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Protect Yourself from Scams and Fraud

Scams and fraud are unfortunate hazards of the digital age. When you accept a card purchase, there is always a chance that the card or card information was stolen and is now being used to commit 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, 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 card payment to a third party

Scammers will sometimes ask you to use part of a card transaction to pay a special vendor (such as a driver, caterer or event planner or delivery 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 delivery 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 delivery practices

Many illegitimate purchases involve special requests or irregularities around the delivery of goods. These include:
* Billing and delivery postcodes that don’t match
* Insistence on rush-delivery/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 delivery 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 card 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.

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 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 card’s postcode. 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 payment cards