Report: Airlines hit hard by online fraud

Airlines worldwide lost more than US$1.4 billion to fraudsters in 2008.

The airline industry experiences significant online fraud, according to findings released by CyberSource Corporation, a company that offers a hosted fraud management solution for online retailers.

According to the survey, airlines worldwide lost more than US$1.4 billion to fraudsters in 2008. The figure amounts to about 1.3% of worldwide airline revenue.

Online fraud can occur in several ways, Bruce Frymire, a spokesperson for CyberSource told The Industry Standard. Generally, fraudsters use stolen credit card information to buy a ticket for themselves, or act as a travel agent, and buy a ticket for someone else. By the time the true card owner reports the theft, the flight has usually been taken and the airlines loses 100% of the revenue, Frymire said.

While U.S. airlines tend to use automated solutions to identify fraud, overseas airlines manually review many of their bookings. For Middle East-based airlines, 81% of bookings are manually reviewed, compared to just 3% of North American-based airlines, according to CyberSource.

CyberSource commissioned the airline survey and received about 100 replies from airlines worldwide. The survey was conducted online and via telephone.

Currently, about 20 airlines use the CyberSource fraud management solution, including British Airways, Jet Airways and LOT Polish Airlines.

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