Travel Agency Fraud: Common Scams and How to Protect Your Business

According to a study by IATA, 52% of airline ticket fraud cases occurred in the United States.  ^[1]Airlines. “Fraud in the airline industry why carriers need to think of themselves as crimefighters.” Accessed May 2nd, 2025.   As a travel agent, when you book airfare, hotels, and vacation packages for your clients, you face the risk of fraud — a risk that is on the rise across the industry. Travel agency fraud can be frustrating and costly to deal with, but there are proactive steps you can take to prevent them before they impact your business.

What exactly does travel agency fraud entail? This article will provide a detailed guide on travel agency fraud, the types of fraud, and how your travel agency can protect itself.

• Travel agency fraud, from authorized transactions to chargebacks, are on the rise due to high transaction volumes and weak security measures within the industry.
• The higher the risk probability of the transactions you handle, the higher the likelihood that your agency will be a target for fraud.
• You can protect your agency against fraud with proactive eCommerce fraud prevention measures and a secure payment infrastructure.

Understanding Travel Agency Fraud

These days, fraud is more complicated than someone calling your agency and reading you a fake credit card number to book a vacation. Let’s look at what travel agency scams are and why they’re becoming a bigger problem in the industry.

Travel agent scams are deceptive schemes engineered by bad actors to steal money from travel agents and customers booking vacations.

Some fraud schemes are straightforward, while others take more time to plan and execute. Chargeback fraud, for example, is a scam involving a customer booking a vacation package and disputing that transaction with their bank to get a refund. Or a fraudster could create a fake website advertising nonexistent vacation deals to encourage you to sell a package that doesn’t exist to your customers.

The travel industry is particularly vulnerable because of its sheer volume of high-ticket transactions. Money is always moving around, making it a high-risk business consistently preyed on by fraudsters.

The threat of fraud in the travel industry is at an all-time high. About 53% of travel merchants claim online fraud costs them over $10 million annually. ^[2] Ravelin. “Travel fraud trends – fraud in the online transport, travel and hospitality industry.” Accessed May 2nd, 2025. The travel industry saw the highest rate of growth in fraud attempts between 2019 and 2023, with a 117% increase in suspected digital fraud.  ^[3]TransUnion. “TransUnion Report Finds Digital Fraud Attempts Spike 80% Globally From Pre-Pandemic Levels.” Accessed May 2nd, 2025. Fraudsters will not be taking a back seat any time soon.

The shift from offline to online ticketing has increased fraud even more. As travel agencies increasingly move to and rely on digital platforms for booking flights, hotels, and vacations, they’ve inadvertently left themselves exposed to online payment fraud. In this unregulated environment, there are too many intermediaries, paving the way for fraudsters to pounce on online travel agencies.

Common Types of Travel Agency Fraud

What kinds of travel scams do you need to look for? Here are the most common ones:

A particularly notorious fraud in the travel industry involves fraudsters stealing legitimate credit cards from real people. They then use the stolen cards to place bookings through an agency. You might help a customer book a flight, a hotel stay, or even an entire high-priced vacation package, only to later find out that the real cardholder didn’t authorize those payments.

For your agency, the real damage comes in the shape of a chargeback. Sensing foul play, the customer will refute the charges with their credit card company. They’ll claim they never authorized payment, so your agency has to refund the total amount, plus a potential chargeback fee, for a transaction you thought was legitimate.

Known as “friendly” fraud, this type of travel agency fraud occurs when a customer places a booking and goes on the vacation, then disputes the transaction. They file a chargeback, claiming they didn’t authorize the transaction. Friendly fraud isn’t always deliberate fraud or a scam. Sometimes, it happens due to buyer’s remorse or customer confusion about how your agency’s name appears on their credit card bill. 

Some of the impacts of chargeback fraud include:

• You must pay the fees associated with chargebacks
• Your agency might lose the booking fee
• Your reputation with the payment processor may be tarnished
• If your chargeback ratio is too high, mandatory enrollment in a fraud monitoring program, which comes with its own fees

Account takeover fraud is exactly what it sounds like: Fraudsters hack into a travel agency or customer account held with suppliers, like car rental services. Once inside, the criminals make fraudulent bookings using those accounts’ saved payment information.

A supplier turning on an agent? Yes, it happens. Fraudsters posing as legitimate suppliers may provide fake invoices or fail to deliver promised services. They might even disappear after receiving a check, leaving your agency to bear the brunt of dissatisfied customers and face financial losses.

Why Travel Agencies Are Prime Targets for Fraud

The figures paint a grim picture: At 36%, the travel and leisure sector ranked second-highest in the world for suspected fraud in 2023. ^[4]Travel Pulse. “Travel Industry Is Second-Highest Industry for Suspected Fraud Attempts Globally.” Accessed May 2nd, 2025. Fraudsters target travel agencies for several reasons, from the potential to steal large payments to security measures easy to bypass.

From weeks-long vacation deals to airline tickets, payments in the travel industry frequently go above the $500 mark. ^[5]True Layer. “The 5 biggest payment challenges facing the travel industry in 2023.” Accessed May 2nd, 2025. Moreover, during the peak vacation seasons, your agency likely processes lots of these transactions daily. These large transactions translate to larger rewards for fraudsters if they can successfully circumvent security protocols. 

Small travel agencies or those focused on online bookings may not know how to invest in fraud prevention, especially if they don’t see the importance of being proactive or haven’t encountered a fraud event yet. This lax approach can make your agency a target.

How To Prevent Travel Agency Fraud

Fraud prevention is the best form of protection. When you understand the risks, you can take the necessary steps to prevent and respond to travel agent scams to safeguard your business.

Verify the legitimacy of the agencies and vendors you work with whenever possible. This will help you determine whether your prospective partners are who they say they are.

This could be as simple as reading reviews on trusted sites to see what real customers and other agencies have to say. In addition, verify contact information — legitimate agencies should have confirmed physical addresses with working phone numbers. 

Ensure any online platform you use for bookings complies with modern security standards:

• Data protection and privacy compliance
• Payment systems that utilize PCI-compliant gateways
• Cybersecurity protocols, ranging from SSL encryption to multi-factor authentication
• Fraud prevention tools, like credit card CVV matching and address verification

A robust payment system with a travel agency merchant account is your best defense against fraud. These verification systems ensure secure payments:

• PCI-compliant payment gateway
• Tokenization
• Multi-factor authentication
• EMV chip-enabled cards

These systems make it harder for criminals to breach your systems or steal credit card information by erecting multiple verification hurdles. Even if they get past the first one, the subsequent steps can stop them and protect your customers’ payment details.

Next, consider reinforcing the processing part of your payment infrastructure. The high-risk transactions your agency frequently handles require the right high-risk payment processing partner. Such a partnership ensures secure credit and debit card processing, fraud and chargeback reduction, and access to fraud prevention resources.

When you educate your clients about potential travel agency fraud to look out for, you reduce the risk of them falling prey to it. Encourage your clients to avoid wire transfers and remain on the lookout for any unauthorized charges on their bank statements. 

Make sure the billing descriptor — how your business name appears on customers’ credit card statements — is clearly attributable to your agency and that customers know how it will appear. This can help prevent accidental chargebacks from customers who see the transaction and think it’s fraudulent because they don’t recognize the business name.

Remind your clients to only book through your website or trusted travel agencies to protect themselves from fraud in the travel industry. 

It’s simpler and cheaper to stop fraud before it occurs than to respond to it afterward. Monitor transactions with fraud detection tools that flag and report unusual activity as it occurs.

Protect Your Travel Business and Customers

Travel agencies may be vulnerable to fraud, but with the right tools, you can protect your business and your customers. By using a secure payment system, verifying the partners you work with, and leveraging fraud prevention tools, you can detect suspicious activity, ensure your booking partners are legitimate, and protect your customers from account takeovers while securing your business against chargeback fraud.

Find out how PaymentCloud makes protecting your business from travel agency scams easy with built-in alerts and fraud prevention tools that integrate with your travel agency merchant account.

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