Credit Card Fraud at Hotels: How to Stay One Step Ahead?

In a recent survey by Stripe, 64 percent of global business leaders said that it has become harder to fight credit card fraud since the pandemic.

But here’s the good news: there are things you can do to fight back!

This blog is your one-stop shop for learning how to proactively combat credit card fraud at your hotel. We’ll explore 6 simple but effective ways to keep your business safe and your guests stress-free. 

So, grab a cup of coffee (or your beverage of choice), and let’s arm ourselves with knowledge to protect your hotels and guests.

What is A Hotel Credit Card Fraud?

Before we delve into credit card fraud, let’s understand what we’re facing. 

Credit card fraud happens when someone uses another person’s credit card information without their permission to make purchases or reservations. This can occur in a few ways:

• Card Not Present (CNP) Fraud: This is becoming increasingly common. Fraudsters steal credit card details (card number, expiration date, CVV code) and use them online to book rooms or pay for services without even needing a physical card.
• Physical Card Theft: The classic case – a thief steals a guest’s wallet or credit card and uses it to pay for their stay or rack up charges.
• Account Takeover: Fraudsters use stolen personal information (including credit card details) to gain access to a guest’s existing account and make unauthorized charges.

By understanding the different types of fraud, you can be more alert to potential red flags and take steps to protect your hotel and your guests. 

Now, let’s get insights into some proactive ways to keep those credit card bandits at bay!

6 Proactive Ways to Combat Hotel Credit Card Fraud

Payment fraud poses significant risks, especially for independent properties like yours. So, how can you minimize this risk? Here are some practical tips and best practices to help safeguard your business.

1. Verification at Check-In

Verification at check-in is a critical step in preventing credit card fraud at hotels. It is the first line of defence against a hotel credit card fraud. Here’s how you can do it–

• Confirm Identity: This might seem obvious, but always ask for a valid government-issued photo ID (driver’s license, passport) that matches the name on the credit card used for booking. Double-check the expiration date and photo to make sure it’s the real deal.
• Don’t Be Shy, Ask Why: If something seems off – a blurry photo ID, a name that doesn’t quite match, a guest acting nervous – don’t be afraid to ask questions politely. You can explain it’s just for security purposes.
• Pre-Authorization Power: For high-risk reservations (expensive rooms, last-minute bookings), consider pre-authorizing the credit card. This puts a temporary hold on a small amount to confirm the card’s validity. Once confirmed, the hold gets released.
• Digital Check-In Done Right: Digital check-in is convenient, but security shouldn’t take a vacation! Make sure your system requires guests to upload clear photos of their ID and credit card during the online check-in process.

By implementing these verification practices at check-in, hotels can significantly reduce the risk of credit card fraud while providing a secure and seamless experience for guests.

2. Maintain Accurate Records

Accurate record-keeping serves as a crucial tool in identifying and preventing credit card fraud instances. By meticulously documenting all guest transactions, including payments, check-ins, and check-outs, hotels can effectively track and monitor any suspicious activities. Here’s how—

• Accuracy is Key: Make sure all guest information (name, address, phone number) is entered accurately during check-in and matches the details on the credit card. Typos and mismatched info can create openings for fraudsters.
• Digital Detox (Sometimes): While digital records are convenient, consider keeping paper copies of IDs and bills of high-risk credit card transactions. At times a physical record can be a lifesaver.
• Save Data: Store all guest information securely, following industry best practices. This might involve using encrypted databases and access controls to keep prying eyes away. Investing in a cloud-based hotel PMS can also help centralize and encrypt data, ensuring its integrity and protection against unauthorized access.
• Clean Up Crew: Don’t let old data linger! Regularly purge outdated guest information according to your local data privacy regulations. This reduces the risk of a data breach and keeps your system squeaky clean.
• Utilize Technology: Utilizing technology can streamline record-keeping processes and enhance accuracy. Implementing an integrated hotel management system or booking software can automate many record-keeping tasks, reducing the risk of manual errors.

By implementing such practices to maintain accurate records, hoteliers can strengthen their defenses against credit card fraud and ensure the integrity and reliability of transaction records.

3. Make Clear Anti-Fraud Policies and Procedures

Imagine a suspicious reservation comes in, but your staff isn’t sure how to handle it. That’s when clear anti-fraud policies come in. Here’s how to create a winning strategy:

• Create Clear Policies: Write down clear and concise procedures for handling suspicious transactions. This might include guidelines for verifying high-risk bookings, handling requests for address changes, and reporting potential fraud. Make sure your team is trained to follow your policies and escalate concerns if they find anything suspicious.
• Make it Accessible: Keep your anti-fraud policies readily available for staff as a reference during busy check-in times. A quick digital document or a printed poster by the front desk can be a lifesaver.

By establishing clear policies and procedures, you equip your staff with the tools they need to fight fraud and protect your hotel. Remember, a well-trained team is a powerful weapon against sneaky credit card thieves!

4. Staff Training on Fraud Awareness

Training staff on fraud awareness is vital for preventing credit card fraud in hotels. By educating employees on common fraud schemes, red flags to watch out for, and best practices for handling suspicious situations, hotels empower their frontline defenders.

Staff training covers various fraud types, including card-present and card-not-present fraud, and teaches employees to recognize indicators like unusual booking patterns or behavioral discrepancies. Practical exercises and regular refresher sessions reinforce learning and maintain staff vigilance.

Creating a culture of openness encourages staff to report suspicious activity promptly, ensuring swift and effective responses to potential fraud incidents. With informed and vigilant employees, hotels can effectively combat credit card fraud and protect both their business and guests from financial harm.

5. Descriptive Credit Card Descriptors

Clear and descriptive descriptors for credit card transactions are essential for preventing fraud and improving guest satisfaction. By using concise language that accurately reflects the transaction, including relevant details like the hotel name and location, can help guests easily identify purchases and reduce confusion. 

Regularly updating descriptions to reflect changes in pricing or offerings ensures accuracy and relevance. Clear descriptors not only enhance guest experience but also play a crucial role in fraud prevention by enabling guests to quickly identify unauthorized transactions. 

Prioritizing clear descriptors benefits both guests and hotels by reducing disputes and chargebacks while improving overall fraud prevention efforts.

6. Regular Financial Review

Financial reviews are crucial for hotels to ensure health and identify areas of concern. By analyzing financial data, setting clear objectives, and monitoring performance against benchmarks, hotels can optimize their financial strategies. 

This includes reviewing financial statements, conducting audits of processes and controls, and collaborating with financial professionals for expertise. Documenting findings and action plans ensures accountability and tracks progress over time. 

Prioritizing regular financial reviews helps hotels enhance performance, identify growth opportunities, and mitigate risks effectively.