One of the number one questions I get asked is simply: [With all of the advancements] Why is it more difficult to accept plastic now than it was?
How about theft? Or Fraud? Or the thousands of people everyday trying to actively abuse the system? My grandparents always said that no one they knew really locked their doors. Of course they meant a long, long time ago… in a galaxy far, far away… but today it’s different. There are all kind of locks on processing credit cards because there are all kinds of ways to steal. Remember this simple phrase: A safe that is not locked is no safe at all. It’s a really heavy box. The really crazy thing here is that the system has a paper trail that is not too hard to follow and the bad guys almost always get caught. That being said, let’s look at some things people have done.
1. The Self Tipper: So we are in a restaurant and there is a waitress who the management needs to talk to. Why? Well, over the past week, several people have been calling in to complain about unexplained charges on their card. Here’s what’s happening: She had been writing down the card data and going back in and re-entering the card AND giving herself a tip on top of it. This is because a waiter gathers both credit card charges and cash over the course of the shift and then has to give the restaurant the amount they sold at the end. First they give all the credit card receipts, then cash until the amount of food is paid off and they keep the rest. In effect, she was having to turn in less cash as she was off-setting the bill.
2. The Back Draft: So now we are in a tire store. The store is losing money and has no idea how. It is so bad, that a manager basically comes up front and watches every sale which is being made, no cash register can be opened without a manager’s key, and yet all product is accounted for as either in stock, or has a sales receipt listed as being sold. So where is the money going? Well as it turns out the management may be watching the transaction, but doesn’t know what to look for. Here’s what’s happening: The person at the counter was teamed up with the customer who was a cousin with a different last name, as well as a few friends. Cousin (or friend) would come in, buy $400-600 in tires, give employee a valid card which would be charged for the full amount, and then leave with the goods. However, the employee at the end of the shift would then credit back either the majority of the money or all of it to the accomplice’s card.
3. Charge-Back Charlie: This is one of the worst of the worst. This is the guy who buys stuff on his card all the time and then basically refuses to pay for it. Either he’ll buy some electronics or hire a contractor that accepts credit card payment, and then calls his credit card issuing bank and complains that either the store did not live up to what it said it would do, or that the contractor did not get his approval before leaving the job and thusly fight the charge in its entirety. Here’s what’s happening: As sinister as this is, this one is done right out in the open. He is counting on the law of averages and if he keeps fighting it, he knows plenty of people will just quit fighting and he gets it for free. Plain and simple: it’s out right theft.
Here’s the Rules of the Road:
- Most Retail business fraud is from within
- Most Card-Not-Present accounts such as over the phone or internet, it’s from the outside
- Almost all fraud leaves a paper trail (in the end, 90%+ of the good guys win)
- Appreciate the complications, MC/Visa is trying to help you LOCK YOUR SAFE!
All of these stories are true and have happened right here in my own hometown. If you have had some credit card fraud, feel free to call or email me and we can review ways to make your business safer.