3 min read
What exactly are we talking about when we talk about fraud?
In the ticketing and live events sector, there’s a wide range of fraudulent activity that can challenge your organization, and it’s easy to get lost in the jargon without the full context.
What do we mean by payment fraud in ticketing?
Unfortunately, there are a number of different fraud related challenges facing ticketing teams. These range from ticket reselling through to chargebacks and bot attacks. We often hear conversations using "chargebacks" as shorthand, but there are even variations in what that means, depending on how and why a chargeback was filed.
Payment fraud can refer to several different types of fraud perpetrated against organizations who sell tickets or merchandise, or take donations by debit or credit card. It's a cross-industry problem, but there are different challenges facing ticketing organizations, who have limited seats to sell within a specific timeframe, rather than an infinite production line of products.
So, let’s start by understanding the different types of payment fraud. Then you can work with your payment provider to confidently detect payment fraud and protect your organization.
Transactional fraud (stolen financials)
Fraudsters use stolen credit card information to purchase tickets, then the cardholder files a chargeback. This means they tell their bank or credit card company that the charge wasn’t valid, and receive a refund.
For you as the merchant, this could result in:
- 100% loss of the sale value
- Fees that can be as high as $50 per chargeback
What can you do about it?
Introduce ticketing fraud detection tools to flag tickets being purchased from improbable or impossible locations.
Card testing
Fraudsters test the validity of large lists of stolen card numbers by attempting numerous small transactions. In other words, the fraudster is trying to get information about which card numbers work and is using your website as a guinea pig. On your end, this could look like a high volume of low-value payment attempts or a large number of attempts to store card information. And for non- profits, it’s common to see this type of behavior coming through as low-level donations.
For you as the merchant, this could result in:
- Chargeback fees
- Fines from credit card schemes
- Authorization / payment attempt fees
- Polluted analytics
What can you do about it?
Monitor and block customers using multiple different cards or IP addresses in a short period of time.
Unauthorised ticket resale and bot activity
Fraudsters use automated bots to purchase large quantities of high-demand tickets, bypassing purchasing limits meant to ensure fair access for genuine fans. They could be using either legitimate or stolen card details. They then resell the tickets at inflated prices on secondary markets.
For you as the merchant, this could result in:
- Chargebacks when the tickets fail to resell or cardholders flag the fraud
- Direct harm to your patron experience
- Damage to the artist and venue's brands
- Polluted sales data that makes future planning difficult
What can you do about it?
Automated monitoring can identify customers spending unusually high amounts, while making the effort to fight chargebacks may prevent recurring attempts from the same resellers.
When you identify legitimate customers who have purchased through resellers, help them understand how buying direct in the future will benefit both them and your organization.
Friendly fraud (chargeback abuse)
Chargebacks don’t always occur because cards have been stolen. Sometimes a patron will make a purchase with their own card, but then later dispute that charge with their bank.
A customer may do this without ill intent: they might not recognize the transaction or forget that a purchase was made by a family member. But it’s unfortunately becoming increasingly common for a customer to purchase a ticket to a concert, show, or exhibition, find they're unable to attend, and then file a chargeback. It's a way to try to skirt around the refund policy and get their money back.
For you as the merchant, this could result in:
- A lengthy and difficult dispute process
- 100% loss of sale value for disputes that you don’t win
- Fees for disputed chargebacks
What can you do about it?
Review your terms and conditions. Consider how you can offer customers greater flexibility, perhaps by offering credit or exchanges if your events run for multiple dates.
Offer ticket insurance, or offer exchanges as a benefit for members or subscribers, for a triple win: improved customer experience, increased revenue, and a reduction in friendly fraud.
Each of these types of payment fraud can be costly and draining for your organization, especially if you’re trying to resolve them on your own. But the good news is that live events leaders like you have found strategies and tools for event ticketing fraud prevention that can reduce these headaches.
Organizations using Spektrix Payments Fraud Protection, powered by Adyen, know that every transaction's being monitored on their behalf. Automated tools flag suspicious activity, and an expert human team's on hand to offer advice - helping them reduce the cost and resource lost to payment fraud, and focus on customer friendly ways of working.
If you need a ticketing and payment processing partner that can do the heavy lifting for you, talk to our team.
