Ticketing vendors have fast become a primary target for criminal fraud and chargeback fraud. Despite that the ticketing business is not considered a high-risk MCC by the credit cards, it’s actually a perfect environment for both types of fraud. Active resale markets and high ticket prices in this industry are a big draw for criminal fraud. And many of the security measures that ticket merchants take can also drive up friendly fraud. Let’s look at how both types of fraud attack the ticketing industry.
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FRAUD
Items with an active resale market are like chum for fraudsters. Rarely do fraudsters keep the items they purchase with stolen or counterfeit cards, instead they look to liquidate their purchases as soon as possible. Tickets are a perfect item for this. When an event is sold out, demand skyrockets, making ticket resale easier than other items acquired through fraud. People don’t think twice to purchase tickets second-hand off unauthorized resellers, unknown websites, or from complete strangers on peer-to-peer markets like Craigslist when they’re looking for tickets to a big event. Even if an event is not sold out, fraudsters can lure people in by selling their tickets at a fraction of the legitimate retail price.
FRIENDLY FRAUD
Ticket sales have a certain “processing reputation”. Non-transferable tickets and no-refund policies are commonplace in ticketing. It’s also common that plans change and people can’t make the events that they’ve purchased tickets for. So when a consumer can’t go through the vendor for a refund, they’ll initiate a chargeback through their issuing bank. Issuing banks grant chargebacks with very little scrutiny in these cases, which makes ticket purchases a prime target for friendly fraud.
RECOVERING LOST REVENUE
Most ticketing merchants are well aware of these issues. However, much they can recover some of the revenue lost to fraud through representment. Merchants have a strong case when a cardholder lives near the event and the ticket has been redeemed at the event. Chargeback protection for merchants in the ticketing business can pay off.
