ARC: Ticket thieves getting smarter

CHICAGO -- Thieves are more crafty than ever in getting their hands on ARC ticket stock, said Gary Yallelus, a Chicago-based fraud investigator for ARC.

They also are devising new ways to steal credit card numbers, Yallelus said at the recent Travel Weekly Conference on Technology.

Yallelus headed an ARC pilot program in 1998 to train Chicago-area travel agents in security rules so that they could better protect themselves against fraud, for which they could be held liable. The program followed a rash of burglaries in the area in 1996 and 1997.

Yallelus said he found that most travel agencies "did not understand the security rules" in the ARC handbook.

His goal is to separate the five pages in the handbook devoted to the rules -- and written in confusing legalese -- and create a stand-alone brochure written in layman's terms.

The consequences of fraud are serious: Half of all agencies that were burglarized in the Chicago area were forced out of business because they were held liable for the stolen tickets.

Many agencies don't understand just how valuable ticket stock is, Yallelus said.

"The courts have ruled that every box is worth $500,000. That means a shipment can be worth $2 million. There are few agencies that can sustain a loss of one box if they are held liable," he said. "The tickets are valuable, and the thieves know it."

Why don't airlines do more to prevent the use of stolen tickets?

Yallelus said the airlines fear the practice of screening for stolen tickets would slow check-in times and thus prevention becomes a touchy customer-service issue, particularly since most stolen tickets eventually are sold as first class and business class tickets.

However, new technology, such as a system installed by British Airways to screen tickets at check-in, dramatically cuts the use of stolen tickets.

Yallelus said another pressing problem is credit card fraud in which thieves steal numbers and use them to buy tickets.

In the latest twist, thieves pay front-desk clerks at hotels for the credit card numbers of guests who have checked in. They then use those numbers to buy airline tickets.

Yallelus warned agency owners that "unless you have the person in front of you, you risk liability."

Taking a booking from a client that the agent has never met and who is using a credit card number is risky.

"We're the only industry that sells an invisible product for this kind of value over the telephone," he said.

There are several steps agents can take to prevent credit card fraud:

Some airlines do make it a practice to check the card number used to make the purchase against the one presented at check-in. By telling callers this, it could "slow down the momentum" of thieves.

"If the person can't answer those two questions, you have a problem with the sale right up front," Yallelus said. "Instead of thinking of how much commission you are going to be making, you've got to think that you might be dealing with a stolen credit card number."

Another way to verify that a client actually has a card in his or her possession and is not using a stolen card number is to ask for the CIN number on the back of the card.

That number is not imprinted in raised numbers and does not show up in credit card receipts. Yallelus said agencies should make sure when setting up corporate accounts that the client opens the account in person with the agency.

If the client won't do that, "it's a red flag," he said.

Yallelus also said that Internet travel agencies are having "big problems" with credit card fraud -- mostly through their toll-free numbers -- "but they won't talk about the extent of it, and we only find out when it's huge."