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THE RESERVATION RECESSION
CHAPTER 8
Avoid Becoming a Victim of Guest Fraud: 4 Problems and Solutions for Short-Term Rental Operators
With the right techniques, you can protect your properties and combat guest fraud
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Imagine this: You’re a vacation rental operator with 30 listings on Airbnb. You take great care to stay on top of all your operations and ensure the best experience for your guests. But then one guest appears to have serious cause for complaint.
You receive reports of a murky smell, poor hygiene, hair and dust lying everywhere, and even giant roaches roaming around. You know that’s impossible. Your cleaning team is impeccable and trustworthy. It’s not long before you realize you’re dealing with a fraudster.
Believe it or not, this is a true story from around two years ago. The scammer wanted to extort money and settle the case outside of the Airbnb platform. The owner refused to be blackmailed this way and in return got a very nasty online review. This is just one of many guest fraud examples.
Property managers and vacation rental operators are naturally inclined to be hospitable and assume good intentions because it’s good for the business and in our nature to be trusting. Unfortunately, fraudsters have other things on their agenda. In a tight market, when margins are thin, the last thing you want to deal with is guest fraud.
To help you avoid being a victim, we list the most common problems, real-life examples, and practical solutions, so you can mitigate the risk of short-term rental guest fraud.
Read other chapters in The Reservation Recession.
Problem 1: Key copying
Key copying is a serious problem and a worrying potential security breach for any property manager out there. It often follows fraudulent bookings, i.e. scammers booking a stay without the intention of ever being your guest. This way they get access to check-in information and learn the actual address of your property. Once they get a hold of your keys, they can duplicate them which makes your property vulnerable to criminal activity.
Here’s one example of an attempt of a key-copying scam that fortunately created no serious consequences:
The solution: Keyless entry and unique access codes
As you can see from the example above, keycodes that expire at the end of the stay provide an additional layer of security—both for your guests and your vacation rental. Keyless entry prevents scammers from entering your listings by using stolen or duplicated keys.
Pro tip: Use keyless access for maximum security, but make sure that codes are reset after every stay. Generate unique access codes every time and share it only with verified guests. |
Operto Tech connects your smart locks with your PMS so every time there’s a new booking, there’s a new access code, too. Having a unique access code eliminates the need for key cards.
The best part is that you get a log of everyone who’s ever entered the property. Seamless, easy, and beautiful. Want to learn more? Book a demo for Operto Tech. |
Problem 2: Blackmailing and threatening with bad reviews
In the hospitality industry, blackmailing is a common type of scam where a guest threatens to damage your online reputation in the knowledge that guest reviews often play a crucial role in your occupancy rates.
In most blackmailing cases, guests ask for a refund or a certain amount of money, threatening to leave a bad review online if you refuse. Below you can see one example of this type of fraud:
This host makes a really good point about the importance of guest screening for Airbnb hosts. Airbnb has made significant steps toward fraud prevention (e.g. verifying a guest’s identity by requiring a scan of a personal document), but cases of fraud still continue.
The solution: Guest screening
Implement an automated screening process where personal data and contact information are utilized to cross-check guests with regional, federal, and international records, giving you more control over who stays at your short-term rental.
Pro tip: Most OTAs and travel websites such as TripAdvisor encourage property managers, hoteliers, and vacation rental operators to report blackmail threats immediately to get ahead of fraudsters and protect your online reputation. Also, make sure you know your rights and read through the policies on OTA websites (e.g. Airbnb Extortion Policy). |
Problem 3: Guests claiming the apartment is dirty
Unfortunately, in many disputes you might have with your guests, it’s their word against yours.
Scammers are aware of the flaws of OTA systems and other marketplaces. Cleanliness is one of the important factors that guests can comment on online or leave a separate review for. So, despite the fact you invest in keeping the place spotless, some guests might try to scam you by falsely representing the state of your accommodation. They can then attempt to get a partial refund or even stay at your short-term rental for free.
Below you can read about one unfortunate case of a five-star Airbnb host who stumbled upon a scammer:
The solution: Log the condition of your properties after each clean
There’s a smart way to prevent the inconvenient “he-said-she-said” situation from happening. To avoid guest fraud, log the condition of your properties after each clean.
Operto Teams users do this on a daily basis. It’s easy to create a task for cleaners to share pictures of the property within the Staff Portal. That way, if guests try to scam you, you have photo evidence with timestamps readily available.
Pro tip: Make sure your cleaning team understands why you’re collecting photo documentation of each unit. Otherwise they might think you are micromanaging or that you don’t trust them. Use a software solution for your internal communications that makes storing and maintaining records easy for your staff. See how easy it is to record the condition of units with an Operto Teams demo |
Problem 4: Chargeback fraud
Your guests have checked out. Everything seems alright. Your cleaning team is already preparing the place for your next guests. Then out of nowhere, you receive a notification from your bank that the payment has been reversed.
Chargeback fraud is an especially tricky type of fraud. A chargeback is the reversal of a credit card payment that’s issued directly by the user’s bank. In the case of refunds, the retailer is directly involved. But with chargebacks, the customer bypasses the retailer and there’s little you can do about it.
In the hospitality industry, there are two common cases where a chargeback might occur:
- A guest has requested a chargeback from their bank because supposedly they weren’t pleased with their stay (which doesn’t give them the right to reverse the payment they made)
- A serious crime of identity theft has taken place and the real credit card holder has requested a chargeback
Payment fraud is tough to deal with. You can file a request for dispute resolution, but it will be costly if your case is unsuccessful. So, largely, scammers count on vacation rental operators not bothering and simply taking the hit.
Meanwhile, Airbnb’s Trust and Data Science team actually relies on complex machine learning models to fight fraudulent chargebacks, as David Press, Trust Data Scientist at Airbnb explains in his Medium article:
The solution: ID verification during digital check-in and a record of guest interactions
If you introduce a digital front desk, not only will you equip your guests with all the necessary information upfront (e.g. by enabling them access to digital guidebooks, entry codes, and WiFi passwords), but you’ll also have sufficient proof of the fraudster interacting with your short-term rental business.
Every bit of proof you have is valuable, especially confirmation of them booking a stay. Think about safely storing the scans of their IDs, their digital signature, access logs, and more. If a dispute occurs, this will help you build a case for your business.
Pro tip: Use trustworthy and secure tech solutions that will ensure a seamless guest experience but also help you safely store guest records in case you need to prove a case of payment fraud. Be armed with information and evidence, just in case. |
How do I avoid guest fraud? Best practices to keep your STR business safe
To keep your short-term rental business safe, you should always think two steps ahead, implementing automated processes and practices that protect you from bad actors, and track the state of your units as well as your booking information and guest interactions.
Screen your guests
Guest screening needs to be frictionless for your guests. If they sense you’re being intrusive, it can negatively impact your relationship with them and may even trigger bad reviews. This is why you should consider an automated screening solution that’s built into the guest booking/check-in process.
For instance, with Operto Guest, guests can easily provide basic ID details to get verified and screened by automated guest screening experts, Autohost. Because the entire experience is seamless, your guests will perceive it as a part of your standard guest booking procedure.
Operto Guest enables you to focus on building meaningful relationships with your guests within a branded web app that automates check-in, guest verification, and guest screening.
Ask for security deposits
There are pros and cons to requesting a security deposit.
Security deposits might put off some guests and the protection they offer is limited, plus there’s a process around receiving and returning them. That said, with a security deposit in place, you’ll have some protection against property damage with a fast way to collect the funds for repairs if needed.
Invest in short-term rental insurance
An insurance policy that’s specific to your business can help you handle damage to your belongings and property, and even protect you and your guests in the case of a serious injury occurring during a stay. But don’t only look at what’s covered as part of your plan, also see that the claims process is simple and payouts are fast.
Ensure tight cybersecurity
Stolen credit card information is a common cybersecurity issue, and the hospitality industry often struggles to effectively deal with it. However, if you’re using a trusted PMS solution, you shouldn’t have too much to worry about because it’s their job to prevent any unauthorized access or hacker attacks.
Use technology to avoid guest fraud
Being proactive about guest fraud can save you a lot of stress and money. Combine seamless tech solutions that easily integrate with your PMS and guest experience tools to achieve multiple business goals. More precisely, you can:
- Prevent key duplication by introducing unique access codes that are reset with every new guest stay
- Create a seamless guest journey from the moment guests book their stay and include automated guest screening as part of your check-in process
- Prevent payment fraud with ID verification
- Monitor check-ins and check-outs from a centralized dashboard in real-time
Operto Tech ensures improved security by assigning unique access codes for each individual booking.
Use our digital check-in system to minimize the chance of becoming a victim of fraud, and provide the best guest experience.
Frequently asked questions about how to avoid guest fraud
What is hospitality fraud?
Hospitality fraud is a term used to describe different types of illegal activities that target hotels, vacation rentals, short-term rentals, and more. Common examples include credit card or chargeback fraud, identity theft, fraudulent bookings, and guest blackmailing. Severe cases might include cyber attacks, where hackers take advantage of weak security patches to steal guest information and credit cards.
Will Airbnb refund me if scammed?
Whether or not Airbnb will refund you if you are scammed depends on each specific case. Airbnb has policies such as Host damage protection (a part of AirCover for Hosts) and the Extortion Policy in place, but scammers still manage to find loopholes to get away with fraudulent activities.
Can Airbnb hosts get scammed?
Unfortunately, Airbnb hosts can get scammed. However, you can mitigate the risk of being a victim by taking preventive measures. Here’s a list of things you can do:
- Practice ID verification and screen your guests
- Focus on direct bookings
- Invest in short-term rental insurance
- Ensure tight cybersecurity