Telltale Signs of Telephone Fraud

The Chosen Payments Chargeback Assistance Team has noticed an increase in telephone fraud over the summer months. In an abundance of caution, we urge you to educate yourself and your employees today some of the schemes used to perpetrate crimes against merchants.

A Recurring Retail Store Scheme:

Fraudsters choose a particular product to examine and enter into discussion with a sales associate in a retail store. The fraudsters will typically introduce themselves and discuss pricing and will ask for the same of the person helping them. After developing a limited relationship, they leave without making a purchase. At a later time, the thief will call the store and ask for the store associate by name and then place a large order to be delivered. Your guard is let down because of the personal interaction with an actual customer in your store and the fact that you have “met them”. The amount of the purchases for this type of scam have been between $5000 and $25,000 so your loss potential in this scheme is high. The caller presents a stolen credit card for the payment and requests shipping to an address that is usually a vacant home or business. The stolen merchandise is then sold online. Please be aware of this scheme and the fact that product choices could change but the method of in-person shopping followed by a telephone order is almost always the same.

Many chargebacks caused by fraud are preventable by simply paying attention to what is being said. We hear many stories from merchants where the caller is almost waving a red flag in front of the face of the order-taker but yet a fraudulent order is still taken.

Here are some common traits of thieves using stolen credit cards:

Too Nice & Too Friendly

While some people are indeed super friendly, most thieves will try too hard to get chummy with the order-taker and talk about things such as the weather or ask about your personal life. This is an attempt to distract you from doing your job properly. No matter how cozy you get with a caller, always follow the same established procedures.

Promises – Promises

When a caller starts talking about how much business they do and if you do a good job they will “give you all their business”, this is a MAJOR RED FLAG. If you do a good job, you know they will be back without the promises. If they had a complaint with a previous vendor of the same type, what was it?  Who was it? If they claim they do a lot of business within your industry they should have no problem naming who they do business with. Ask them.

Can You Run The Card Now?

This is another major, major RED FLAG! They want to make sure the card goes through so they know they are getting away with it. Think about this: Have you ever asked someone to run your card right now while you are on the phone? Why would you concern yourself about it? The merchant will surely run it before you obtain your goods or services, right? If you know your personal account is in good standing, you don’t worry about whether a charge will “go through”.

The Greed Factor

One thing we see over and over is a request to upgrade after the initial transaction. “Upgrading” could mean someone asks for a sedan from a limo service but once the card goes through they ask for a party bus. Or, a person booking a hotel room can upgrade from a regular room to a suite. Another big RED FLAG is when they start asking you to add this or that on and “put it on the card”. This is just pure greed knowing that you have fallen victim, accepted the card and are delivering services or goods.

The Additional Calls

When the caller calls back over and over again, they are nervous about whether you have figured it out or not. Calls asking if the limo is on its way or if you have shipped the product yet or put the product out for delivery yet are signs of fraud. If a customer calls you back after the initial order, this is a RED FLAG.

WHAT TO DO

Now that you know what to LISTEN for, you need to know how to handle the transaction. Let’s back up for a moment and make sure that you take precautions when you accept a credit card by phone. Make sure that you get the complete billing address for the card along with the cardholder’s name AS IT APPEARS ON THE CARD. If the delivery address is different than the billing address for the card, make sure you email them a credit card authorization form to complete. If it delays the process, THAT’S OKAY. Protect yourself. If things are not adding up, call the Merchant Hotline. For Chosen Payments merchants, that number is 800-228-1122. Make sure you have your Merchant ID number handy. Press Option #4 for a “Code 10” operator.  A Code 10 is a suspicious transaction. The operator will assist you by working with the card issuing bank such as Wells Fargo for a Wells Fargo Visa. The bank will call their cardholder/customer and verify with them they are making the transaction.

Other helpful things you can do on the Merchant Hotline:

#1 – Get an authorization and secure funds on a card for up to (7) business days

#2 – Use the Address Verification System (AVS)

#3 – Get the name of an issuing bank for a specific credit card number.

* You can then ask the caller what type of card this is. (ie. Wells Fargo, Capital One)

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