Credit card companies are reporting that over the past several months, they have seen a general rise in fraud. Flooring dealers are definitely not being spared. (and in some cases, are being specifically targeted) as victims, with an uptick of reports of recent instances.
There are several different ways this is happening. Being aware of the common scams can help you protect yourself. You’re at risk not only because of the increase in the fraud itself, but to compound the difficulty, the credit card companies, seeing so many cases of fraud, may be less likely to return your money due to their own self-preservation instincts.
One credit card processing company says that ever since COVID hit, they are seeing a sharp increase in chargebacks in general. Compounding the general rise in chargebacks, dishonest people know that if you swipe their card (and do not have a processor that will take chip or tap technology), they can dispute the charge, and the merchant has no recourse. So what’s happening is that people will receive their flooring, and then dispute the charge for various made up reasons. Because swipe technology is outdated and not secure, the credit card companies are holding the merchant responsible. Unfortunately, scammers have figured that out and are taking full advantage.
How can you protect yourself?
- First, upgrade to credit card processors with tap and chip technologies. It gives you more recourse for restitution or to challenge chargebacks.
- Require a signature upon delivery, installation, and purchase, confirming that they received the product, it was in good condition, they approve of the installation, etc.
Stolen Credit Card Scams
There is another scam that is trending in the industry. It goes something like this:
A potential customer will call and order product. They will give you a credit card over the phone that will process just fine, and then someone else will pick up the product a day or two later. Sometime later, the credit card company will come back and tell you that you took a stolen credit card and charge you back for the purchase. Because you took the stolen card, you have no recourse with the processor, nor with the bank, nor with Visa/Amex. The dealer is the one stuck with the loss. We recently had a dealer who lost $13,000 in this sophisticated scam. Many others throughout the industry have reported similar victimizations.
How can you protect yourself? Here are a couple of things to consider:
- A yellow flag should go up if someone is NOT ordering in person, and they can't come in, and you don't know who they are.
- A red flag should go up if the order is for a significant amount.
- If someone is ordering remotely, connect with them over facetime, zoom, or some other video conferencing app, and have them show you the card and their photo ID. Or have them send a photo ID and picture of the credit card (in separate texts) to your store manager or owner. (IMPORTANT: The credit card image MUST be destroyed immediately after verification, per PCI regulations. You can keep the image of the photo ID for your records.)
- Have the customer sign an electronic contract, through an e-signature service like DocuSign. (This will require the customer to have a valid email address.)
- Another option is to call the fraud department of your credit card company, and have them verify the card. Keep a record of the call and the person with whom you spoke
- When a person is picking up a cash & carry order that was made remotely, check ID and license plate number whenever possible.
Again, these suggestions don't apply to every purchase -- only for phone orders of people you don't know and haven’t worked with before.
We recently shared about this scam with our software customers, and one of our dealers reported that within hours of reading the email, he was hit with an attempt. He followed the suggestions above, and the thief ultimately disconnected the call. So please be cautious, and do all you can to protect yourself.