Protecting yourself against travel scams should be a big priority for Americans hitting the road this summer: Travel fraud rose 16% in 2017, according to Forter, an e-commerce fraud prevention firm.
Travel fraud costs between $283 and $588 per fraudulent transactions, according to Sift Science, a leader in machine learning fraud detection for online businesses, and airlines lose an estimated $2.4 - $4.8 billion each year to credit card fraud, which is 1-2% of their total revenue.
What Is Travel Fraud?
There isn't just one definition of travel fraud, as it comes in multiple forms. Travel fraud can be triggered at any point in the travel experience, from buying airline tickets or booking hotel rooms, to having your credit card data stolen while dining in far-off lands.
Travel fraud is accelerating based on the rapid growth of online travel booking services—not all of them legitimate. Also, the use of digital devices and apps raises the potential for travel fraud, as it gives scammers another target to perpetrate travel fraud.
6 Types of Travel Fraud and Travel Scams
Americans heading off on new travel adventures should be particularly wary of these six travel scams:
1. Third-Party "Discount Travel" Scams
Travelers may be tempted to reach for discounted vacation offers from third-party firms. Such companies offer "instant" travel discounts designed to lure consumers to make impulse decisions on hotels, airlines, cruise lines, and other travel packages. Consumers will provide a credit card or debit card number, and these discount firms will pocket the charges, and all too often not provide the services promised or skimp on the offerings.
2. Free Vacation Offers
Travel scammers also often offer free vacations that are more about stealing money from your bank account that providing a dream trip that's "on the house." Travelers wondering if free travel vacations are on the level are onto something—free vacations from companies you've never heard of before just don't happen, not unless there's a major catch involved in the deal. To recognize a fraudulent deal, know the warning signs, which include offers of gorgeous locales with no specific mention of hotels, resorts, or airlines.
Additionally, the free travel offer doesn't list any specific dates or any fees attached to the offer. If you're considering such an offer, read the fine print included in the offer (especially on fees included), check the listing companies' track records on websites like Trip Advisor, and review the listed record of the company on the Better Business Bureau website.
3. High-Pressure Booking Tactics
Unscrupulous travel services firms will often try to put the pressure on to close a toxic travel deal. They do so for a reason: Travel consumers who book a travel package well in advance often do so with a credit card payment. The fact is, according to the FTC there's a 60-day limit on disputing a credit card purchase (you must dispute it 60 days after receiving the first bill with the charge on it). By the time the consumer figures out the travel company is ripping him or her off, it's often too late to get their money back.
4. Rental Fraud
With the rise of Airbnb and other private residential home rentals, vacation rental scams involving apartment dwellers or homeowners who offer deep discounts on travel rentals are growing more pervasive. Here, consumers looking to book a place to stay will search for a good deal and dig up a home with a great rental price and contact the "owner." In reality, the owner is a scammer who insists on an immediate down payment on the property rental.
Often, the scam artists will insist on a bank wire payment, which can be transacted in a day or two, and goes directly into the scammer's account. When the traveler shows up at the property they find the property in a deteriorated state, or they find that the property is owned by some else, and isn't available for rent at all.
The good news? Online rental companies are now offering built-in protection against such scams. Airbnb, for instance, doesn't release payment to the homeowner until 24 hours after the renter checks in. HomeAway provides secure payments and money-back guarantees, as well. Also, read reviews to get the scoop on a property. Past travelers can tip you off to something shady. Be cautious on sites like Craigslist where you don't have guarantees and reviews aren't available.
5. Bait-and-Switch Scams
Another form of rental fraud comes in the form of bait-and-switch rental scams. In this instance, unscrupulous rental providers list a highly desirable, but unavailable, rental property. When a travel consumer signs off on the rental, upon arrival, the renter is told the original listing is unavailable and is steered to a much-less desirable property.
6. Fraudulent Currency Exchange Scams
Americans traveling overseas may use street-based storefront currency exchanges, which bill themselves as accessible and user-friendly. Travelers who use storefront currency exchanges should take caution. Such exchanges can charge onerous fees and provide the wrong amounts on currency exchanges, always in favor of the storefront currency exchange.
These fraudsters count on the foreign travelers not knowing the currency rates while traveling abroad, and that they'll embrace the convenience of exchanging currencies right on the street. Travelers should avoid storefront currency exchange services; instead, only use banks and other financial institution currency exchange services, or "currency exchange-only" stores that are accredited and that specialize in currency exchange services. U.S. travelers should always know the current exchange rates between the U.S. dollar and the relevant currency used in the country they're visiting.
Using a credit card, especially if you don't have foreign transaction fees when possible helps you avoid carrying around too much cash. And you can use well-known companies' ATMs as needed, though you'll want to be aware of any fees from that bank and yours.
Knowing How to Avoid a Travel Scam
In general, consumers planning and booking travel should be on guard against clicking on suspicious emails offering free or deeply discounted vacation packages. The old adage that "if it seems too good to be true, it likely is" is a handy rule of thumb when considering such deals. Also, if you do sign on to any vacation package deal, get all the terms in writing, and don't make any payments until you do. A reputable travel service will have no problem doing so, but a scam artist likely won't want any record of the deal.
Read the fine print on any travel deal and scour your invoice or contract for any hidden fees and charges that weren't clear upfront. Common travel fees include processing fees, late booking fees, and international departure and arrival fees. Get an explanation on any fees charged for travel, and ask if any can be eliminated or discounted. Traveling these days can be time-consuming enough without worry about getting scammed while on the open road. Watch for the travel scams listed above and make sure you don't fall victim to any one of them.
Other helpful resources:
- Learn how your credit card might help you if your travel plans unexpectedly change.
- Know what to do if your wallet is stolen.
- Find out about other top scams to avoid.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on May 22, 2018, and has been updated.