Businesses are being warned about a credit card scam that could leave companies out thousands of dollars after they ship high-value merchandise.
According to the Better Business Bureau, the scam is alleged to involve fraudsters contacting businesses by phone and purchasing expensive goods using stolen or fraudulent credit card information.
Mary O’Sullivan-Andersen, president and CEO of BBB Alberta and East Kootenay, said the scheme was targeting the trucking industry in Saskatchewan last month before making its way into Alberta.
“A transaction can be approved and then cancelled,” O’Sullivan-Andersen said.
She said a preliminary approval may initially be provided by the credit card issuer, but a fraud or identification warning can later be triggered, freezing or cancelling the approval.
According to the BBB the fraud can leave businesses exposed even after a transaction initially appears legitimate. Once a seller receives an order and processes the payment, the customer arranges for the merchandise to be sent by courier. The business may only discover the payment problem after the goods have left its possession.
Businesses are being urged to be cautious of large or unusual telephone orders, including requests involving multiple credit cards, repeated purchases of the same merchandise or unusually large quantities. These can indicate potential fraud. As well businesses are being advised that rush delivery requests or discrepancies between the purchaser’s name and billing information to make further checks.
O’Sullivan-Andersen warned that the financial impact can be significant, with losses quickly reaching hundreds of thousands of dollars.
“This type of fraud can quickly amount to hundreds of thousands of dollars in losses,” she said. “All businesses should implement protocols to verify a customer’s identity and the credit card information being provided.”
The BBB recommends that businesses establish procedures for confirming customer identities and checking payment information before releasing merchandise.
Companies should also speak with their payment processors about available fraud-prevention tools and ensure appropriate security measures are in place. The BBB is advising businesses to report suspected fraud to the police.
