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Beating the scam artists

After analysing an array of solutions, low-cost giants Southwest Airlines and easyJet have selected a risk-screening platform for payments that is proving effective against the threat of booking fraud, writes Keith Mwanalushi
 

The battle against online fraud is a constant challenge for e-commerce merchants, and the airline industry is no exception. Southwest Airlines has a long track-record of profitability, and just a few years ago the carrier had fraud prevention technology put in place. But now it has taken its fraud-fighting programme to a higher level.

 

Continued growth in online bookings and the ever-evolving nature of card-not-present fraud demands a solution that is more effective, scalable and customisable. Southwest’s goal was to reduce fraud-related losses and make anti-fraud resources more productive, while preserving an excellent customer service. Another key objective was to use new fraud-fighting technologies in the most cost-efficient way, without depending on solely one tool, such as device fingerprinting.

 

“When airlines first started selling online, some companies felt that fraud losses would be the cost of goods sold for online bookings,” a Southwest spokesman tells Airline Payments. “However, fraudsters quickly seized upon this naivety and airline fraud losses were in the range of 1.5% of sales. In some cases the losses were as high as 4%. For this reason it became critical to have a fraud solution in place for online bookings to minimise these losses.”

 

Southwest selected Accertify with its Interceptas platform for enterprise-wide transaction risk screening. It chose the solution after determining that it provided advanced data management capabilities, as well as a comprehensive and flexible platform. According to data from a leading credit card company, the carrier now has the lowest rate of online fraud; about 33% lower than some of its competitors.

 

Accertify says that robust data management features in Interceptas enabled Southwest to access 30 times more data in its screening process, supplying more detection horsepower to its programme. The airline was able to incorporate more than 600 distinct and relevant data elements, and quickly deploy 125 additional business rules in the screening process. Rules were specifically tailored to the company’s business and processes for maximum effectiveness, and this provided significantly more accurate results in reducing false positives and flagging high-risk orders for review.

 

In addition, comprehensive reporting abilities within the Interceptas platform provide Southwest with data and insights that help its fraud team respond quickly to new trends. A monthly chargeback analysis report highlights fraud patterns and a weekly business rules report allows the carrier to adjust transaction scoring processes for increased accuracy.

 

Southwest began using Interceptas in mid-2008. Since then, the airline reports that it has seen an 80% reduction in the rate of fraud, consistently lower credit card chargeback losses, predictable fraud activity and “nearly no activity from fraud rings, and it has enabled our fraud team to become analysts of the data versus processors”.

 

Accertify claims that attempts at fraud, as measured by fraud-related cancellations and chargebacks, fell 73% in the 12 months following implementation.

 

Accertify’s emphasis is that constantly evolving card-not-present fraud easily defeats fraud detection products that are inflexible, or use limited data types. These products can lose their effectiveness over time, allowing fraud rates to creep higher, putting the merchant right back where they started. Also, because Southwest is consistently thwarting fraudsters, they are going elsewhere to find easier targets.

 

In October 2012, easyJet adopted Accertify’s comprehensive fraud management solution. Lex Ledger, revenue protection manager, says: “We were highly impressed with Accertify’s proactive approach to developing an effective and flexible solution, and by working with them we can continue to focus on protecting our customers and enhancing the overall customer experience.”

 

“Our comprehensive range of products is built from a merchant’s perspective, to simplify processes, drive down fraud rates and speed fulfilment to genuine customers,” said Jeff Liesendahl, CEO of Accertify. “Our customised solution is effective against emerging fraud schemes, and offers a higher level of protection for our clients, allowing them to focus on their core business.”

 

Sceptics, however, have questioned whether such technology could mistakenly reject legitimate bookings, confusing them with fraudulent transactions. The Southwest spokesman says that with this in mind, it has developed a proprietary fraud-detection process that has very little interference with legitimate sales. “In fact, since implementing Interceptas, my team has seen an increase in the number of commendation letters from customers who thank us for protecting their credit,” he affirms.


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