Fraud in the mobility industry
Even a fraudster needs a break every now and then from his busy life scamming merchants all over the world. So when the fraudster finds time for a holiday, he looks for a good deal. He flies first class, orders a limousine to pick him up and drop him off at the luxurious 5 star hotel he booked, again, using stolen credit cards from innocent people. Yes, fraudsters shop everywhere, and merchants need to protect themselves.
Especially the mobility sector gets hit hard in the past year as new players arise and with the growth of this sector, so do the fraud cases. Losses in this sector can be painful. For hailing companies this is mostly because of the small margins. For rental companies, it’s rather the value of damaged or stolen vehicles: imagine losing a rental car worth 40.000 euros.
We’ll lay out the playing field of fraud in the mobility sector and have a look at how merchants can protect themselves.
What is Mobility?
Before diving into the topic of mobility fraud, let’s clarify what we consider to be mobility. Without striving to be complete in this overview, here are the main services in the mobility sector:
- Ride sharing
- Ride hailing
- Vehicle rental
- Vehicle sharing
Within these categories there is a lot of differentiation to be made. As you can imagine there are many types of vehicles which fall into the above categories. This can vary from an electric step, to a car that can be unlocked via an app, to a simple normal bicycle and scooter. Even flying vehicles seem to be not too far from becoming a part of urban mobility options. Airbus has already launched an app for booking a helicopter as a means of urban transportation. Others like Uber are working hard on creating new eVTOL (electric Vertical Take-Off and Landing) aircrafts and setting up a good infrastructure. Although this is expected to take 3 to 5 more years for this service to commercially start operations: the mobility sector has taken flight. New technologies and ideas on mobility have blossomed and the current landscape has become extremely divers.
Complexity of Mobility Fraud
The growing market has opened up opportunities for new businesses to kick-start, but also for fraudsters to pick their share. Fighting fraud in this market is complex for several reasons. First one being the variety of fraud types the mobility sectors suffers from.
The most common fraud types are:
- Online payment (credit card) fraud: for hailing, rental, ride and vehicle sharing
- Vehicle theft: rental, vehicle sharing
- Damage and misuse: rental, vehicle sharing
It’s interesting to have a quick glance at the Uber Engineering platform to see what measures they have taken to protect themselves against the enormous amount of fraud types they’re suffering from. It’s good to realize, just as Uber says themselves: “Fraud fighting at scale is a challenging task. We are not fighting against a small number of individuals, but large, well-organized criminal communities equipped with advanced technologies and excellent customer service.” The challenge is to be better than the fraudsters, and there lies the biggest bottleneck: not every merchant has the same resources and assets Uber has to combat fraud. Therefore, merchants need to be inventive themselves by finding the right measures, procedures and tools that fit their company & fraud profiles.
Regarding online payments, an important challenge is the lack of information merchant have for each transaction. In many car hailing cases, smooth registration wins over ‘know your customer’, in some cases leading the fraud prevention team to only have a phone number of the customer (which can even be purchased online). This makes it very hard to analyze a transaction.
Vehicle theft is a different ball game, you’d say. It’s not something you do on a frequent basis – one would expect all of a sudden a good or unknown customer turns bad, and decides not to return the vehicle. Is that true though? Would not this person have had some ‘bad’ registrations in data bases in the past?
Learn from the Past
Finding the best defense starts with understanding your opponent: the fraudster. As Uber said, they’re dealing with well-organized criminal communities. About 10 years ago the travel industry decided to unite and fight fraud as a community. They saw that the fraudsters would book on their website, but also on their competitors website. That’s when merchants from all over the world started to share their fraud data and experience with their peers on the platform they launched: Perseuss. With the support of both IATA (International Air Transport Association) and Europol they became increasingly effective in their fight against fraud. On average, the airline industry has been able to lower their fraud rates by 45%.
A similar approach has been rapidly expanding in the Mobility industry. Since the beginning of this year, Perseuss has gathered important Mobility partners in this data sharing operation. This means that all Mobility merchants can join by sharing their fraud data safely and using this data to protect themselves against new attacks. Interestingly enough, it has become clear that most of the big fraud gangs known in the database are operating cross sector: the same fraudsters attacking airlines, also try car rental companies for example. This means that the daily fraud feed of the entire Perseuss community is profitable for everyone checking their transactions real-time on the platform.
Especially if you are one of those companies that has very little data available - maybe you only have a phone number - you’ll need to start looking for all the information you can find. This is where technologies like device fingerprinting and behavior fingerprinting are extremely beneficial. Device fingerprinting helps you to identify devices by capturing unique features such as device number/id. Using this you can track user’s behaviour and feed this information in your machine learning algorithms. The algorithms are trained to detect patterns in both the devices used and the behavior in the users account. These predictive patterns are constantly changing as the algorithms are constantly fed with new information. Data scientists may detect a commonly used fraud pattern, but as soon as they therefore decide to block any users with this pattern, fraudsters know they’ve been caught and they start changing their behavior again. As you can image, it’s a constant cat and mouse game played between the fraudster and the data scientist.
Fighting fraud is hard, complex and very dynamic. It’s a battle fought in many sectors all around the world. And that is where an important first step needs to be taken by all fraud fighters: there is no competition in fighting fraud. There is so much information available and it’s a shame this information is not available for everyone. A lot of sectors have yet to learn from the travel community sharing their fraud data amongst each other. Hopefully the Mobility initiative of Perseuss can be the first step towards a growing awareness in this sector that sharing data can help you and your peers fight fraud successfully.
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