Get ahead of credit card fraud in your hotel
Get ahead of credit card fraud in your hotel
11 SEPTEMBER 2019 1:00 PM

Fraud has been increasing year over year in the hospitality industry as criminals are finding more and more ways to steal credit card numbers and use them in hotels. While changes have been made to protect the business, hotel managers need to work to be a step ahead.

Fraud is continuing to evolve in the hotel industry. The American Hotel and Lodging Association (AHLA) said “As much as 55% of all credit card fraud in the U.S. takes place in the hospitality industry.”

Chargebacks are a huge hit to hotels and affect the bottom line. As GMs, we are tasked with guarding against fraud as much as possible, while taking into account guest experience. Everyone that walks into the hotel is suspect, but there is a fine balance.

Member fraud is more prevalent with certain brands. With all of the benefits of brand memberships these days, we must field the guests for proper ID at arrival to ensure they are in the correct reservations and rooms. While working to prevent fraud, it’s important to encourage the brand to have the most up-to-date information on a guest’s profile to avoid any common issues. It’s easy for a traveler to just insert a credit card number, but is that info being verified? It’s important for the individual hotel to follow best practices that work best for that particular market or brand to ensure we are not putting ourselves in a vulnerable position. Some brands don’t require ID or credit card at arrival based on status, so the higher the tier, the less info is required at arrival to limit the inconvenience to the guest.

What can we do to prevent fraud as much as possible?
It all begins with the guest. It’s important for the guests to utilize their profile to the best of their ability and not to have others reserve under their name. Often times, guests will make a reservation for their relative/spouse/friend to utilize, on their benefits. This can be a version of fraud because unless the booker specifies, there’s no proper identification on the reservation. This brings us into PCI compliance.

You will often hear a guest say, “Just use the card on file.” While this may be the convenient option, it’s important to visualize the ID and matching credit card at check-in to avoid any mysterious or unapproved cards being used. It is easy to use a fraudulent card when reserving since there are no steps required to verify the cardholder. But when the guest arrives, it’s the hotel’s responsibility to ensure that we are swiping the credit card and verifying that all of the info matches. Julie Gobunquin, GM with InterMountain Management in Issaquah, Washington, advises that the guest service agents “use the EVC reader and obtain all guest contact information.”

Hotels are also starting to move to electronic credit card authorization forms. This limits the amount of “no name” credit cards being utilized. Hotels require that form to be filled out by the cardholder prior to arrival to ensure we are taking the proper procedures for reservation payments.

It is up to each individual hotel leadership team to devise a plan to ensure their hotel is protected.

“Daily sales report reviews, routine inventories, utilization of brand reports and resources, and accountability for adherence to policies are just a few of the best practices that should be utilized to prevent fraud. Frequent training for both line-level team members and leadership is essential to fraud prevention as well,” said Jennifer Nicholas, GM at Hilton Garden Inn Tysons Corner in Virginia.

Regardless of the type of fraud being discussed, the best deterrent is a culture of awareness and accountability. The implementation of accounting policies and procedures—and more importantly, the consistency with which those policies are reviewed and adhered to—is an instrumental part of creating the culture that will ultimately contribute to the level of success that a hotel is able to achieve.

Leadership by example is a key element to creating the culture you desire. It may seem simple, but if a manager or supervisor takes a beverage from the hotel’s gift shop without paying, this sets the tone for what team members are allowed to do. This same basic concept applies to all things in operations. If a cash drop is short by a quarter then it’s short by a quarter. If that seemingly small number is supplemented by an individual for the sake of balancing the day because “it’s only a quarter” then the perception could be that the same principle applies in reverse. If a drop is over by a quarter, then you would not want the individual taking that money for themselves because they had previously given a quarter.

This type of thinking and approach to work can turn into a slippery slope that has the potential to infiltrate other areas of operation.

Celeste Johnson has more than 10 years of hospitality experience, working in many different roles within major brands including Hilton, Marriott and Hyatt. Career highlights include opening Hampton Inn & Suites in Bellevue WA – the brand’s 2000th property. Celeste is currently the General Manager of Hyatt Place Garden City; she is specifically focused on blending operations, sales and revenue management with a passion in employee relations.

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