I own a small business. I’ve never had to deal with credit card fraud, but it looks like my luck has changed. A woman used a credit card last month and now the “clearing house” that I deal with has initiated a fraud investigation. I have cooperated with the clearing house and faxed them the paperwork they requested.
Once there is an official charge back I’ll be out $450. What do I do? Do I offer her the chance to bring me the cash? Do I call the cops? Do I talk to my lawyer?
Once the clearing house finishes their investigation, they’ll send you a report. Take that to the police.
If it’s a fraud investigation, it means the card was likely stolen or used without permission. Your attempts to get her to bring cash in are going to be fruitless, and may simply alert her to the fact that she’s been caught. Let the police handle her, and getting your money back.
Really? I’m sorry to hear that. I thought the credit card companies and/or the banks suffer the consequences in cases like this. At least, they keep telling us that fraud is why the interest rates are so high.
My condolences. 
You file a police report and contact your insurance company. a BOP (business owner’s policy) would hopefully cover this.
Thanks everyone!
I used to accept checks. My area had more NSF checks than the national average. I looked into a check guarantee service, but it would not have been profitable. So I stopped accepting checks. Within a year, all of my local “competitors” followed suit.
The local courthouse (DA office) started a bounced check division to help businesses recover losses. They came and asked me to begin accepting checks again “for the good of the community”. I said no thanks.
I’ve been joking about going cash only, but with the national budget crisis. . .:eek:
I’m not sure what you mean by clearing house. Do you mean your merchant acquiring processor?
I used to manage a merchant credit card processing system and our agreement said that if we had a signature that matched the signature on the back of the card, we were guaranteed payment. (Most of our transactions were online, but nonetheless this wording was in the agreement.) If there is a chargeback because of a stolen or lost card, but you produce a signed credit card slip, I don’t see how you can be held responsible. (Chargebacks from things like failure to deliver or charge not authorized are a different matter.)
I encountered two convenience stores in Tennessee that did just that. They did not accept plastic of any sort or checks.
Yes, i don’t understand either.
The rules when I worked with cards was “card present, signature matches”. As long as those were satisfied, the merchant was guaranteed to be paid. (I was always amazed how many merchants made no effort to check the signature). Did the signature match? Do you ever check? If not, sucks to be you…
If the argument is “I didn’t get what I paid for” there should be a different investigation. For goods bought at a cash register, I have trouble imagining how this would stick. IIRC, it’s about failure to deliver, not defective goods. If you sold her a Rolex and delvired a Rolllex fake, she might have a case. But if she bought it in person and it died a day later, not the card’s problem.
In once case personally, the shop processed my Visa transaction twice (in the days of written/carbon copy receipts). I assume the slips were checked and didn’t justify the charges, but that was the merchant being stupid (not theivery).
You can chase the person if you can identify her; small claims, etc. Keep your surveillance tapes if you have any. But… if someone is committing fraud, odds are small claims court is the least of their worries.
I guess. The people we got the machine from and who send us a statement showing the month’s activity. Sound right?
As to the reason I’m on the line for the $$$. We had an employee meeting to discuss what happened. Card was presented by someone known to us. Her name aint on the card. She signed with her “real” name. The employee who accepted the card knows the woman, and knows the cardholder; they share a house/live together.
I found out today that this has been a common situation. Cards are presented by a spouse/kid/roomie/whatever and we accept it along with driver’s license. I didn’t know all this.
So, I’m not heavy into the business end of things, and where I am I am pretty laissez-faire. I have an employee who does hiring/firing, schedules, and some light book keeping. Works for me. If it costs $500 every 10 years, so be it.
If I were closer to retirement I might do that, just to be ornery.
In the past 20 or so years I’ve only had one merchant check the signature. I buy silver dollars/silver medallions for presents, and apparently it’s the law that I have to present ID, and that the vendor has to check the signature of any credit/debit card offered in payment. Most cashiers don’t even look at the signature line on the back of the card to see if it’s vaguely the same.
I’ve let my husband and daughter use my checking debit card. Neither of them are on the account. Neither of them have ever had anyone question them. My first name, which is not Lynn, is clearly a female name…but my husband can use my card just fine.
I left the credit card industry 5 years ago, at that time VISA introduced new charge-back regulations which basically came down to changing the responsibility of disputing - before the change it would be up to the retailer to prove he had no way of knowing that the card was fraudulent so you had lots of chargebacks with a high success rate of disputing, now the acquiring merchant has that burden which means less chargebacks to a retailer but the chances of successfully disputing are smaller as well since the acquirer has already done all the legwork
Yes, if you accepted a card in violation of the rules - you were trusting the card holder not to dispute the charges. Since he did, and clearly his signature did not match, you are SOL. (Outta Luck.) You can ask the lady to pay cash, you can take her to small claims court, you might even see if you can drag the card-holder into it if he is responsible for his live-in girlfriend/common-law-wife’s debts. (Depends on your state). You run the risk that the court will say "you accepted the card knowing it was in violation of card rules so you knew the risk; but essentially, if she got the goods, she should be obliged to pay.
I recall ITGOD (In the good old days) there were stories of kids using their parents’ card, spouses using a card that did not have their own name, etc. Merchants accepted them, and if charges were disputed, often the signature was a close match (if the kid was smart) and the merchant was OK, the credit card company just raised the raites for everyone to cover it. One story I remember was some kid who ran away and made it all the way across the country before his parents caught on and cancelled the card.
Debit cards with a PIN change the game, since now the onus is on the cardholder to keep their card and not divulge their PIN. The new security-chip credit cards bring the same level of risk to credit cards. If the card is there and the PIN is correct, then the charge is valid.
I had this exact thing happen a few years ago with a semi regular customer. They came back in 9 months later with another problem. So I happily checked in their computer, fixed it, rustled up all the paperwork from the earlier charge reversal and called the customer to tell them they needed to bring cash for the current repair plus the reversal from 9 mo ago and that no checks or credit card would be accepted this time around.
They paid it, and have been back since.
What good does it do to match the signature to the one on the card? Think about it…have any of the banks you do business with seen the back of your card since you signed it?
I’m not saying it’s worthless to check for a match. You might keep yourself out of some trouble by doing so. But it’s a pretty worthless defense, isn’t it? You say, “But the signature matched the back of the card.” They say, “Really? Prove it.” And of course, you can’t prove that.
The merchant is really up against it here. Even if you ask for ID, check the sigs on both the ID and the back of the card, compare the picture on the ID to the face in front of you, and know beyond a doubt that you are dealing with the cardholder…you still could never prove that after the fact. It would be your word against theirs.
Still waiting to hear from the cc people. A week to investigate? Seems like it should be a slam-dunk.
Basically, signature matching is an art, not a science; and no doubt the credit card company, unless they have it in for the merchant, is not going to be too rigorous. Yes, a card’s signature may be faded and illegible or appear to be tampered or overwritten - but then it’s up to the merchant to refuse it or face the consequences. In this case, OP says the person signed their signature, not card-holder’s, so its not deliberate fraud. I assume it’s obviously not the holder’s signature…
However - the card company has a signature on file from the application, and the merchant has copies of the receipt with signature. If the two are not even close then the merchant did not check, case closed, (unless the merchant insists?).
If the card-holder pulls a fast one and gives a blank card to an accomplice, or someone else habitually uses a card - the ccc can check other receipts, and look for a pattern. Again, depends how much effort they want to put into the case. I suspect they are too busy chasing down professional theives to worry about some guy arguing with his non-wife over $500.
Unfortunately not necessarily… I handle chargebacks where I work and usually our processing company takes at least a week to even look at the paperwork. Then it can take several weeks for us to get the money back, if we get anything at all. Sometimes if it’s a large amount I can call up our rep at the processing company and whine to get it moved along faster, but they don’t like it when I do that!
Well, I called them yesterday and mentioned that I’d like to pursue my cash from the woman. The person I spoke with was insistent that I wait until they complete their investigation so that she doesn’t know she is being investigated.
WTF? Is she gonna flee the area? She is a single mom with a ~4 year old who used her house-mate’s card without permission. I’m going to wait one more day, then call her and demand she pay me as soon as the charge-back is complete.
As far as whether the company likes it, how does it affect me? I’m out the money whether I follow their wishes or not.
I used to process chargebacks at the credit card bank. Contrary to some customers imaginings, it’s not Marge with a ledger book who can look it up and tell you right away what’s up. “Oh, yes, here it is! Judy’s Cupcakes - $17.95. Up on Maple Street. On last Tuesday was it? Sure, sure, I’ll take care of that right away!”
It’s 1000 clerks with a stack 1000 high every day. They’ll get to it, really they will. Unfortunately, the dollar amount is really irrelevant to the speed of processing, it’s just a data point like date or address or account number.