I was sitting at my desk last week and a client called. When I answered he said, “I am being scammed I need you to help me.” My client and his wife own a small retail store, he just found out that a cardholder dispute, also known as a chargeback, had been filed.
A few days earlier, two people came into his store and made a larger than usual purchase. They needed to split the sale on two different cards because they did not have enough available credit on one. (First red flag)
Then, the cards would not work in the EMV chip reader, it would not work when swiped either. (Second red flag) The customer had to manually key in their card number to complete the purchase.
My client was suspicious, and since it was a large amount, the customer was asked to provide ID. The ID presented matched the name on the cards. Both transactions were approved, the customer signed the receipt, and left the store.
When my client called me, his first thought was the customer was just trying to scam them and claim they never made the purchase. He sent me pictures of the two individuals from the security cameras and told me that he had called the police.
I helped him complete the paperwork required for objecting to the chargeback and we submitted it to the bank that issued the cards.
When a chargeback happens the entire amount of the purchase is deducted from the merchant. The merchant has the opportunity to object and submit their proof or purchase to the card issuing bank. In can take a few months for the bank to decide.
I would speculate that the customer was using stolen card numbers. When she presented her id, it matched the name on the card. I suspect the card was fake or she simply keyed in the stolen numbers, not the numbers on her card.
Another client told me this exact story a few months ago, almost word for word. So, what can a business owner do to protect themselves?
- Post signs stating the ID is required for any transaction over a certain dollar amount.
- Do not accept a card payment if the EMV chip does not work, unless you know the customer well.
- Use security cameras in your store.
- Do not accept a card that is not signed by the cardholder.
You can also call for a voice authorization and ask for a code 10. Asking for a code 10 alerts your processor discreetly that you suspect fraud. Credit card fraud is not going away but you can take steps to reduce your risk by implementing these suggestions.