The Fake Hotels Phenomenon Targeting OTAs - Travolution

Excerpt from Travolution

Fraudsters are becoming increasingly innovative, says Anthony Hynes, MD and chief executive of eNett International

The rise of fake hotels is a phenomenon that has left both consumers and online travel agents (OTAs) frustrated and out of pocket. And they're becoming more sophisticated and believable too. In recent months, the travel industry has witnessed a tidal wave of fake chalet websites, with one website, Alps-stay.com, conning unsuspecting holiday-makers out of tens of thousands of euros.

It's no wonder fraudsters are targeting consumers booking holidays – hotels in Europe saw an increase in bookings of 6% in 2017 compared to 2016. However, it's not just consumers suffering the monetary blows, OTAs are too. How? A fraudster will list a fake hotel and then use stolen credit cards to make a booking via the OTA's website. The OTA will then receive chargebacks for bookings after making a payment to the fake hotel. By this point, the fraudster will have withdrawn all the funds paid by the OTA and won't respond to any contact attempts, leaving the OTA with a financial loss.

Fake hotels are fast becoming a massive issue for OTAs. But they aren't the only rising scam confronting the travel industry – 'inflated room prices' is also becoming more prevalent. There are instances of room prices being inflated dramatically followed by a spike in booking volume. This indicates collusion between a hotel and a fraudster. When hotels raise the cost of their rooms, fraudsters will use stolen card details to book rooms via an OTA. When the OTA receives chargebacks, the hotel can provide guest documentation that relinquishes responsibility of them being debited for the fraud. The result? The OTA takes the hit and the hotel and fraudsters split the winnings.

Another common trick OTAs and consumers are caught out by is ticket purchases. Using stolen credit cards, fraudsters will often sell tickets to tourist attractions on a social media platform at a discounted price. So, when the attraction date comes around, either the OTA is left out of pocket after a chargeback or the consumer is turned away for possessing a fake ticket, out of pocket and with a bad holiday experience.