Deborah Erickson

Manager – Risk Analysis

Schemes:ExchangesRefundsCommissionsVoids

EXCHANGE FRAUD - QUESTIONS

• Are all tickets eligible to be exchanged?• How long can an original ticket live?• After 12 months, can a ticket be exchanged?• After the original date of departure, can the

ticket be exchanged?• Can an agent change of form of payment?• From cash to credit or credit to cash?

• Can an agent change the passenger’s name?• How long does it take a carrier to identify or

research multiple exchange transactions before issuing a debit memo?

EXCHANGE FRAUD Life of one ticket – Almost 3 years

• Original ticket was issued February 2006• reissued 24 times• Included splitting into 9 MCOs for residual value

and 15 additional new tickets• Included FOP changes• Included Passenger name changes

• Final ticket was issued in December 2008• Different passenger• Different itinerary• Different FOP

EXCHANGE FRAUD – CARRIER SOLUTIONS

• Carrier solutions• Identify exchanges – 24 of them?• Review (find) original ticket• If exchanged more than once, use DRS by

inputting one ticket at a time• Send debit memos?• If the original ticket is from 2005, do you DM for full

value of the new ticket? Or initial ticket? Or just a penalty?

• Do you want to know if the original ticket was issued over one year old?

EXCHANGE FRAUD ARC ANALYTICAL SOLUTIONS

• Identify all related exchanges in 39 months of COMPASS© data

• Analyze each exchange including 39 months of previous linked exchanges and provide a weekly report to carrier identifying all anomalies, such as:• Change of passenger names• Change of form of payment• Over 1 year • Change of class of service or fare• Change of itinerary

WHERE IS THAT ANALYTICAL EXCHANGE SOLUTION?

• Do you want to see that solution?

• Do you want to see your carrier’s specific data?

• Do you want to see ARC’s analysis of that data?

• Too early for an answer – just wait!

REFUND FRAUD

• Are all tickets eligible to be refunded?• Can a ticket be refunded after 1 year?• Can the ticket be refunded after the departure

date?• Can a ticket issued in 2006 be refunded in

2009 after having been exchanged 9 times?• Flown and refunded – how does that happen?• How long does it take a carrier to identify or

research an eligible refund?

REFUND FRAUD – NEW CASES

• Skokie Illinois agent – May 2009• E-tickets issued and flown• Pattern of refunding flown tickets through IAR• Agent pays debit memos after carrier discovers

flown/refunded• Audit confirms no plausible explanation for

flown/refunded tickets• Agent placed in “Section XV” of the ARA• ARA terminated - $77K

REFUND FRAUD ARC ANALYTICAL SOLUTION

• Identify all refunds – Manual and GDS• Analyze each refund and develop weekly

report to carrier identifying all anomalies• Research individual refunds• Identify agent’s patterns of refunds• Compare settled data vs. refund data • Identify previous exchanges used to change form

of payment from credit card to cash prior to refund• Review length of time between Date of Issue, Date

of Departure and Date of Refund

COMMISSION FRAUD - DISCLAIMER

• ARC and the carriers can not and will not discuss commissions

• I am not here discussing or asking questions about individual carrier-authorized commissions

• I am here to show you how 100% is (sometimes) fraud

COMMISSION FRAUD

• Is 100% commission ok on every ticket?• Is 100% commission ok on every MCO?• Is flight OK on a ticket with 100%• How long does it take for a carrier to identify

or review flown tickets with 100% commissions?

COMMISSION FRAUD – NEW CASES

• Port Orange, Florida agent – February 2008• Issued tickets and took 100% commission• Refunded the tickets to owner’s personal credit

card• Audit confirms no plausible explanation for 100%

commission • Agent placed in “Section XV” of the ARA• ARA terminated - $59K

COMMISSION FRAUD – NEW CASES

• Chicago Illinois agent – May 2009• Issued 305 MCOs and took 100% commission -

$500K • Issued with owner’s and “business partner’s” credit

cards, as well as PAX’s credit cards• Refunded the MCO’s and “returned” the 100%

commission on 230 MCO’s - $400K• Audit confirmed - “Pay-day” loans – borrowed the

money from carriers and would return the money, on average, 36 days later

• 123 “open” 100% commission-MCOs, which were not refunded - $164K

• Agent placed in “Section XV” of the ARA• ARA terminated - $164K

COMMISSION FRAUD ARC ANALYTICAL SOLUTION

• Identify all tickets/MCOs 100% commission• Analyze each MCO/ticket with a 100%

commission and develop weekly report to carrier identifying all anomalies• Research individual MCOs/Tickets• Identify agent’s patterns commissions• Using carrier’s advice re commissions, apply rules

to identify non-authorized commissions

VOIDING FRAUD - QUESTIONS

• Is an E-ticket void OK with an ESAC code?• Is a paper ticket void always OK if it voided in

the GDS?• Are Manual voids done in IAR OK?• How long does it take a carrier to determine if

a voided ticket was properly voided to prevent usage?

VOIDING FRAUD – NEW CASES

• Chicago Illinois agent – March 2009• October – March, 64% of all tickets voided• Paper tickets – flown• Audit assigned, agency location not operational• Another address located - found another agency

name and possible unauthorized owner’s name• Agent placed in “Section XV” of the ARA• ARA terminated - $111K in voided/flown tickets

VOIDING FRAUD ARC ANALYTICAL SOLUTION

• Identify all Voids – Manual and GDS• Analyze each void and develop weekly report

to carrier identifying all anomalies• Research individual voids• Identify agent’s patterns of voids• Compare settled data vs. voided data

PLEASE, NO MORE ANALYTICAL SOLUTIONS!

• Why am I highlighting “Analytical Solutions”?• No prizes for answering this question!• One example:• Carriers do purchase various reports from ARC

including refunds, voids, commissions (Only RM has the new exchange report)

• In order to identify problems, carriers have to train staff to use the reports to identify and research areas that might pose problems

• Staff have little time to use the reports

PLEASE PROVIDE ANALYTICAL SOLUTIONS FOR US!

• Recent Case• One carrier purchased the ARC void report• Staff either 1) didn’t know how to use the report or

2) wasn’t trained to identify and research such problems or 3) didn’t have time to use it or 4) all of the above

• Weeks later, the carrier was the “biggest looser” in the Chicago agent’s voiding scheme

• Had they used the report the first week, they would have saved “thousands” of dollars

WHERE IS THAT ANALYTICAL EXCHANGE SOLUTION?

• Why wouldn’t I tell you?• It’s your hands!• Prizes you received for answering questions

is a prototype of the report – using your data!• Want to learn more about what it means?• Times are available this afternoon and

throughout the seminar for ARC to demonstrate our analysis.

WHY CAN ARC MAKE A DIFFERENCE?

COMPASS• 39+ months of data

• ARC can see yesterday’s tickets to identify anomalies today • identifies patterns that individual carriers cannot see

• Experienced ARC Analysts

• Immediate contact with ticketing agent

YOU DIDN’T GET A PRIZE??

• You want your data but didn’t answer any of the questions?

• Check with Rafat or Debbie to see if we have your data available.

Where do we go from here?

Always ask for help:• Individual carrier problems are rare• Find a problem? Suspect a problem?• Contact ARC • 703 816 8126 Risk Analysis• 703 816 8137 Field Investigation & Fraud

Prevention