Fraudulent claims expected to rise from the cease of operations of UK airline giant, warn leading international travel and risk experts
The Chargeback Company, the internationally-renowned leader for risk mitigation, has today warned of potential large-scale backlash of friendly fraud and resulting chargebacks to the travel industry from the demise of Monarch Airlines.
In the wake of the Monarch Airlines collapse that grounded hundreds of planes and left thousands of UK citizens stranded, the Civil Aviation Authority (CAA) has called for the country’s biggest ever peacetime repatriation to safely transport over 110,000 stranded holiday-makers back home. While the CAA has jumped in to save the day, troubles for the travel industry are still at large.
Tracy Cray, Director of Card Scheme Compliance at The Chargeback Company, predicts that the wider travel industry is about to face a huge backlash from the multiple abrupt flight cancelations: “Repercussions from the biggest UK airline ever to cease trading will be seen throughout the travel and aviation sector, as desperate customers begin making fraudulent claims in attempt to claw back their losses.”
It has been estimated that just 50 percent of Monarch customers have full ATOL protection, covering them from losing their money or being stranded abroad. The problem lies with the other half of Monarch’s consumer base who purchased non-secure tickets. Without a license, consumers’ cancelled flights – and wallets – go unprotected.
Further to the detriment of its customers, Monarch revoked ATOL protection on its seat-only sales. Since 14 December 2016, bookings via Monarch Holidays are secured with a license, but those via Monarch Airlines are not. Unfortunately for those who only purchased a seat on a Monarch aircraft, many travel insurers do not accept airline failure in their policies.
At current, 300,000 customers have been effected by cancelled departures from the UK, meaning thousands of missed connections and crumbled holiday plans. Unlucky travellers will be forced to turn to fraudulent chargeback claims with their credit or debit card providers in a bid to retrieve their full payment.
Chargebacks occur when a consumer goes over the merchant’s head and asks the bank to forcibly remove funds from the business’s bank account – charging them a substantial fee in the process. The procedure is intended to protect the consumer against fraudulent transactions. However, as circumstances out of their control and uncovered in insurance policies are in play, customers are likely to ignore the illegality of making false claims and use the tools at their disposal to get money back into their own hands.
Monica Eaton-Cardone, co-founder of The Chargeback Company, adds: “The huge side-effect of the administration of Monarch Airlines will reach travel operators worldwide, but problems are not just limited to this one case. With over 3.8 billion air travellers taking to the skies each year, the potential threat to customer’s travelling without ATOL protection is detrimental.
“Customers need to equip themselves with top insurance before making large-figure holiday bookings. Likewise, travel operators and payment providers alike need to be on the lookout for the number of fraudulent claims that inevitably follow breakdowns in the system as we have seen today.”
The Chargeback Company supports travel providers and other businesses with a range of services, including pre-chargeback resolution services, dynamic loss prevention, intelligent source detection, affiliate fraud detection, chargeback resolution and response, and merchant education.