How to Deal with Travel Fraud and How KYC Helps
If you love to travel then you should know it’s not cheap. Be it somewhere local, or somewhere really far away, there will always be costs. This high cost is one of the reasons why there are so many attempts to fraud and cheat the players in the travel industry.
Sometimes, these cheaters will appear in the form of fraud travel agencies while other times it will be the customer who is the fraud. No matter which case it is, you want to avoid this from happening at all to protect yourself and your business.
A very common way of doing it is to use the KYC approach. KYC or Know Your Customer is a method of verifying the identity of a customer or a person to avoid getting scammed and cheated.
In this article, we’re going to explore the different kinds of travel fraud that take place. We’ll also be going over KYC in much greater detail and also figure out how this concept can be applied to deal with travel fraud. Without further ado, let’s jump right into it.
The Travelling Industry and Different Kinds of Travel Fraud
The travel industry has been thriving ever since travelling has been a thing. Every year millions of tourists visit the various attractions scattered across the planet. But with that impressive number, there is one other thing that the industry has to deal with every year. And that is an attempt at travel fraud.
To put a stop to this fraud scam, cybersecurity experts have been on top of it. There are multiple measures in place to protect the victims. One of the popular methods, in this case, is the KYC service. It’s what we’re here to talk about today.
But before we start about KYC, we need to understand the types of travel fraud that are prevalent in the country. Understanding them can help against preventing them. So, let’s take a look at some of these travel frauds.
Stolen Credit Cards
One of the most common ways of travel fraud is the use of a stolen credit card. Using a credit card like this is convenient since the fraudster isn’t liable for any of the charges. But what are some of the uses of these stolen cards?
Using stolen cards, products can be purchased online as all it needs is just the information of the card and nothing else. Some fraudsters will also visit the financial institutions that issued the card and try to cancel it for free credit. Others will buy a gift certificate with hopes of redeeming it.
There are endless ways to use a credit card. And all of this is done before the owner even notices. Because once the bank informs the owner, they’re going to cancel all of the purchases. And once that happens, it affects the businesses that took payments with the particular card.
Fake Travel Agencies
This fraud happens the most when it comes to travelling. In order to make your travel plans easier, there are plenty of travel agencies that exist. Normally, these agencies will give you all the necessary benefits of booking your hotels, hooking you up with a travel guide and whatnot.
But the fraud here is when scammers will open a fake travel agency. They will offer the same services as a legit agency. But they’ll also offer discounts. This discount is why many tourists get roped into the scam.
Travelling costs a lot, there’s no doubt about it. That’s why you’re always looking to save money wherever you can. This is exactly how you get trapped in a scammer’s scheme.
You’ll make all the plans and make all the necessary arrangements and payments. But to your surprise, you’ll find that the agency doesn’t exist and you paid for nothing. All your money went down the drain and it’s never coming back
But that’s not even the worst case. If you’re having a bad case of luck, the fraud agencies will steal your payment information to make further purchases leaving you with further losses.
Taking Over Accounts
Through cyberattacks, fraudsters can take over your account and take out the transaction information. At that point, the fraudsters are free to use your information however they’d like.
If this happens to you, there’s nothing you can do to get back the money you lost. That’s why before this ever happens to you, we suggest investing in some good cybersecurity to guard against harmful attacks.
But just cybersecurity sometimes proves to not be enough to safeguard you against these scams. As an alternate, we’re suggesting making use of KYC services for individuals and businesses.
What is KYC?
As we were saying before in brief, KYC is a process of getting to know your customer. But this can also apply to travel agencies also. It acts like a first barrier by getting to know who you’re getting into business with.
KYC is most common in financial institutions such as banks. It also comes into play when you’re making an investment. By doing this you are able to verify someone’s identity and investment knowledge. It also helps to understand a person’s financial profile.
KYC is an ethical requirement more than an obligatory one. It comes into play when opening and maintaining a person’s account. This can be a financial account, but it can also be an account for travelling.
There are three major components to the KYC process. These are:
- Customer Identification Program (CIP)
- Customer Due Diligence (CDD)
- Enhanced Due Diligence (EDD)
Let’s take a look at these components in a bit more detail to better understand them.
Customer Identification Program (CIP)
During this part of the KYC, customers are required to provide 4 vital pieces of information. The customer has to provide their full legal name, date of birth, address and identification number.
Customer Due Diligence (CDD)
This is the next process in KYC. This is when all the information provided by the customer is collected and verified. A risk profile is made of the customer to evaluate them for suspicious activity.
Enhanced Due Diligence (EDD)
This is for high-profile customers who are riskier to deal with. This is done to eliminate any risk of infiltration, money laundering or terrorism financing. If the collection of any additional information becomes necessary, it’s also done during this phase.
KYC in the Travel Industry
In the travel industry, the most valuable thing to businesses is customer satisfaction. To that end, businesses will not add any cybersecurity measures. This is because some customers feel that it’s a breach of hospitality and privacy.
But does it have to be this way? Is there no way to unite customer satisfaction as well as have security measures to protect one’s businesses? There is, and it’s the KYC method.
If you implement KYC practices in your business or service, you can know about your customers before the deal goes anywhere. You also need to be ready for full transparency which will help build trust. That way your customer will be satisfied and you can stay free of worries.
KYC is so good in what it does because you are able to know and understand your customer. This also helps you single out any fraudsters posing as customers trying to cheat you. You can put a stop to all the exploitation that they might do with the help of KYC.
Levels of KYC You Should Be Using
A question might come to mind, what kind of KYC should you be using? Should you go all in and demand everything, or can you get away with just a little? The answer to that question will depend on the level of your business.
Depending on how big your travel-related business is, the level of KYC needs to change accordingly. If you have a hotel business, take the CIP part of the KYC from your customers at the time of their check-in. You can do CDD, later on, to verify if they are who they say they are.
KYC is not just good for understanding customers, but it’s also good in the fact that everything you’ll be doing is within government regulations. So, there’s nothing here that’s a breach of privacy and it won’t come to bite you back later on.
KYC Software
Instead of manually asking for all the information from your customer, you can automate the entire process using KYC software. Using one can also mean that your customer doesn’t feel pressured to provide the information.
KYC Software is also incredibly cost-effective. You can get a lot done in a short amount of time. If you did the same thing manually, you’d normally have to employ someone to do the work and pay them a lot of money.
Instead, by using KYC software, the entire process becomes streamlined and so much easier. If you’re looking to decrease the chances of fraud, then consider investing in KYC software.
But simply having one won’t provide you with all the security that you are expecting. Any KYC software will work the best with other cybersecurity tools in place. These tools can be data enrichment tools or email lookouts.
If you’re unsure which ones are needed for your business then you can try contacting a cybersecurity expert who’ll get you hooked up with all the goodies.
Final Thoughts
KYC is a very noninvasive method of verifying someone’s identity to prevent the risk of fraud afterwards. It’s a legal process and works within government regulations. If you are worried about getting scammed in your business, then consider employing KYC software to safeguard against such things.
FAQs
Check out some of the commonly asked questions about KYC and its application in stopping travel fraud.
What is KYC?
KYC is the process of getting to know your customer by collecting and verifying their identity. Depending on the level of risk you possess, you will either have to go through customer due diligence or enhanced due diligence.
How many steps in the KYC process?
There are 3 major components of KYC. These involve collecting the customer’s information, verifying it and doing a risk prediction.
What kind of information do I need to provide for KYC?
For the customer identification program, you need to provide 4 pieces of information to verify your identity. You need to provide your full legal name, date of birth, place of residence and identification number. The information needs to add up and match everywhere or it will be considered invalid.
Can I get scammed while travelling?
While most of the scamming occur before or after the act, it’s possible to get scammed while travelling. You can get scammed by local sellers and travel guides.
Does KYC fall under cybersecurity?
You can perform the KYC process manually, but it’s also possible to automate it using the software. At that point, you can consider it a cybersecurity measure. For the best experience, we recommend combining KYC with other cybersecurity measures.
What should I do if my credit card gets stolen?
You should inform the company that issued the card to close the freeze the card immediately. After that, you need to assess the number of losses incurred. If possible, ask for refunds. Companies have measures in place to refund money in cases like this.
How to steer away from fake agency scams?
Using popular travel agencies or reputed websites is one of the easiest ways to do this. Even if these websites cost a little more than some unknown site offering discounts, you have the guarantee of not getting scammed here. After all, losing a little money is better than losing it all.
Is the use of KYC common in the travel industry?
KYC is commonly used in financial institutions. It’s done to understand who the customer is. But because of the services that it offers, it’s possible to implement and make use of it in the travel industry also. In fact, a lot of businesses in the tourism sector are making use of it.