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How to Prevent Credit Card Fraud at Your Hotel

Wanny Mei
BY
Wanny Mei
October 21, 2020
Credit card fraud is likely not at the top of your mind, but fraud prevention can save your hotel a lot of money and trouble. Unfortunately, credit card fraud is a growing problem, especially with increasing numbers of transactions happening online. For a smaller hotel, fraud could make a considerable dent in the year’s profits, especially since businesses are often left to cover chargeback fees. And in these already difficult times, it can really be an even greater nightmare.

To try to prevent credit card scams, here are some signs to look out for:


1. Most fraud happens from online purchases, not from actual credit cards

According to a Javelin Strategy & Research study, credit card scams are 81% more likely to happen in online sales. In these cases, cards are not present, and the buyers are using stolen information. With more and more bookings happening online, fraud could pose a greater issue over time, as more people prefer to research and book hotels digitally.


2. Big spenders

While most fraudulent spenders look for big-ticket items that can be resold, your hotel should still watch out for high purchase amounts. If someone is spending significantly more than the usual guest, you should consider the possibility of fraud.


Your hotel can set up some preventative measures to avoid credit card scams. Some actions include:

  1. Requiring the complete name, address, ZIP code, and phone number of the cardholder.
  2. Asking for the 3- or 4-digit code on the back of the card.
  3. Implementing an address verification service (AVS) to block purchases when the billing address entered doesn’t exactly match the billing address on the cardholder’s record.
  4. Requiring a photo ID that matches the cardholder's name.
  5. Using a fraud detection service that blocks suspicious activity based on factors such as where the transaction originated.
  6. Finding an excuse to call the customer at the phone number listed, and ask to speak with the cardholder. If the person you speak to is not the cardholder or they don’t recognize the person at all, there’s a chance you’ve encountered a scam.

hotel front desk staff on the phone

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