Scams and fraud are unfortunate hazards of the digital age. When you accept a credit card purchase, there is always a chance that the card or card information was stolen and is now being used for fraud. The fraudster can keep racking up charges until the true cardholder notices the unusual activity and disputes the transactions with their bank.
As a seller, credit card companies hold you liable for fraudulent transactions. Square works hard to catch unusual activity and notify you of fraud or potential scams, but you are always your first and best line of defense. It’s vital to learn how to spot and avoid suspicious transactions.
Potential Signs of Fraudulent Buyers
When scammers steal someone else’s card information, they typically have one of two goals:
- To obtain goods from you without paying for them
- To fraudulently obtain funds by deceiving you.
Scammers tend to follow identifiable patterns—telltale signs that you should be wary of before completing a transaction with a buyer.*
The buyer asks you to send part of a credit card payment to a third party
Scammers will sometimes ask you to use part of a credit card transaction to pay a special vendor (such as a driver, caterer or event planner) or shipping company. Often their request will instruct you to conduct an irreversible money transfer such as a wire, Western Union, money order or bank transfer. These types of requests are are highly indicative of a scam.
In this case, the true cardholder would dispute the transaction with their bank and you’d be responsible for returning the full amount. To protect yourself and your business, never send part of a customer’s payment to a third-party vendor or shipping company.
Purchases are exclusively made via phone, email or text message
If a customer avoids any in-person contact when the transaction type would normally call for it, they may be attempting to scam you. Common examples include catering, hairstyling and photography. The customer may explain their absence by claiming to be in the hospital or hearing impaired. This approach is often used by scammers for two reasons: to hide their true identities and to gain sympathy in the hope that you’ll be more willing to accommodate unusual requests.
Irregular orders and shipping practices
Many illegitimate purchases involve special requests or irregularities around the delivery of goods. These include:
- Billing and shipping postal codes that don’t match
- Insistence on rush-shipping/service (can indicate the buyer is in a hurry to complete the transaction before the stolen card information is reported)
- Large, repeat orders in a short time span
- Bulk orders of goods that can be easily resold (blank t-shirts, electronics, USB drives etc.)
- Requests that you wire funds to a shipping company recommended by the buyer
Card Transaction Issues
There are certain indicators that a buyer may be using a list of multiple stolen credit card numbers to make fraudulent purchases.
- The card is declined. A 'declined' response can indicate that the scammer wasn’t aware of the card’s credit limit or the issuing bank has flagged the transaction.
- The buyer asks you to split and/or charge an order to multiple cards. As with card declines, a fraudster may attempt to spread a transaction over several cards in case the purchase exceeds the credit limit of a single card.
How to Protect Your Business
- Never wire or send money to any third-party at your customer’s request (including Western Union, MoneyGram, bank transfer, etc.).
- Don’t take credit card payments for services that are outside what your business normally does.
- Never use a third-party delivery service that you’re not familiar with. Always send your goods through a certifiable delivery company (UPS, Fedex, etc.).
- Avoid splitting large orders into multiple small payments.
- Match the billing postal code to the credit card’s postal code. If they don’t match, ask why. The reason should make sense within the context of the order (e.g. the product type and/or quantity would fit that of a gift).
- Ask for government identification to verify the buyer’s identity.**
*If you suspect fraud, let the customer know you can’t accept the sale. Contact us if you have any questions or concerns about a customer.
Learn more about best practices for accepting card payments.
While the signs listed are often associated with fraud, they do not necessarily mean a buyer is attempting a fraudulent purchase. If you suspect fraud, contact Square Support.
Square Fraud Email Notifications
Square Secure, the set of services and tools we provide to keep your account safe, includes live transaction monitoring. This allows us to spot suspicious transactions and review them. If we determine a transaction(s) on your account is likely to be the work of scammers, we’ll alert you via email.
Once you receive an alert via email, we ask that you not process the order(s) being investigated or accept further payments from the customer in question until you hear back from us. In the meantime, we’ll look into the details of your transaction(s) and compare them with other known fraud patterns we’ve identified.
This review process is typically completed within 1 working day. We’ll send a second email to let you know the outcome of the review or if we need any additional information from you.