Professional Comment

How Can UK Hospitality Businesses Protect Themselves Against Fraud?

By Andrew Doyle, CEO, NorthRow (

The total monetary value of reported fraud in the UK stands at a staggering £1.1 billion according to data from FastTrack and there is a sharp increase in incidents of fraud occurring across a range of industries, including hospitality.

Why is the sector so open to fraud?
It is easy to see why cases of fraud are increasing in this way. The high volumes of transactions that occur in hospitality can make it harder for businesses to spot fraudulent activity, especially if proper controls and monitoring systems are not in place.

The rise in online booking platforms and payment systems (a lot of which were introduced as a result of Covid), also means there are a lot more opportunities for cyber fraud to occur, including stolen credit cards being used to make purchases or cases of identity theft to make and pay for bookings.

What are the implications?
According to a report from Capcon, a typical fraud case will cause hospitality businesses a loss of £6,800 a month and last a year before detection. This loss is significant at any time, but none more so than during a cost of living crisis when consumer spending is way down and costs are skyrocketing.

As well as the significant and obvious financial cost of fraud, hospitality businesses leave themselves open to reputational damage and a loss of trust and credibility in the eyes of customers if they are not adequately protecting themselves. This, in a sector as competitive as hospitality where customer reviews and testimonials are crucial, can be absolutely catastrophic.

What should hospitality businesses be doing to protect themselves?
Just as is the case with any industry, there are simple steps hospitality businesses can take to mitigate the risk of fraud and therefore protect themselves against its devastating effects. Investing in employee training to help recognise the tell-tale signs of fraud is an important first step, as well as implementing a regular review and audit of historical transaction records to spot any irregularities.

It is also important to conduct thorough vendor and supplier due diligence to ensure they are reputable and trustworthy. Having a customer verification process in place to ensure they are who they say they are is equally important, especially when it comes to high-value transactions.

While this sounds like a lot of time and effort for hospitality businesses (especially during a time of staff shortage and economic uncertainty), it doesn’t need to be. There is technology available that can take care of almost every part of this, including real-time monitoring that detects and alerts you to any suspicious activity, vendor and supplier due diligence and biometric authentication that can verify your customers’ identity.

The rise in fraud is alarming for UK hospitality businesses, especially when both the financial and reputational costs are so high, but by ensuring your staff know what to look out for and by adopting the right technology, you can protect your business, your reputation and give yourself the time to focus on what matters most – your customers.