Being in the payments business, we see many different types of credit card fraud scams; many of which impact innocent business owners and operators.
A merchant of ours recently received a telephone order for several thousand dollars of roofing materials. The customer charged the order to a credit card and requested the merchandise be shipped to the opposite coast (1st red flag). The customer then called back before the product shipped and canceled half the order, but requested the merchant issue the refund to a different credit card (2nd red flag). The merchant complied with the cardholder’s request and issued the refund. Two months after the order shipped, the merchant received a chargeback for the full amount of the original sale.
In this particular scam, the cardholder whose card was originally charged claimed they never made the purchase and their account was used without their permission. The cardholder who the refund was issued to, (i.e. the fraudster) made off with thousands of dollars in credit back to their account and also likely took possession of thousands of dollars in roofing supplies.
Sometimes the excitement of a large order can blind you to obvious red flags. It is important to train staff and always remain vigilant. To avoid falling victim to a similar type of fraud, use the AVS and CVV code for all card not present orders, only ship to verified addresses and only issue refunds to the card the original transaction was run against. If you ever need help determining the legitimacy of an order, call Customer Support at 888.624.3687 M-F, 7:00am-5:30pm PST. Also, download our Fraud Awareness Training Guide for additional tips and best practices.