How to Avoid Travel Industry Chargebacks

How to Avoid Travel Industry Chargebacks

The U.S. travel market was forecast to top $370 billion by the end of 2018 — representing a 5% growth over 2017. Disposable income, developing markets and increased curiosity are just three of the industry’s drivers, and they don’t seem to be slowing down anytime soon.

With summer in full swing, now is the time people are making and planning their big summer vacations. It’s good news for travel agencies looking for a spike in revenue, but the increase in travel reservations can often mean a corresponding increase in fraud.

In 2016, for example, the airline and travel industries accounted for 46% of e-commerce fraud attempts and experienced chargeback levels of more than twice the rate of other industries. Although these travel industry chargeback rates are rightfully enough to concern many merchants about potential risk, these seven tips can help them mitigate their exposure.

1. Confirm Order Details

Today’s fraudsters are no stranger to emerging technology, and some are using tools like VoIP services to hide their location when calling to make a reservation. Others try to hide their true identity by having physical tickets delivered to an address other than the billing address on file. Any merchant who is concerned about or suspicious of a customer’s true location or identity should take the time to perform a thorough manual review before approving a suspicious transaction.

2. Follow Industry Best Practices

While merchants can empathize with a customer’s need to make last-minute travel plans, it shouldn’t sway these businesses into deviating from the industry best practices that are designed to keep them safe. Because fraudsters will often contact travel agencies with rushed requests to set up travel and other accommodations, merchants should ensure they’re gathering copies of and information from important travel documents (like driver’s licenses, visas and passports). Merchants should also be wary of first-time customers making large purchases. Follow best practices here, too, for the proper credit card authorization and authentication procedures to minimize travel industry chargebacks.

3. Make Rebooking, Cancellation Policies Clear

Many travelers book well in advance of their departure dates to secure the best prices. Unfortunately, the best laid plans often change, and many travelers might try to initiate chargeback disputes when they find they’re unable to complete their planned trips. Ensure your cancellation and rebooking policies are displayed prominently throughout your website and on checkout and confirmation pages.

4. Use Secure Payment Methods

With the increased risk of card-not-present fraud for online transactions, it’s more important than ever for travel industry merchants to ensure their payment methods are secure. PCI compliance and 3-D Secure technology are two solutions businesses might consider implementing to improve the safety of the entire payment cycle.

5. Understand the Purchases With the Highest Risks

Generally, it’s the big-ticket and the most popular travel items — like vacation packages and last-minute airfare — that put those in the travel industry at the biggest risk for chargebacks. Not only do the big price tags result in a heavy financial hit, but industry merchants also must consider the cost of the employee’s time and effort that’s lost when customers file chargebacks.

6. Consider Authorization Holds

Merchants don’t receive any funds during an authorization hold, which means the transaction hasn’t yet been completed. And that means that customers don’t have a transaction they can dispute and escalate to a costly chargeback. The good news for merchants is that the hold guarantees the merchant will get paid for the purchase.

7. Implement Chargeback Insurance

Industries at an increased risk of fraud can benefit from chargeback insurance. With this protection, merchants receive a 100% guarantee of coverage of all fraud-related chargebacks. And because chargeback fees can end up as high as $100 per transaction, the true cost of fraud can quickly add up for merchants.

While chargeback insurance is a smart option for merchants, only a handful of fraud prevention solution providers offer it. ClearSale has been offering chargeback insurance for more than 10 years, customizing their approach to the needs of each of their clients. If you’re interested in learning how chargeback insurance could benefit your travel industry business, contact one of our analysts today.

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