Credit card processing scams are unfortunately one of the fastest growing cyber crimes occurring today. These scams occur when businesses sign up with a new merchant account processing company only to discover that the credit card information being sent to the new company is getting stolen or misused, and/or they are being overcharged on transaction fees. Fortunately, there are ways that business owners can protect their business in 2013 from these scams.
A business owner should start by reading one of the many credit card processing companies review websites. Since this is a relatively new field, credit card processing companies review websites rely largely on customer reviews of merchant account processors. Companies that are actually scams are usually identified within weeks on these websites.
There are several steps that a business can take, however, if they are considering doing business with a new merchant account processor. To start, only process a few credit cards in the first several weeks of doing business with a new company. Preferably, these should be cards owned by the business owner and/or his or her close friends and family members. If a company will steal credit card information, they will most likely do so immediately, and the business owner and his or her friends will immediately be notified of suspicious activity on their credit card. While canceling the credit cards will be a hassle, at least the business will not have alienated their customers to try out a new credit card processing service.
Next, run several different types of transactions on a card and carefully review the statement of fees that is generated from each transaction. Make sure that these fees line up with the amount stated by the processor when the business first signed up for services. Most of the scams that occur in this industry actually take the form of overcharging customers for transactions and/or charging customers for transactions that did not take place.
By carefully reviewing the statement that the credit card processing company sends to your business, it is possible to check that the amount that your business is being charged matches the amount that the credit card processor’s agreement states that you are supposed to be charged.
In addition to checking the fees charged for regular transactions, also look at the fees that are charged for transactions such as returns and chargebacks. Very few businesses keep accurate records of the number of credit card chargebacks that occur as the result of customers returning merchandise or taking care of mischarges, since these transactions rarely affect the bookkeeping of a business. Each one of these transactions, however, is subject to fees from the merchant account processor.
Because the fees from these transactions can be high and few businesses track these types of transactions, a common scam is to fabricate returns and chargebacks and charge businesses for them. These scams can be perpetrated by merchant account processors for months or years before the merchant account processor is caught.
Finally, be careful with how your business stores its customers’ credit card data. Typically, every transaction that occurs will generate a record that can include the client’s credit card number. Of course, by recording this data, a business has to be careful with how it disposes of it. Identity theft is a growing crime, but few people realize that the majority of data stolen is not done online, but rather from dumpsters.
To protect your business and your customers, make sure to shred any printed reports and receipts that have been already been logged before throwing them out. Losing your customer’s data can make your business instantly lose the trust that you have worked for years to create with your clients.