Have you fallen victim to a hotel credit card scam? If this concerns your property, it's crucial to understand the various types of scams to better prevent them. The risk often varies based on hotel size, location, and security measures. Larger chains are frequent targets due to their high transaction volume and data storage.
Different types of credit card fraud in hotels
With numerous scams occurring regularly, it's crucial to recognize credit card fraud promptly. Below are five of the most common types of scams:
Reservation fraud
Hotel reservation fraud occurs when someone uses a stolen or fraudulent credit card to make a hotel reservation. They may try to make a deposit and then cancel the reservation, requesting a refund to a different account. Alternatively, they might book expensive rooms for extended stays with no intention of paying or try to resell the room to others at discounted rates, earning unauthorized commissions on the reservation.
Chargeback fraud
Chargeback fraud occurs when fraudsters make hotel bookings, enjoy the services, and then dispute the charges by claiming that the transactions were unauthorized, resulting in chargebacks for the hotel. This can lead to disputes with payment processors and financial loss for the hotel. Chargeback fraud may also occur when a guest's credit card has been stolen or when they have been a victim of a data breach. This represents one of the significant challenges related to hotel data protection.
Card testing
When a credit card is stolen or a fake credit card is being used, fraudsters may make small purchases to validate the card. This is a widespread practice because although the credit card needs to be authorized, it won't be charged until checkout. Essentially, they are testing to see if they can use the credit card for larger and more costly purchases.
Insider fraud
Insider fraud may occur when a hotel employee gains access to the payment system and engages in fraudulent activities, such as making unauthorized charges or stealing credit card information for personal gain.
