On Fraud, Alternative Media and Such

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La Agencia de Viajes - (Airline & Travel Payments Summit), August 22, 2011, Part 1


Airlines Information, the agency behind the Airline Profitability Conference (CILA), organized the first Airline & Travel Payments Summit Latin America (ATPS), which took place last Thursday and Friday. The aim of the event was to make airlines aware of the impact of issues like fraud and to inform them about the tools and solutions available to combat them, as well as the latest trends in alternative payment methods. The summit opened with background information on the real size of e-commerce. Marcus Masen, CCO of Ogone, revealed that 15% of the global Internet population is from Latin America, a region whose growth rate is twice that of the world average. It is estimated that, by 2011, e-commerce in the region will hit US$34 billion (Argentina's share will be 4%). By 2014, that figure would be US$52 billion. Most importantly, 45% of such operations are travel and tourism related transactions. Another interesting fact is that 20% of consumers spend an average of US$300 via their mobile phones — the latest form of e-commerce: mobile commerce.

THE LOOMING THREAT

Following Mosen was Guillermo Rospigliosi, Managing Director of Cybersource, who spoke about fraud with some startling facts. He explained that e-commerce fraud is powered by organized crime and demands some kind of infrastructure.

He also mentioned the airline online fraud report issued biennially by his company and described the four stages of e-commerce operations. Firstly, operations are reviewed automatically. At this stage, companies use approximately seven tools, which rely on a layered strategy.

Secondly, online sales are subject to a manual review. 80% of carriers do this and 14% of them examine 100% of transactions. Thirdly, transactions are accepted or rejected. Usually, 61% of sales are approved. As for rejections, the figure is 3.3% globally and 4.4% in Latin America. Lastly, there are complaints and "friendly fraud" (chargebacks issued by the consumer). Expressly, fraud related losses reach US$1.4 billion globally.

Cybersource's executive affirms that it is possible to profile defrauders. For instance, 48% travel on their own (make a single booking), 53% book 12 hours prior to the flight and 42% book between 12 and 23 hours, and 56% solely book one-way flights.

We will explore the subject further in our next following edition, delving into the perspectives of travel agencies, who were represented at the event by Ricardo Guerrero, Managing Director of TIJE.

Jan-Jaap Kramer of Telchar Airline Fraud Consultancy.

Epígrafe: Fraud control in Latin America: moderator Alejandro Ormeno, CEO, Ormeno Associates; Max Mierscheid, Senior Manager Card Payment Fraud, Lufthansa; Eldred García, VP Head of LAC, Accertify; and Ricardo Guerrero, Managing Director, TIJE.