Just a friendly Heads up Scammer

[Dave Johnson29]

It's the (original) card holder that is only liable for up to $50 in the case of fraud. The vendor (you) is SOL.

Sorry Dan, if you take credit cards and I have been doing it for 15 years, you need to re-read the contract. My liability for fraud is $40.00 once the card has been approved. Visa and MC carry the fraud risk on credit cards. Debit cards are an entirely different system and the vendor may in fact eat it unless they negotiated a deal with the card merchant. That's what smart people do.

Now a charge-back is something entirely different. That's where the customer is not happy with the goods and wants a refund. That must first be negotiated between the customer and vendor. If the customer still feels he is in the right and the vendor is wrong, then they write to MC or Visa and get them involved to mediate. If MC or Visa think the vendor is in the wrong, they pay the guy back and charge the vendor the amount and a fee.

Up until about 4 or so years back, MC and Visa would almost always side with the customer and the vendor would in fact "eat it." Due to the rising level of fraud, both MC and Visa rewrote their rules and now mediation on a chargeback is much more reasonable. To the point that the charge back fee goes to the customer in a large percentage of the cases. Well over 60% and about time I say. Although, I have never had a chargeback.

In Scott's case his card merchant is concerned there may be a chargeback for a refund on faulty work. The merchant has full withdraw and deposit control over Scott's bank account and will also know the average monthly balance. They are concerned that if a charge back was sucessful, there might not be enough in the account to withdraw. As Scott says, this is a pretty unusuall situation because of the big dollar number.

[Scott Shepherd]

Dave, I'm still not sure I agree with that. You might have negotiated those terms, but on my processor, here's a blip from their website :

"According to the results of the 10th annual CyberSource Online Fraud Report, U.S. merchants lost an estimated $4 billion to fraud in 2008."

To me, if the merchant gets paid, then how are merchants losing $4B in fraud? If it were the banks, then it would have said "The banks lost $4B in fraud". This makes be believe it's my responsibility.

I don't know, but I'm going to put a call in as well and find out how my processor handles it.

[Dan Hintz]

Dave,

Contrary to what the contract says (and I've been accepting for over 7 years now), the vendor is almost always the one who gets the shaft. When a card turns out to be stolen, do you honestly believe the credit card companies allow the vendor to keep the money from a stolen-card purchase? No, the CC companies yank the money back out of your account. Most of the time weeks or even months down the road, which means the vendor just sent out a bunch of product with nothing to show for it in return. You can explain your loss (at no fault of your own, since they approved the purchase) until you're blue in the face, but in the end they'll side with themselves and keep the money. I'm a member of an online forum/group that provides help/info to businesses that accept credit cards (thy keep a running list of scammer shipping addresses, breached credit card #s, breached credit card processors, etc.), and the only time I have ever read of a vendor getting money back is when a charge reversal could be shown (through emails, calls, etc.) to be false... and even that isn't always easy.

The short of it? Regardless of what the contract says, the CC companies will side with whomever allows them to keep their money, and that rarely includes the vendor.

According to your contract, merchants are not allowed to keep any form of your credit card info on hand once the sale has gone through. Ever wonder how Yahoo!, Amazon, et. al. manage to keep your credit card info "on file" for your next purchase? Yeah, they're breaching their contracts, but the CC companies are okay with it because those big sale houses are their bread and butter.

[Scott Shepherd]

Just put a call into my processor. Without missing a beat, the answer for our account was "The Merchant is responsible". I explained it about every way I could, and the answer was always the same, "The Merchant is responsible".

[Dave Johnson29]

the answer was always the same, "The Merchant is responsible".

Was that for a stolen card or a charge back?

I must confess I have experienced neither, so I am basing this all on the rules of my contract which have not been tested by me. Hopefully I will remain in the dark that issue.

I must say my merchant is very vigilant on what they approve. I have had orders two days apart on the same card and they will hold the second one's approval until I assure them by fax that I will accept the risk. I have not been burnt yet, but probably only a matter of time.

Based on their need for me to accept the risk in writing, I get the impression they are willing to live by the terms of our contract. I did sign with them may years back and they have not asked to modify the conditions so I may have been in the right place at the right time.

[Scott Shepherd]

Dave, that was for a stolen card. If it makes it through their system, mainly confirmed by the AVS (address verification system), which it would, if it were stolen and they know the address, then it's my responsibility when the person that's card was stolen calls their credit card company and says "I didn't buy 50 banners that say 'Don't worry, be Happy' ".

Their bank is coming after me to find out how I verified it, I'll say through the AVS system and they'll say "We'll need you to refund that money, it was for a fraudulent charge".

I see it much like counterfeit money. If someone pays me with a $20 bill that's fake and I don't catch it, when I deposit it and they find it, I'm out $20.

I don't know how it all works, and like you, I hope I don't have to find out.

[Dan Hintz]

It's a truly sad state of affairs, really... the CC companies don't want the rules to change because they're in their favor, and the lowly merchant is a grain of sand compared to the well paid interest groups supporting them. I cringe when I read of a fellow merchant screwed out of $40k because they were scammed with a stolen CC (not as uncommon as you would think... or hope). Some manage to trudge on, taking years to recover, others fold under the debt (a debt, I might add, you are completely responsible for... for those sole proprietorships out there, that could cost you your house!).

You better believe any time a petition comes up to change the rules, I add my name to it. why should the merchant be held responsible for stolen card charges if the CC companies claim their AVS system is so good? It's a scam from the top down.

[Bill Cunningham]

Large purchases should always be done through a bank to bank transfer..or Interac debit transaction. I don't know how the banking system works in the U.S. (and apparently many of the U.S. banks don't either) but in Canada Bank transfers or Interac email money transfers are the same as cash, and all the risk is with the 'purchaser'. If a unscrupulous vendor shafts them, or they have a beef, they have to get a refund directly from the merchant they paid. The banks or Interac do not get involved. Unfortunately, Interac email transfers are only available between the Major Canadian banks. Right now, when a scammer tells me he's in Canada, I direct him to pay by email interac. That way I'm safe.. Funny, the scammers never seem to continue with the order.. My customers love it, because a lot of folks don't want their card information going out into the eithernet, and feel safer with a bank interac transfer (and it cost 'them' 4 bucks, and me nothing!)..

[Dave Johnson29]

Just put a call into my processor. Without missing a beat, the answer for our account was "The Merchant is responsible". I explained it about every way I could, and the answer was always the same, "The Merchant is responsible".

Scott, you must be sharing the love. Got a big order this morning and with your words ringing in my ears, I called my credit card merchant.

<sigh> As of October 1st, the "new " rules are they have abandoned the $40 and we now must accept full responsibility. They sent notices out last week, but mine has not yet arrived.

Seems the scammers were often in cahoots with a vendor. Come the charge back, the vendor was dipped the max 40-buck liability and the merchant carried the rest.

The way of the world. I am thinking of going back to taking checks only and shipping after they clear.

[Ed Hazel]

When I get a large order I require a check 50% down and the rest due at delivery. I am not a bank.

1. I don't have to pay the CC fees, CC fees on a 10k order could be in the $200 range.

In the beginning I let the buyer dictate the terms I have learned over the years it is better if I dictate the terms I have never lost a sale over this. I can not go to walmart and dictate how/when I am going to pay.

As a merchant taking CC you are extremely vulnerable. Basically if you do not have a customer signature on the CC slip you most prove that you shipped it to the customers address that is the same as on their CC.
If a customer calls and places an order over the phone or Internet and has you ship the item to their work address and you do it. They can call up their CC company and dispute the charges and you will be left with nothing.

[Phil Garcia]

I have been getting the emails you mentioned for over a year now. I researched how the scam works and here it is.
The scammers use a stolen card, the charge goes through before the cardholder even know that his card information has been stolen. The merchant runs the card and everything seems ok for the moment.
The reason the volume of the order is so high is because they(the scammers) want the shipping weight to be high, this is where the scam gets interesting.
The scammers are in with a fictitious shipping company. When the order is ready to be shipped they will tell you that the shipping will require cash, money order or cashiers check for shipping since they do not take credit cards, they will ask you to pay the shipper and run the charge on the card or bill them for the shipping. You pay the funds to the shipper who never shows up for the merchantdise and they get the cash. Most of the engravers that have fallen to this scam lose between $750 to $2000. So, beware, it's not worth even trying. I spent a lot of time figuring this one out.

[Dave Johnson29]

you most prove that you shipped it to the customers address that is the same as on their CC.

Thanks Ed, I got the card merchant Risk section on to it and they said they spent almost half an hour on the phone checking with the issuing bank and other databases and they felt the risk is minimal. Albeit my risk.

I also did an Intellius search and there was about 12 listings for the name and address and the details all checked out there, so I am going to take the risk.

We deliver with Delivery Confirmation and our card processing uses AVS so at this stage I am confident it is all OK.

Hell, it is only money.

[Dave Johnson29]

I have been getting the emails you mentioned for over a year now. I researched how the scam works and here it is.

Thanks Phil, I was wondering how it worked when using a credit card. The cash request comes later.

[Phil Garcia]

Dave, please take a look at this link. I would hate to see a fellow SMC'er get scammed. The link explains it just as I had mentioned.

http://800notes.com/Phone.aspx/1-215-469-6965

[Rodne Gold]

The sad part about my business is that the biggest scam artists and non payers come from religious orgs...especially non mainstream ones - we do no work for new "religious" clients unless it is paid for in cash up front..a few ruin it for many.
I would be very suspicious of hotmail or gmail accounts .. In fact my mail client is programmed to just delete em regardless ..as spam