Fraud In Online Travel Agencies: What It Is And How It Affects Businesses

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Fraud In Online Travel Agencies: What It Is And How It Affects Businesses

Despite the COVID-19 pandemic, people love to travel, and book tickets online to maximize the convenience of this process. As usual, fraud follows where the money goes, and online travel agencies face a constant and ever-growing threat of fighting fraudulent schemes. 

This article shows the most widespread types of fraud in online travel agencies, the risks travelers have to face, and the best ways of fraud prevention for tourists. The insights below are based on Covery’s in-depth expertise in fraud prevention for online travel agencies and other businesses dealing with CNP payments.

What is an example of an online travel agency?

Online Travel Agency or OTA is a platform that allows booking tickets for airplanes, railways, and/or ships, booking lodgings, and renting cars or other means of transportation in a single place., Expedia, and other similar services are great examples. 

Thus said, OTAs have to interact with multiple third-party services — from railway or airline websites to apartment booking platforms like Airbnb. According to an IBM report, those interactions bear many fraud risks, which makes the online travel booking industry the second most exposed to fraudulent activities. For instance, many fraudsters buy tickets one day before departure, as fraud checks can take up to 48 hours, and airlines will not prohibit a legitimate customer to board the plane. Besides, the ensuing chargebacks don’t affect airlines, they target OTAs.

What are the disadvantages of an online travel agency?

OTAs have to verify travelers remotely, rely on tourists providing truthful information and process money of unknown origin in droves. This leads to a proliferation of such types of fraud in online travel agencies:

  • Bookings made with stolen card details. Fraudsters use phishing to gain access to victims’ credit cards or buy those details en masse on the dark web. Then they book flight tickets in order to issue a refund or start a chargeback. 
  • Fraudulent ticket cancellations. Scammers cancel their tickets less than 48 hours prior to departure, or abuse ground transport ticket return policies. Besides, they gain bonus rewards, that can also be used to get easy money or abuse the system a bit more.
  • Account takeover. Yet another case of defrauding OTAs is when scammers gain illicit access to your customers’ accounts. They can then abuse your bonus programs, withdraw funds to other cards, publish fake reviews, and perform various other activities.
  • Fake OTAs. Fraudsters create copies of popular travel websites to steal card credentials, money and other sensitive data. Fooled victims then issue chargebacks against real companies, that have nothing to do with the impostors.

As you can see, fraud in the online travel industry is omnipresent, widespread, diverse and relentless. Let’s now talk about fraud prevention measures OTAs can use to protect travelers, and, ultimately, their own money.

How can I avoid being a travel agent scammer?

In order to avoid facing fraud in online travel agencies and fighting its consequences, the best way is to come forewarned and forearmed. In short, preventing fake tourists from issuing payments through your platform is much easier than dealing with chargebacks and reputational losses.

To detect and avoid fraud in real-time, your anti-fraud system should be able to:

  • perform KYC checks and alert you on fake identities,
  • identify fraudulent payment details and decline such transactions
  • prevent account takeover, freeze access to the account and assist with recovery
  • keep information on all transactions to simplify potential chargeback solutions
  • perform fraud checks in under 48 hours (preferably – in real-time).

Covery is such an anti-fraud solution, providing services in the US, Canada, Europe and more than 170 countries worldwide. It combines a wide variety of technologies, from device fingerprinting to TrustChain reputation scoring and a supervised Machine Learning algorithm paired with a rule-based risk logic engine.

Founded in 2016, Covery has huge experience in fighting fraud in online travel agencies, among other cases. As of 2022, we stored above 500 million Trustchain records, prevented nearly 300 million fraudulent transactions, and helped merchants worldwide save above $5 billion in potential losses. 


Fighting fraud in online travel agencies is essential. There are multiple ways for fraudsters to abuse ticket return policies and defraud OTAs. A real-time anti-fraud system is crucial for securing a healthy bottom line, mitigating risks, and saving money on chargebacks and other indirect losses. Covery is PSD2, GDPR and ISO 27001 compliant since 2022.

Real-time transaction monitoring enables Covery customers to discern fake tourists from real travelers and decline risky transactions, minimizing the potential damage. But this is barely the tip of the iceberg, as Covery has a lot more to offer to any online business. In order to find out more, book a free demo with the Covery team and start securing your operations from fraud!