Payment and business fraud are an increasingly common issue when accepting card payments.
There are a number of techniques scammers use to defraud businesses of any size. When dealing with card payments, there are three common types of fraud:
Buyer fraud
This occurs when a fraudulent customer (known as a 'bad buyer') uses stolen card information to get free goods, services, or cash from your business. The most common way this happens is when a bad buyer requests that your business transfers additional funds they pay you on to another third party that will assist them in receiving the goods or service.
For example, a bad buyer may pay additional funds to a catering business for services using an unreported stolen credit card, and then ask the business to transfer the additional funds on the bad buyer's behalf.
Once the actual cardholder realises that their card has been used in a scam, they will begin the chargeback process with their bank. This would leave the catering business liable for money charged on the stolen card, and also out of pocket for the amount transferred to the legitimate business.
It’s important to know that even a successful transaction could be from a card that hasn’t yet been reported as stolen.
Account Takeover
This occurs when a fraudster attempts to take control of your Zeller account, divert legitimate funds to their own bank account, or use your Zeller account to siphon funds from stolen credit cards.
This can be achieved when a fraudster is aware of your account login details, has access to a device you are logged in to (a mobile device, computer, or a Zeller Terminal), or gains your information through an illegitimate source.
Card fraud
This occurs when a fraudulent customer attempts to pay for goods or services with a single stolen card, or multiple stolen cards.
Warning signs of fraud
There are many common warning signs to keep an eye out for when protecting your business from potential scams. These include:
- Large and usual transactions from buyers you are unfamiliar with. This could be larger than normal dollar value, large quantities of stock, or purchases from areas you wouldn't traditionally ship to.
- Unusual communication methods. The customer may explain their inability to meet in person by claiming to be in the hospital or hearing impaired. This approach is often used by scammers to gain sympathy in the hope that you will be more willing to accommodate unusual requests.
- Failed payments on multiple credit cards, especially when the customer asks you to try smaller amounts after a decline.
- Unusual requests to send part of a credit card payment to a third party. Often their request will instruct you to make an irreversible money transfer such as a bank transfer, PayPal transfer, or money order.
- Multiple transactions on the same card (or from the same customer) over a short period of time.
How You Can Protect Your Business
If you are unsure whether a transaction is legitimate, you can take some extra steps to validate the potential transaction.
- Keep up to date with the lasted scams listed by the ACCC.
- Never transfer or send money to any third party at a customer’s request, even if you are familiar with the customer making the request.
- Don’t take credit card payments for goods or services that are outside what your business normally does (this includes selling assets that you or your company owns, facilitating payments for another business, etc.).
- Avoid splitting large orders into multiple small payments, especially when someone is trying to split the order over different cards to avoid card limits.
- Ask for government identification to verify the buyer’s identity, like a driver licence or passport.
- Develop your team’s knowledge in identifying and preventing credit card fraud, including training your employees to look out for suspicious transactions or customers.
- Never use a third-party delivery service that you’re not familiar with. Always send your goods through a certifiable delivery company such as Australia Post or StarTrack.
If you ever suspect that a transaction may be fraudulent, let the customer know that you can't accept the sale, and then cease contact.
While the warning signs we have listed above are commonly associated with scams or fraud, they do not necessarily mean a buyer is attempting a fraudulent purchase.
If you ever suspect fraud, please contact our Support team.