Credit card processing scams are a new, but swiftly growing, form of crime that targets businesses using credit card processing. These scams can target online merchant accounts and physical, in-store accounts. Since the potential for loss is so high, it's important for business owners to protect themselves against the most common forms of credit card processing fraud.
Hidden Fees and Over Charging
The most common credit card processing scam involves charging a business too much for their merchant service rates. This is typically done by adding charges to the bill or overcharging for the services provided.
To avoid hidden charge scams, a business should carefully review its list of charges every month. Compare each transaction on the charge statement to your financial records. Look for anything that doesn't match. Each charge should exactly match the amount the customer was charged. Extra purchases are easy to spot, and should be dealt with immediately.
Stolen Information
Scams where customers’ personal information is stolen gain a lot of attention because it is considered an invasion of privacy. Often, these scams are performed by employees of a credit card processing company who have access to client records. Card numbers and names are copied from the millions of transactions being processed and are then used to make purchases. Fortunately, these scams are easy to catch since law enforcement can track the information back to a single company.
Illegitimate Credit Processing Companies
Unfortunately, new businesses are the most common victims of credit card processing scams because they don’t have much familiarity with merchant accounts and credit card processing. Many business owners get scammed because they sign up for a service from what seems to be a legitimate company, but is in fact not. To avoid this, it's a good idea to look for reviews and complaints on any credit card processing company before signing a contract.
Extra Charges
Charge-back scams are a lot harder to catch. For this scam, the credit card processing company adds extra returns and chargebacks to your business statement. Few business owners realize that the credit card processing company still takes a commission every time the card is swiped, even when a customer is making a return. While this is legal, it is not legal for the credit card company to place additional charge-backs on the account statement. Unless you regularly check your records, however, these scams can go on for months or years before you notice. To avoid getting caught up in this scam, check statements carefully, and keep a record of any returns you process.
