Fraud Alert

Exchanges

There is a new and growing fraud trend directly impacting travel agents and carriers, which manipulates and exploits weak spots in agents' and carriers' risk management systems. It is important for agents to know how this fast-growing scheme works and what actions agents should take to stop the criminals and reduce losses.

How it Works
A criminal uses a compromised credit card to purchase several tickets in one Passenger Name Record (PNR) from a travel agent. The tickets do not match basic high-risk indicators for fraud: the itineraries do not include high-risk cities/airports, travel is booked far in advance and the cardholder is one of the passengers in the PNR. After the tickets are purchased, the criminal immediately contacts the airline to request that the carrier exchange the agent-issued tickets for new tickets. The new tickets include high-risk cities/airports and immediate departures and may not include the cardholder as one of the passengers.

Some agents are able to identify the fraud because the phone number and address don't match the cardholder, but this fraud may not initially raise a red flag for an agent and by the time the agent is able to review the transaction in more detail and confirm that it is fraud, the tickets have already been exchanged by the carrier. In the end, the credit card number used to purchase the original tickets will eventually be identified as compromised, and the agency issued ticket will result in a chargeback for fraud.

Real Life Example
A fraudster purchased tickets from a travel agency for four people, round-trip, from New York (JFK) to Mazatlan, Mexico (MZT) for travel next month. One of the passengers was also the cardholder. The next day, the fraudster called the airline directly to make changes to the tickets. The passengers are now flying from Lagos, Nigeria (LOS) to Toronto (YYZ), departing the next day. In addition, one passenger in the group is not included in the change (i.e., the cardholder is no longer flying).

In other real life examples, a secondary review of the original transactions by the travel agency, confirmed that the transaction was fraud. The agency attempted to void the tickets but was unable to because they were already exchanged by the carrier and flown by the passengers.

What to Do Next
Review your indicators for high risk and consider placing a transaction in a higher risk category when the following characteristics are met:

  • Multiple first time passengers in one PNR with different names
  • First time credit card and first time passenger
  • Invalid or recently created email address
  • Card Identification Code (on front or back of card) doesn't match
  • Address verification (verifies elements of cardholder address) doesn't match
  • Email address and phone number don't match the cardholder

ARC's Fraud Prevention team is in the initial stages of gathering all characteristics of this fraud (names, phone numbers, addresses, emails, ticket numbers, etc.). If you have (or think you have) experienced this type of fraud, please contact ARC's Fraud Prevention team at 703-816-8137, 855-358-0393 or fifp@arccorp.com.

About ARC:
ARC powers the U.S.-based travel industry with premier business solutions, travel agency accreditation services, process and financial management tools, and powerful data analytics. In 2014, ARC settled $89.6 billion worth of carrier ticket transactions for more than 9,400 travel agencies with 13,000 points of sale. By providing world-class business services and products, ARC enables participating agencies and 200 carriers to focus on what's important–increasing their revenue. Established in 1984, ARC is headquartered in Arlington, Virginia. For more information, please visit www.arccorp.com.