Guest Post: How ‘Know-your-customer’ tech can help mitigate fraud in holiday rentals

Edouard Baussier, global mobility and travel Director of IDnow, walks us through how and why Know-your-customer checks give property managers the “confidence” to do business, and which accommodation giant has already made the jump

With summer just around the corner, the market for holiday getaways is once again buoyant as cancellations forced by the pandemic now feel like a distant memory.

In some parts of the world at least, the World Tourism Organisation reports that traveller numbers are set to reach their pre-2020 levels once again this year, despite the wariness of some consumers to spend during the cost-of-living crisis.

However, the squeeze on holidaymakers’ willingness to splash out on a vacation is not the only reason to exercise a degree of caution in the holiday rental market this summer.

Scams by those offering properties for rent, in what has now become a massive online marketplace, are on the rise.  

During the financial year 2021/2022, Action Fraud received more than 4,200 reports of fraud related to holiday rental properties in the UK, which amounted to losses of almost £7.4m.

Fake websites, fake listings and fake photographs have all been part of the packages luring unsuspecting would-be sunseekers.

Determining the people behind the dream vacation rental

Processes which make sure that the people behind the rental transactions are who they say they are can help mitigate these losses and make online renting safer for all parties.

Known as ‘Know-your-customer’ (KYC) checks, they are commonplace in the regulated world of banking as a way of fighting financial crime and in mobility in the form of identity checks for car rental services, for example.

But KYC frameworks and user identification systems can be just as easily and effectively implemented by holiday rental companies and hosts to safeguard against illicit activity.

It is easy for a fraudster who is looking to scam legitimate holidaymakers to register on several rental platforms with fake details.

They do not need any documentation which confirms their identity or that they own the property in question, nor do they need to confirm the legitimacy of any photographs of the property.

In minutes, they can therefore claim to offer a location for rent, using photos from other websites, and spread the listings across a variety of sites.

The onus is then shifted on to the potential holidaymaker to look for signs that the listing is fake, such as poorly-written descriptions, conducting reverse image searches of photos of the potential property and being asked to make payments using systems outside of the website’s structure.

KYC frameworks can easily put a stop to this practice. As part of such a process, property owners and hosts would need to take a picture of their government-issued form of identification on their smartphone and then perform a video selfie on the device.

The KYC solution would then firstly prove that the document photographed by the user is genuine and then compare the biometrics of the selfie with those in the document’s photograph to prevent identity theft.

Identity verification for all guests and hosts 

One of the giants in the holiday letting space has recently made identity verification a mandatory part of its registration process.

From Spring 2023, AirBnB requires identity verification from all guests and hosts as part of their quest to protect every person at every stage of the transaction.

This comes as the next, logical step on the road of a program of expansion by the platform which already requires credentials such as the user’s legal name and address.

Similarly, the verification of government-issued identification and biometrics together with liveness detection gives property managers the confidence that they are dealing with reputable holidaymakers whose only intention is to relax on their vacation.

Horror stories of unverified users using stolen credit cards and fake identities to move money between fictional guests and locations may soon be significantly reduced in number if KYC checks become the norm for the holiday rental industry.

A more seamless travel experience for everyone

For their part, the travellers themselves are on board with the idea of providing information about themselves if doing so is to their benefit.

A 2019 report from the World Travel and Tourism Council (WTTC) outlined that they are happy to share their data if its correct usage results in a more seamless travel experience and reduces potential fraudulent activity to which they may fall victim.

The key, the survey respondents said, lay in the transparency of the data collection process and the acceleration of the booking process as a result of them providing their biometric data.

There is enough stress in the world which should make a week away from work something to look forward to for everyone.

The thought of further worry coming as part of finding somewhere to stay during a holiday needn’t be included as part of this, as KYC processes have the potential to make the holiday market much safer for all concerned.