReportWire

Tag: click fraud

  • How the Peak Travel Season Will Impact Payment Fraud | Entrepreneur

    How the Peak Travel Season Will Impact Payment Fraud | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Summer is just around the corner, and with it comes an influx of vacationers ready to explore new destinations. As the summer travel season begins, businesses operating within travel and hospitality must adopt robust strategies to manage the anticipated increase in transaction volumes and fraud risks. These strategies must also effectively manage disputes and chargebacks during a peak travel period that’s expected to break records.

    Americans are still choosing to prioritize their vacations despite challenges like international unrest and rising prices. Projections from the Transportation Security Administration (TSA) suggest we’ll see a record-breaking summer travel season in 2024, with officials anticipating the busiest travel season ever.

    52% of consumers say they plan to travel as much in 2024 as last year, with another 40% saying they expect to travel even more. These prospective travelers already have significant budgets set aside for these trips.

    Millennials and Gen Z are the driving forces behind this trend. People in this cohort tend to prioritize experiences over material goods and seek a healthy work-life balance to explore new places and cultures. They’re also heavily influenced by social media, where many influencers showcase travel as part of an aspirational lifestyle.

    This surge in travel drives global business at every level of the economy, but it also creates a heightened sense of risk. For businesses, effectively managing fraud and chargeback risk year-round is crucial to navigating the travel space.

    Let’s explore the best strategies and tactics for managing these threats, whether in-house, hybrid or outsourced, and why asking for help might be the most effective course of action this year.

    Related: How a Bad Billing Descriptor Can Cost You

    The challenges ahead

    While a travel boom is fantastic for businesses and local economies, it poses significant challenges that underscore the necessity of comprehensive fraud and chargeback management. An exceptionally busy travel season can aggravate existing chargeback triggers already intrinsic to the travel space. We may see:

    1. Increased Transaction Volume. The sheer volume of transactions during peak travel seasons makes managing and monitoring every transaction closely difficult. This increased volume can overwhelm internal systems, leading to errors and delays in handling disputes, contributing to more chargebacks.
    2. Fraudulent Activities. Fraudsters take advantage of the busy season, knowing that the high transaction volumes can mask their activities. From fake travel deals to phishing emails, the types of fraud targeting travelers are diverse and sophisticated, increasing the likelihood of chargebacks from unauthorized transactions.
    3. Overbooked Flights and Hotel Shortages. High demand can lead to overbooked flights and sold-out hotels. When travelers are bumped from flights or denied rooms, dissatisfaction spikes. So, too, does the number of chargebacks as customers dispute charges for services they didn’t receive.
    4. Poor Customer Service. Understaffing is common during peak periods, resulting in longer wait times, unresolved complaints and poor service. Frustrated customers often turn to chargebacks to resolve their grievances when they feel neglected or mistreated.
    5. Operational Strain. Handling a surge in transactions requires a well-prepared operational setup. Without it, companies might fail to process payments and refunds promptly, further aggravating customers and leading to more disputes and chargebacks.
    6. Financial and Reputational Impact. Chargebacks result in financial losses due to refunds and fees. However, they also damage a company’s reputation with customers and hurt their relationships with financial institutions. High chargeback rates can result in higher processing fees and, in severe cases, the loss of merchant processing privileges.

    Considering what’s at stake, you can see why it’s incredibly urgent to prioritize effective chargeback management. Aside from saving time and money, it can also help boost customer trust during the peak travel season.

    Managing chargebacks: In-house, hybrid or outsourced?

    Travel operators can adopt one of three chargeback management strategies to handle the increased demand and the potential challenges outlined above.

    First, they can manage everything in-house. This involves maintaining a dedicated team to manage disputes, enhance customer support and refine fraud detection systems. While this approach offers direct control, it can be resource-intensive and requires constant updates and training to stay updated on new fraud tactics and regulatory changes.

    A second option is to outsource everything. This allows travel companies to benefit from specialized expertise and advanced technologies without the burden of maintaining an in-house team. Third-party providers can offer scalable solutions, real-time fraud detection and comprehensive chargeback prevention strategies. However, it can also mean that merchants lack insight.

    As a third option, merchants can try taking a more hybrid approach. Combining internal efforts with external support lets businesses leverage advanced technologies and knowledge from third-party providers while retaining some control over the process. This approach provides a balance between direct oversight and external expertise.

    Related: How to Fight Fraud and Chargebacks Should Regulation Fail

    Industry collaboration

    As we gear up for a record-setting summer, it’s clear that improved industry collaboration could be the key to addressing fraud and chargebacks.

    We could consider the transformative potential of open data and artificial intelligence (AI) within the tourism industry. Combining an open data strategy with AI can enhance decision-making processes, helping to personalize customer experiences and optimize operations.

    By harnessing open data, businesses can gain valuable insights into traveler preferences and behaviors. This insight can be refined using AI to forecast trends and tailor services.

    Related: Think You Can’t Win Against Chargebacks? Think Again.

    Open data and AI will have a much more symbiotic relationship in the future. The kind of collective effort that open data demands will create a more secure environment for our customers and protect our businesses from the financial strain of chargebacks. These technologies promise to boost efficiency and innovation in tourism, help manage threats and enhance the overall travel experience.

    Ultimately, travel operators need to be proactive. By adopting the right strategies and fostering collaboration across the industry, operators can thrive during this busy travel season and create a better experience for all travelers.

    [ad_2]

    Monica Eaton

    Source link

  • AI Fraud is Coming. Here’s What to Look Out For. | Entrepreneur

    AI Fraud is Coming. Here’s What to Look Out For. | Entrepreneur

    [ad_1]

    A new wave of fraudulent investment schemes is coming — and it’s powered by AI.

    [ad_2]

    Alan Rosca

    Source link

  • How Businesses Can Combat Fraud and Increase Efficiency

    How Businesses Can Combat Fraud and Increase Efficiency

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    “There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.”

    These words of wisdom from Benjamin Franklin have, unfortunately, proven timeless. People have been defrauding the government for centuries, but last month, the US hit an estimated $45 billion in COVID-19-related unemployment fraud. Now the government starts the long, costly and inefficient process of recouping the money, conducting investigations and punishing those responsible. This process is often called the “pay and chase” model.

    With all that fraud, it can be challenging for government agencies and private companies to separate the wheat from the chaff (or, in this case, the fraud from the noise). For example, is a person calling your call center with a device you haven’t seen before actually an existing customer with a new phone or someone attempting to take over an account?

    These issues create room for inefficiencies and cost companies huge operational sums when they cannot tell the difference. But, going too heavy with stricter verification that may dampen the customer experience is also something you have to avoid. The good news is it’s possible to identify fraudulent activity with modern technology better and thus increase efficiency.

    Related: The Government Is Not Immune to Account-Takeover Fraud, and That Could Be Trouble for You and Me

    Modern fraud and its noisy neighbor

    At its core, the focus of fraudsters has remained on tricking people into giving access to as much money or data as possible. It’s nothing new; the term “con man” was likely coined in the 1800s. Whether it’s Bill Starbuck’s “The Rain Song” from the musical 110 in the Shade, where the charismatic con man convinces townspeople to give him money to make it rain and end a drought, or someone calling your grandmother and pretending to be a government agency, fraud has always been, and always will be.

    Our ability to close fraud loopholes is improving. Still, fraudsters are constantly creating new schemes, and technology continues to enable them to get better at fooling us and covering their tracks. This requires businesses and the government to react to new trends quickly; the best defense against fraud is to be aware of the techniques, remain on guard and educate consumers to do the same. All the while, businesses and governments must walk a tightrope between restricting freedoms too much and being purely reactive to crime.

    The public and private sectors utilize call centers for customer account issues and require telephonic calls for some account actions. Unfortunately, these call centers are very susceptible to fraud. The time customer service reps spend trying to distinguish between fraud and noise (i.e., the legitimate calls that get flagged as fraud) distracts from more critical business and carries high costs.

    For example, in the financial services industry, the cost of fraud to businesses is $4 for every $1 of actual fraud. That means, on average, if a person defrauds $1,000 from a company, that business’s related costs will be $4,000. And this figure doesn’t include additional costs incurred if a fraudster secures enough information on their first attempt to follow up with more attempts on the same business or its clients, nor the cost of reputational damage post-attack.

    One of the big problems, though, is that fraud and noise can often seem similar. For instance, imagine you broke your cell phone and got a new one. When you try to access your bank account from your new phone, your account gets flagged because it doesn’t recognize the device. Now, you have to call to unlock your account, and your bank needs to spend resources confirming your identity. This protects the consumer and the bank but introduces inefficiency for both parties.

    Related: How to Identity Proof in an Increasingly Virtualized World

    So, what’s an agency to do?

    Is there a solution? Modern identity proofing continues to progress in leaps and bounds. The technology exists now to implement much better identity proofing that’s device-agnostic and uses powerful, behind-the-scenes algorithms to prove a customer’s identity — often without them even realizing what’s going on. Artificial intelligence (AI) helps us use data points across the web to calculate the risk associated with a person or caller and create a dynamic risk profile. Then, based on their risk level, they may be required to complete additional automated steps to log in to their account or conduct business.

    There are more straightforward steps, as well. For example, impersonating the dead has long been a lucrative tactic for fraudsters. Years ago, criminals even got hold of the Social Security Administration’s (SSA) Death Master File, a restricted record with millions of people to impersonate. One of the first steps a company can take during the account creation process is to check the Death Master File. Every time a person initiates a request for money with an agency, a quick screening can be done to ensure the person requesting a payment from the government is not a dead person. That would be a sure sign something’s amiss.

    Of course, there’s no end to the trickery. Recently, I watched in real-time as a phone-based scam targeted my stepmother. She received a text that appeared to be from a friend saying her email had been the target of a scam, and my stepmom should call a particular number to make sure hers hadn’t also been compromised. I had to explain that it wasn’t her friend texting but someone using her friend’s number.

    Older people are especially susceptible to fraud like this, but scammers have discovered impersonating a government agency or some entity with authority is a winner. If we get a call saying we’re in trouble with a government entity, will we ignore it? Probably not — many of us will do exactly what they say.

    Related: How Technology Can Improve CX for Government Services

    A continuous process

    We aren’t going to be able to screen out fraud completely. But we can get better at thwarting it, saving operational dollars and resources and providing good customer experiences. The greatest vulnerability in any system is usually the humans using it, so implementing more automated identity-proofing and anti-scam tools can help bridge the gap. We can build efficiency into our systems by keeping up with the latest scam trends and implementing adequate technical controls to stop them.

    [ad_2]

    Scott Straub

    Source link