It could be disguised as a typical guest interaction: Someone checks in under a corporate account that does not require a credit card, only for management to later realize the guest was not an employee of the company. Or, it could be someone whose credit card fails to go through, so he or she provides the clerk with a false authorization code. Both of these scenarios are common lodging industry scams, pulled by con artists who exploit front desk protocols to get a free stay, and oftentimes managers don’t even know what happened until the guest is long gone.
Fraud is a growing issue in the United States, with retailers losing $32 million in 2014 to credit card scamming, up from $23 million in 2013, according to a recent Business Insider report. For hoteliers to avoid becoming a victim of one of these cons, it is important that they not only recognize the signs of common industry scams but also learn how to be proactive in protecting a property from vulnerability.
Justin Bragiel, general counsel at the Texas Hotel & Lodging Association (THLA), says small, independent properties and bed-and-breakfasts must be particularly mindful of such threats, as those establishments may not have sophisticated security systems or procedures put in place to counteract scamming. Elderly hotel owners may also be perceived as easy targets for fraud. When his association members detect suspicious behavior, which can be identified when any guest tries to provide credit card or account information while bypassing verified sources, Bragiel suggests it is always best to err on the side of caution by putting processes in place that can be used across all transactions to help reduce the chances of fraud. “We encourage all our members to check photo ID in-person when an individual shows up at the property, and make sure everything matches the payment method named on the reservation,” he says. “Also, never call a telephone number provided by a customer or on the back of the card.”
And not all scams require that the scammer be present at the hotel. During Bragiel’s seven years with the THLA, he’s noticed a common scam in which guests, usually from overseas, call to make an advance payment on a hotel room using a stolen credit card. Later, they call back and cancel the room, wiring the refunded money back to a different account. Bragiel says the offer of advance payment should red raise flags, and hoteliers should think carefully about accepting guest payments over the phone.
“If you do accept an advance payment and you decide to go forward with that, have some sort of written policy where you will not refund the deposit at all, or if you do, there will be some sort of waiting time between when the request is made for a refund and when the property actually gives it.” That way, he says, the issue with the original charge will be brought to light in the interim.
If a scam has already taken place, Bragiel recommends THLA members report the crime to their state attorney general’s office. Additionally, he requests victims of scamming file a complaint with the FBI’s Internet Crime Complaint Center, which investigates Internet-related crime and disperses information to the appropriate law enforcement agencies.
To prevent any type of scam, Bragiel suggests that hoteliers establish reliable contacts within banks, businesses, and the hotel’s credit card processor. That way, if questions of authenticity arise, the front desk staff can turn to trusted sources. “When in doubt, we always encourage our members to check with the folks they have relationships with,” says Bragiel
