Did you know that if you, as a business owner, take a stolen credit card, you are on the line for it? Even if everything went through and nothing was flagged initially? It’s essential to protect yourself from being victimized.
There’s a very prevalent scam that has been sweeping through the industry during the past few years, rampantly preying on unsuspecting flooring dealers. And too many in our industry are getting burned.
The scenario typically plays out like this: You get a call from someone, and the potential customer orders a product over the phone, requesting a will-call pickup (cash and carry). They need it quickly, and often, it’s for a sizable amount. The story usually has some variation: they ran out of materials and needed to finish a job ASAP. They say they will send over their installer to pick up the product and want to pay with a credit card over the phone. The card initially appears to process just fine. Their installer (who may or may not be involved in the scheme) picks up the materials. And then you find out a week or two later that it was a stolen card, and you are on the hook for the loss. The credit card company charges you back for the purchase. Because you took the stolen card, you have no recourse with the processor, neither with the bank nor with the credit card company. And, of course, the “customer” is long gone.
We get about two calls a month from flooring professionals who have been hit by this. One particularly unfortunate customer was naive and took multiple stolen cards (the criminal kept returning). Not only was he out of the money, but the underwriters labeled him a risk and shut down his ability to process credit cards. So, take note of this cautionary tale.
If someone is not ordering in person and can’t come in, and you don’t know who they are, be wary. Sure, a longtime customer might call and want to order something, and that’s an entirely different situation. Your risk is minimized if you know the person and have worked with them before. But you need to be on your guard if you don’t know them. Also, a big red flag should go up if the cash and carry order is for a significant amount.
What can you do to protect yourself in this situation? Here are just a few suggestions.
First, offer to go to them if they say they can’t come in. For a $10,000 cash and carry deal, you should be willing to do some driving to protect yourself. Tell them you’ll meet them at their house or jobsite to get the needed signatures and information. If this is a scam, they’ll live in another city or have some other sort of excuse about why you can’t come.
Or, you can offer to connect with them over Zoom, FaceTime, or some other video conferencing app. And during that call, have them show you their credit card and photo ID. Make sure that the names match up.
You also can have them text your store manager a photo ID and a picture of the credit card (in separate texts). However, as per PCI regulations, the credit card image MUST be destroyed immediately after verification. (You can keep the photo ID for your records, however.)
Make sure the zip code for the credit card corresponds to the address of the person or job or is somewhere near you. If it’s a zip code for a city three states away, there’s a high likelihood you’re being tricked.
Another tip is to have the customer sign an electric contract through a service like DocuSign. This requires the customer to have a valid email address. This can help track them down if there is any problem.
You also can call the issuing bank for the credit card presented and have them verify that the person is legitimate. That way, the bank can try to contact and authenticate the customer directly. We have found that some banks are willing to do this, and some are not. It just depends on the bank and the mood of the customer service person.
When the “installer” comes to pick up the material, check the ID and the license plate number and ask how they know the customer. Occasionally, the person making the pickup is oblivious to the scheme, but they sometimes can lead you to the perpetrator.
Another warning: Never use ACH or e-checks with cash and carry deals. It usually takes much more time to find out that account information has been stolen, and ACH accounts do not have address verification. We recommend requiring a credit card for cash and carry.
As a vendor accepting credit cards, you also should be aware that when you take a credit card and process it, the name presented isn’t automatically checked against the names on the credit card account. You should always check the name on the credit card to verify that it matches the person’s official ID.
I have been amazed at how many in our industry have been victimized by this cash-and-carry scheme and continue to be. It has been an onslaught. I hope everyone will be cautious so they aren’t the next victim.
Chad Ogden is the founder and president of QFloors software, located in South Jordan, Utah. While he is a “tech guy,” Ogden says he got into the weeds of credit card processing to provide something better for customers. His company offers credit card processing, both for QFloors/QPro customers (QPay), and for others in the flooring industry (Mountaintop Payments). If you have additional questions, feel free to reach out to the team at sales@qprosoftware.com or info@mountaintoppayments.com.
