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Schogini Systems, PTP 292, Trivandrum 695038.Tel: 91 471 2360598/2363598 http://schogini.in support@schogini.in
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Tuesday, 13 April 2010
Airline Fraud Management
April 12, 2010 Version: 1.0 Gayatri S Ajith, Partner/CTO & Director, R&D @ Schogini Systems, with 8 years of experience in Web Based Technologies. gayatri@schogini.in
The airline industry experiences significant online fraud, with airlinesworldwide loosing more than US$1.4 billion to fraudsters in 2008.This alarming number is distributed to airlines with weaker or poorlyimplemented ecommerce solutions; they loose revenue to the tune of 10% to 20% by way of charge backs and loss of genuine ticket sales.Online fraud can occur in several ways. Generally, fraudsters usestolen credit card information to buy a ticket for themselves, or actas a travel agent, and buy a ticket for someone else. By the time thetrue card owner reports the theft, the flight has usually been takenand the airlines lose 100% of the revenue.60% of airlines rely on Internal Audit to detect and handle fraud, yetairlines have smaller Internal Audit teams than other industries. Overa third of the fraud is detected ‘by accident’.
Manage Fraud: Tips & ideas
Fraud management should be a continuous process. Generally, allfraud management techniques can be grouped into 3 main areas:
(I) Security Methodologies
Airlines must ensure that their systems are always compliantwith the latest security standards, especially where onlinetransactions are concerned.For credit card transactions PCI compliance is a must andcustomers need to be made aware that such standards arebeing met.
Schogini Systems, PTP 292, Trivandrum 695038.Tel: 91 471 2360598/2363598 http://schogini.in support@schogini.in
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Tuesday, 13 April 2010
Payer authentication (3D Secure) – Verified by Visa,MasterCard SecureCode – can also ensure that the merchant isspared from fraudulent transactions & charge-backs.For online transactions, airline IT department should ensurethat standard attacks like phishing, spoofing and hijacking areconstantly monitored and taken care off.
(II) Fraud Control Systems
Fraud policies must be defined and accepted by all who areinvolved in fraud management. Stakeholders and seniormanagement should also be made aware of such policies.Every employee involved must be clear about their role in thefraud management process.Real-time fraud control systems must be put in place toprevent or alert fraudulent situations. Fraud control systemsmust apply the agreed fraud policies.
(III) Fraud Detection & Quick Adaptation
As important as having dynamic fraud control systems, it’simportant to ensure that the fraud policies that are beingfollowed are also constantly updated – else the complete fraudcontrol exercise is futile.Fraud control system and involved employees must alertsuspected fraud and record in a central database so that it canbe monitored regularly.The internal audit team should have the capabilities andresources to analyse fraud and the resultant risks. The auditdepartment should have enough power (or report to the topmanagement) to take quick action in updating the companyfraud policies.
Schogini Systems, PTP 292,Tel: 91 471 2360598/236359
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Tuesday, 13 April 2010
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