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How to prevent fraud in the hotel sector

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TrustCloud | How to prevent fraud in the hotel sector

In the hotel industry, it is estimated that between 5% and 6% of annual worldwide revenue is lost due to various forms of fraud. Accommodation companies that rent rooms or apartments for short periods are the most vulnerable. 


he expansion of tourism and new forms of accommodation has led to the emergence of new fraud methods in the hotel sector, highlighting the need to verify guests’ identities in the most efficient and robust manner possible. 

The sector has undergone a remarkable global recovery, surpassing pre-2020 crisis levels that affected the world economy. This resurgence has been driven by various factors, including the implementation of innovative strategies, adaptation to changing market trends, and the opening of new tourist destinations. The increasing demand for unique travel experiences and improved economic conditions have significantly contributed to this revival, solidifying the sector as a key driver for economic development in multiple regions. 

However, specific forms of fraud within the sector have only multiplied. As tourism has undergone a robust recovery, it has also posed challenges related to security and integrity in the industry, with guest and host identity verifications at the forefront, along with issues related to electronic payments. The digitization of tourism services, while facilitating accessibility and travel bookings, has created new opportunities for fraudulent activities, such as online scams, reservation forgery, and credit card fraud. The expansion of the tourism sector, while positive in many aspects, has required special attention to protection and cybersecurity to safeguard travelers’ trust and ensure long-term sustainable growth. 

Credit card frauds challenging accommodation identification filters 

As hotels have shifted towards digital platforms to manage reservations and financial transactions, new opportunities for fraudulent practices have emerged. Scammers, employing various tactics such as identity theft, card cloning, or personal information theft, have directed their efforts towards booking rooms and services through electronic means. This type of fraud not only impacts the reputation of hotel establishments but also directly affects customer trust. In response to this challenge, the hotel industry is constantly evolving, developing advanced cybersecurity measures and closely collaborating with financial institutions to protect transaction integrity and ensure a secure experience for travelers. 

The emergence of automated check-out and check-in points, eliminating the need for human presence, represents a convenience for travelers but may introduce new risks. These points of interaction, both physical and virtual, have expanded opportunities for fraudulent practices, as fraudsters seek to exploit gaps in security systems for illegitimate transactions. However, multi-layered identity verification technologies, such as those proposed by TrustCloud, have emerged as an essential resource in the fight against this type of crime. 

Remote identity verification at the core of tourism fraud protection 

The integration of advanced verification systems, including facial recognition, biometric authentication, and behavioral analysis, significantly strengthens security protocols during check-in and check-out. Our identity verification solutions enable a more robust authentication process, making identity theft more challenging by evaluating multiple factors before authorizing a transaction. Additionally, the real-time integration of these security layers adds a proactive dimension, allowing for the early identification of suspicious activities and the adoption of preventive measures. Discover how TrustCloud prevents significant financial losses for both guests and hosts through its identity verification solutions. Inquire for information now. 

Account takeover, leaks, and scams with loyalty programs 

Other types of fraud directly target guest accounts. Through account takeover (ATO), scammers gain access, either by hacking the hotel’s information system or the guest’s account, to legitimate accounts. Thanks to massive database leaks and credentials available on black markets, hackers can run automated scripts to test login data and validate accounts. As users increasingly use online platforms (35% of total hotel bookings are made via mobile devices, according to a Euromonitor study), it has never been easier to access real customer accounts. From there, the attacker can book a stay if a payment method is registered in the account or transfer points from a loyalty program account. When the customer discovers the issue, it is often too late. 

Preventing hotel fraud at every stage of a reservation 

To prevent fraudulent fund diversion, damage to the reputation of tourism accommodation businesses, and data breaches, digital processes for automatic identity verification must be reinforced at every stage of a reservation. 

  • Reservation: This is when the customer begins their journey through a digital booking platform. In this phase, robust verification technology ensures that the information provided by the customer is authentic, reducing the possibility of fraudulent bookings made with false or stolen data. 
  • Check-in and Check-out: During the check-in or check-out process, digital identity verification would strengthen the security of the process by ensuring that the person arriving to occupy the room is the same as the one who made the reservation. This process is essential to help prevent identity theft and ensure a safer and more reliable experience for legitimate guests. 
  • Payment: Cross-referencing secure payment data with registered identity contributes to ensuring that the transaction is legitimate and that the credit card used belongs to the reservation holder. This reduces the risk of payment-related fraud, such as the use of stolen cards or manipulation of financial information. 

The tourism accommodation sector is a prime target for identity fraudsters due to its high volume of low-value transactions, which may go unnoticed until it is too late. 

It is crucial for hotel accommodations to act responsibly in managing and storing personal data during reservations. Guest privacy protection should be a top priority, making it vital to work exclusively with committed providers, such as TrustCloud, ensuring the adoption of security and reliability standards in handling sensitive information. 

TrustCloud’s identity verification solutions (documentary, biometric, etc.), equipped with deepfake detection technologies and various configurable security layers, are also a powerful ally for an industry with the volume and projection like the hotel sector. 

Contact our fraud experts and request personalized advice now. 

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