In the modern age, when Artificial Intelligence has established its roots in almost every field, fighting fraudulence of course has to be added to its resume. In the year 2022, when triangulation fraud cost international businesses billions of dollars, some sagacious minds took it upon themselves to tackle this nuisance. And so in 2023, a new era dawned, where AI safeguards against scalable triangulation schemes.
AI Safeguards Against Scalable Triangulation Schemes – A Quick Glance
AI Safeguards Against Scalable Triangulation Schemes – An Overview
Triangulation Fraud – AI Safeguards Against Scalable Triangulation Schemes
In the year 2022, international businesses were a victim of triangulation fraud, and it was estimated that these triangulation frauds cost businesses up to $34.6 billion. When done at scale, triangulation fraud leaves ticket merchants which also includes travel advisors with thousands of dollars in chargeback penalties and no recourse. Triangulation fraud involves three entities:
- The first one is the legitimate travel agency or airline selling tickets.
- The second one is the legitimate customer trying to buy a ticket.
- The third entity is the fraudster.
- There is also a fourth hidden entity in the background, the person whose credit card was stolen.
Now what happens is that after the fraudulent steals or buys the stolen credit card, they set up a website. When the prey i.e., the legitimate customer visits the site, often drawn in by the shimmering and attractive discounted prices, the fraudster springs into action, taking the customer’s details and charging their credit card. However, the money goes to the company set up by the fraudster, not the airline or the travel agency. The next step the fraudster takes is that they purchase the ticket from the travel agency or airline via online booking using the stolen credit card.
The legitimate customer then receives the ticket and sees a charge on their credit card, which they brush off as normal because they did just purchase a ticket. What happens next is that the person whose credit card was stolen will see thousands of dollars worth of unauthorised charges in their next statement. Which they will obviously deny. In turn, the credit card company will then demand chargebacks from the airline. Which will turn its frustration onto the agency and hit it with a debit memo. When done at scale, triangulation fraud can be significant and hurt the merchant the most.
Triangulation Fraud Traditional Prevention
The most successful triangulation schemes are those that are done for last-minute flights that are leaving within the next 24 hours. When this happens, airlines don’t have enough time to vet every last-minute ticket and once the passage climbs on board, the airline has no recourse, and the ticket can’t be revoked.
In order to stop such fraudulent purchases, travel companies tend to turn to rule-based prevention techniques. The travel companies either refuse to sell last-minute tickets to unknown customers or try to match the name on the credit card to the name on the ticket in order to see if they are being scammed or not. While these techniques have proven to be somewhat effective at preventing fraud, they also come at a high cost, as in order to save themselves from fraud, airlines and agencies have to give up on selling last-minute, high-priced tickets.
Even asking to check if the name on the card matches the one on the ticket means most business travel is rejected. Therefore, these techniques present a lose-lose situation for travel agencies and airlines. They can either become a victim of fraud and be subject to expensive chargebacks or turn away legitimate customers from purchasing high-priced tickets.
Moreover, the fraudsters are also quite remarkably adaptable. As the rules are static, they always find a way to bypass them, leaving in their wake merchants with rules that only prevent legitimate customers from purchasing tickets. Therefore, even though these traditional means might be effective they present a lose-lose situation and that is the sole reason why AI is needed. Not only does AI safeguard against scalable triangulation schemes but does so in a way that no loss comes to the merchants.
AI Safeguards Against Scalable Triangulation Schemes – AI vs Triangulation Fraudsters
AI tools face the same limitations as merchants, they are not PCI-compliant. PCI is a set of security standards that govern the processing of credit card information. Therefore, neither AI nor merchants are authorized to hold the full credit card number, due to which identifying a stolen card becomes difficult. Moreover, they don’t have access to Personally Identifiable Information like social security numbers, full names, and email addresses. What’s ironic is that these protocols are set in place in order to protect privacy and security, however, these very protocols work against AI that is being used in fraud detection.
You might be wondering that the article is titled “AI Safeguards Against Scalable Triangulation Schemes” so where is that part? Well, even though AI might face some limitations, it can however look at tens of thousands of data points in order to reveal patterns and behavioral cues when deciding whether to accept payment or not. When AI starts to see scalable patterns emerge, it quickly blocks the purchases that match the patterns, and that is how AI safeguards against scalable triangulation schemes.
The scalable patterns it detects include a number of different types of activities. These could relate to a specific travel agency, a network of travel agencies, specific airlines, specific geographies, and other numerous elements. This, however, may still allow fraudulent attempts to be approved, but scalable fraud is stopped in its tracks.
The advantage AI has over rule-based prevention is that AI looks for anomalous patterns that are based on millions of data points from numerous previous transactions. Whenever purchase attempts match behavioral norms, AI approves the purchase. Moreover, AI models are sometimes not only supervised but also unsupervised within the supervised system, meaning that these models can discover and learn new types of scalable fraud schemes and devise means to overcome them.
AI Safeguards Against Scalable Triangulation Schemes, Opens Last-Minute Travel
In today’s era of fraud and scams, it is vital that travel agencies and airlines, introduce AI into fraud detection and payment approval processes. Apart from preventing scalable fraud, Artificial Intelligence also allows businesses to sell high-priced tickets at a lower risk. AI safeguards against scalable triangulation schemes but also gives merchants peace of mind when making trades.
