Gabriel Lucas, Director – Payments Advisory at Redbridge, examines how airlines, car rental companies, hotel groups and booking platforms can turn abuse prevention into a performance lever.
In payments, fraud is still associated with card theft and identity theft. In travel and passenger transport, you are seeing something different. What are we talking about?
Historically, payment fraud meant stolen cards, false identities and account takeover. Those risks remain significant. But in Europe, PSD2 and strong customer authentication have substantially reduced fraud at the moment of payment. The pressure has moved downstream, to what happens after the transaction.
In retail, the term is return abuse: order three sizes, wear one, send everything back. In travel and mobility that vocabulary does not work, because there is nothing to return. The room was slept in, the car was driven. The service has been consumed, and there is nothing to give back.
Abuse therefore takes other forms: disputing a no-show or cancellation fees that were accepted at the time of booking, claiming a refund after travelling on the grounds that the service was not as described, opening multiple accounts to stack “first booking” discounts, disputing charges raised after a vehicle is returned — fuel, damage, fines. The term we use is policy abuse. When the abuse runs through the card networks, it becomes first-party fraud, or friendly fraud.
What makes it difficult is that the people involved are not professional criminals. They are often opportunists, sometimes customers who do not weigh the consequences of their own behaviour. And because they use a real identity and a valid payment method, conventional fraud detection tools do not pick them up.
What makes the travel sector particularly exposed, compared with conventional e-commerce?
Five characteristics, and they compound.
An exposure window no other sector has
A booking may be paid for six months before departure. Between taking the money and delivering the trip, and then until the cardholder’s dispute rights expire, the exposure can run for the better part of a year. No other consumer-facing sector waits this long between the moment the money comes in and the moment it is safely yours.
Charges raised after the service has been delivered
This is car rental’s defining problem, but hotels know it too: fuel, damage, fines, cleaning, minibar, late return. These amounts are charged to a card on file, without the cardholder present, sometimes weeks later. It is the most dispute-prone transaction in payments.
The remote order channel
Telephone and email remain widely used in hotels, holiday rentals and agencies. This channel falls outside strong customer authentication, so there is no liability shift and the merchant absorbs the cost by definition. Across the engagements we have audited, the dispute rate on this channel reaches 0.311%, against 0.004% for e-commerce across the same set of merchants. A factor of eighty.
Onboard sales
In aviation, in-flight sales are often processed offline: the transaction is captured on board, then submitted for authorisation after landing, sometimes several days later. The cardholder recognises neither the date nor the amount. The dispute becomes almost automatic, and it is often made in good faith.
Industrialised claims
Travel is the only sector in which specialist firms actively approach customers to pursue claims on their behalf, in return for a commission. Compensation for delay or cancellation is the most visible example. The line between a passenger’s legitimate right and an opportunistic claim blurs, and the volume is enormous.
This is about thresholds, not just losses. Travel merchant category codes are already classified as high risk by acquirers. Beyond the direct loss, a drifting dispute rate triggers scheme monitoring programmes, with penalties attached, then a deterioration in acquiring terms and tighter collateral requirements. In a sector where the acquirer already withholds cash against the risk of undelivered service, this is as much a liquidity question as a margin one.
What is the real impact, and should this be a strategic priority?
Without hesitation, yes. At first glance, it is tempting to treat these losses as a normal cost of doing business. In reality, across e-commerce as a whole, abuse commonly accounts for 1% to 3% of turnover. For many companies that matches the marketing budget, or exceeds it. In highly promotional businesses, or those with generous cancellation policies — and travel ticks both boxes — losses can be considerably higher. For a business running a net margin of a few points, it is a structural risk.
Beyond the direct loss, abuse corrupts the numbers you use to run the business. It distorts acquisition cost, customer lifetime value and retention rates, and the decisions that follow are wrong. If lifetime value includes repeat customers who carry a thin or negative margin, the company spends more to acquire more of them.
Operationally, the hidden costs accumulate: pressure on customer service and dispute teams, dispute fees charged by the provider, the cost of compiling representment evidence, friction with the acquirer. In rental, add the cost of chasing damage claims; in hotels, the time spent reconstructing proof of stay.
The good news is that companies which start measuring and then addressing the issue in a structured way often see quick results, sometimes from simple adjustments. Redesigning your terms of sale and your customer segmentation often returns more than conventional fraud prevention work, and sometimes more than acquisition spend. Handled well, abuse prevention starts earning money rather than only protecting it.
How do you contain abuse without damaging the customer experience or the brand?
That is the heart of the problem, and it is especially acute in a sector where the experience is the product. The worst option is to impose blunt, uniform restrictions: they create friction for everyone, drive away the best customers and damage the brand.
Effective approaches rest on precision and personalisation.
Start with the payment chain, not the commercial policy
This is the most frequently overlooked point, and the least expensive. A significant share of disputes is not abuse at all: it is a customer who does not recognise the descriptor on their statement, because it carries the name of a legal entity, a booking engine or a technical provider rather than the brand they bought from. A clear descriptor, a settlement date consistent with the stay, and a reminder email before the balance is taken: these three measures reduce dispute volumes before the question of abuse even arises. In the same vein, replacing telephone card capture with an authenticated payment link brings the channel’s exposure down to e-commerce levels, without changing the sales process at all.
Differentiate terms by trust and risk
The sector already has the instruments: fare families, loyalty tiers, deposit amounts, cancellation windows, prepayment versus payment on arrival. It is usually enough to set them by behaviour rather than by price alone. A loyal, low-risk customer should keep a smooth and generous experience; a riskier profile can be subject to stricter rules, provided they remain consistent and defensible.
Detect in real time
Device fingerprinting, behavioural analysis, abuse scoring: these methods pick up weak signals while limiting false positives. In travel, a few signals are particularly telling — the last-minute booking paid with a card never used before, repeated bookings cancelled just before the free window closes, the mismatch between the card’s country of issue and the itinerary.
Apply friction selectively
Identity verification, spending limits, a higher deposit, requiring a card in the driver’s name: these controls should be reserved for risk cases, not applied across the board.
Communicate, and favour direct contact
It is often better to warn, explain, or offer a goodwill gesture than to ban outright. You protect the value, you reduce repeat behaviour, and you turn a potentially negative interaction into an opportunity to build trust. In travel, where customers return and online reviews carry real weight, that trade-off is even more favourable than elsewhere.
Prevention works best when it is designed into the customer journey from the start. Done well, it stays almost invisible to trusted customers, while risk is managed quietly in the background.
Do you have examples where turning abuse into a source of value has genuinely worked?
Two cases from outside travel, where the mechanics carry over directly.
A subscription platform was facing extensive abuse of its trial offers and refund requests. Rather than withdrawing trials or tightening the experience for everyone, it introduced light identity checks and rate limits based on device and IP address, while testing a more flexible refund policy for high-trust users. The result: a 30% fall in abuse, higher conversion and retention, and improved satisfaction. The mechanism is exactly the one a booking platform would apply to its “first booking” discounts.
A premium fashion brand then replaced its uniform returns policy with a dynamic model, adjusting terms according to purchase and return history. Riskier profiles were given stricter conditions; loyal customers kept a flexible policy. The segmentation cut abuse by more than 35% and improved margins, without making the experience worse for high-value customers. Transposed to travel, this is the move from a single cancellation window to one modulated by customer history.
Both cases say the same thing: reducing abuse does not mean punishing everyone. With well-designed segmentation, you cut losses and improve the experience at the same time.
What advice would you give an airline, a rental company, a hotel group or a platform starting to take this seriously?
First, name the problem
Many companies still file these losses under “customer service”, “goodwill gesture” or “promotional cost”, without recognising them as a form of behavioural fraud. Naming it clearly is what makes it possible to measure, manage and prioritise it.
Then quantify it
Track refund and dispute rates by segment, by sales channel, and by property or route. Analyse promotion usage. Examine dispute trends among repeat customers. Metrics such as the abuse-related loss rate, the ratio of abuse to lifetime value, or the gap between service delivery and dispute make the problem visible. Even a simple baseline almost always reveals losses that were previously invisible.
Align the right teams
Fraud, payments, revenue management, customer service and legal need to move together. Risk is only one part of it. It touches pricing design, terms of sale and the protection of long-term value. Abuse sits precisely at the intersection of these functions, and silos make it harder to resolve. In travel, add the acquirer relationship, since the level of disputes drives the collateral you are asked to post.
Start small, think big
Test on a subset — one market, one route, one brand within the group — measure precisely, iterate. Quick wins build support. Over time, the company stops reacting and starts designing for it.
The window that matters. The best time to start is when the peak season figures have just been closed: dispute volumes are fresh, the cases are documented, and the next peak is still far enough away for a correction to be tested, deployed and measured.