We are continuing to see a credit card payment scam that's been trending in the floor covering industry, and is being reported on a more frequent basis (see Floor Covering News' latest article). In the past year, we had two dealers lose over $10,000 each from this same scam. The scam goes something like this:
A potential customer calls and orders products over the phone requesting a will call pickup (cash and carry). The customer is usually in a hurry and needs the product right away. They will give you a credit card or ACH payment over the phone that will process just fine. After that they'll say something like, "I'm sending my guy (or my installer) to come and pick up the order." Sometime later, the credit card company will come back and tell you that you took a stolen credit card, and will then 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 in this scam.
This scam is a threat to all flooring dealers taking credit card or ACH payments over the phone in a cash and carry situation.
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.
So if you are in this situation, what can you do to minimize the risk? Here are some ideas you can implement when dealing with phone orders from people you don't know:
- Go to their house. If they can’t come in, try to visit their home address. If it is a scam they will either live in another city or won’t want you to come. For a $15,000 cash and carry deal, you should be willing to drive 30 miles to ensure you get the deal and protect yourself.
- Connect with them over Facetime, Zoom, or some other video conferencing app, and have them show you their credit card and photo ID. Or have them text your store manager or owner a photo ID and a picture of the credit card (in separate texts). Make sure the name on the card matches the name on the photo ID. The credit card image MUST be destroyed immediately after verification, per PCI regulations. However, you can keep the image of the photo ID for your records.
- Make sure the zip code for the credit card is in the same city. Often stolen credit cards come from cities that are far away.
- Have the customer sign an electronic contract, through a service like DocuSign. This will require the customer to have a valid email address.
- Call the issuing bank of the credit card and have them verify that the person is legitimate. That way, the bank can try to contact and authenticate the customer directly.
- Check the ID and license plate number of the person picking the order up.
- NEVER use ACH/echecks with cash and carry deals. It usually takes awhile to find out that account information has been stolen, and there is no address verification with ACH accounts. We recommend you require a credit card for cash and carry.
FYI - when taking a credit card, the name on the credit card isn't automatically checked against the names on the credit card account. So you must always check the name on the credit card to verify it matches the person's official ID.
Again these suggestions don't apply to every purchase -- only for phone orders of people you don't know. We just thought you'd like to know about what we've been seeing lately. Please pass the word on to your employees.
Read the full article here: