Preventing Fraud with Friction

Friction in Fraud Prevention


If you’ve ever used fraud-prevention technology before, you’ve probably heard the word “friction” thrown around a couple of times.


Friction, in this context, is basically adding additional steps to the end-user (in this case a guest) to prevent fraud.


There are lot of ways doing it and considering that, on average, businesses spend  8% of annual revenue combatting fraud, it’s a crucial process to implement.


There are many different types and layers of friction. If you’ve ever confirmed the code of a text you received from a website than you’ve gone through a friction-based fraud prevention process.


The reason it’s called “friction” is because you’re adding additional steps to the booking process.


You can think of friction as seesaw in the world of fraud prevention.


Friction in Fraud Prevention


The more friction you have, the lower your chances of booking a fraudulent reservation which saves you thousands of dollars of revenue from chargebacks and damages.


At the same time, if you use too much friction when it’s not needed, it could result in revenue-loss because of the additional added steps that could lead to booking abandonment.


If you implement little-to-no friction, it would make the booking process easier, but you also increase your chances of a booking fraudulent reservation as well which would also cause revenue-loss and greater consequences.


Benefits of Friction in Fraud Prevention


The benefits are obvious: less fraud


When you apply more friction in your guest verification process, you’re significantly decreasing the chances of having a fraudulent reservation, and in turn, saving yourself from the headache that comes with.


It also shows your guests that you prioritize secure transactions, making them feel safe in doing business with you the in process.


Cons of Friction in Fraud Prevention


If friction isn’t used properly, it can result to abandoned bookings.


For example, if you have a guest that you know is not committing fraud because they fit your category of a “non-risky guest”, then you don’t really need for them to go through 10 different verification processes.


Applying friction to legitimate transactions can lead to increased rates of abandoned bookings.


That’s why it’s absolutely crucial to apply friction in a way that doesn’t deter legitimate guests from completing the reservation, while at the same time, catching fraudulent transactions.


Using Friction Dynamically to Prevent Fraud


The key to applying friction in fraud prevention is to use it when necessary by using “rule-sets”.


A very simple & basic example is something like this:


If the reservation is (x) you apply (x) amount of friction.


You’re customizing the amount of friction needed based on the reservation attributes.


Guest Ranger takes this to the next level and provides customization based on multiple attributes to create automated rule-sets in dynamic sequences.


Fraud-prevention technologies usually give you a pre-defined ruleset, but that’s ineffective for a lot of reasons, one of them being that their algorithms are heavily based on detecting non-human behavior, such as bots.


For example, if you have a online store where you’re selling & shipping goods, then an algorithm that detects bots and non-human patterns can be great at preventing false-orders, but for short-term rentals, there is absolutely no net-benefit to implement bots from the perspective of someone committing fraud.


What would the person committing fraud get out of that?


They aren’t receiving a physical product and the only way they can get anything out of it is if they stayed at your rental, in which case, it would be useless to use bots to commit fraud, because they’re basically just making a legitimate transaction.


Short-term rentals differ greatly from e-commerce stores. Detecting fraud in our industry requires a whole different set of rules, attributes, and characteristics


Our rulesets & attributes are specifically built for the short-term rental industry and are not predefined.


You know your company best, you know your units best, and you know your location best, so you should have complete control of your rules.


That’s why we allow you to define and customize your own rules to give your more control of your verification process resulting in more revenue and less fraud.


A few of the attributes that you can choose are:


  • Guest Location
  • Time from Check-In
  • Length-of-Stay
  • Units
  • Property Group
  • Amount of Guests
  • Reservation Source
  • Reservation Type
  • And more…




Friction is a double-edged sword.


Too much can mean loss of revenue and too little can mean even more loss of revenue and other liabilities.


In order to use friction properly, you need to a dynamic strategy.


By doing so, you are implementing a frictionless verification process, which results in lower fraud and more revenue.


Don’t let your revenue get lost due to fraud, schedule a demo with us today for more info