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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 detect unusual activity and notify you of fraud or potential scams, but you are always your first and best line of defence. 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 – tell-tale signs that you should be wary of before completing a transaction with a buyer.

The buyer is inconsistent in communicating

Scammers will often communicate using fake information, such as false phone numbers and fake or temporary emails, that are only used for the purpose of a scam. 

Scammers may also provide inconsistent customer details when they place orders. For example, they may try to place multiple orders with the same card details but provide different customer information, such as email address and delivery address, for each order. Keep an eye out for any inconsistencies in customer information, and verify your customer to ensure they are the actual cardholder.

Watch out for any communication with a customer that doesn’t feel natural. Scammers may use scripted responses with common phrases that they send to potential targets in bulk.

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.

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), or make an unusual refund request. 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 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. We also recommend always processing refunds for customers through Square where possible. If you do issue a refund outside of Square, make sure to get written confirmation from the buyer that they have received the refund.

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 – although a difference in address doesn’t necessarily mean a scam (the purchase could be a gift) you should take additional steps to verify the buyer

  • 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.) or large orders of your most expensive goods

  • Requests that you deliver with a buyer’s ‘preferred’ delivery company or requests that you wire funds to a delivery company recommended by the buyer

  • Requests to change the delivery address after an order has been placed – scammers may place an order with a legitimate address and later ask for the goods to be delivered elsewhere

  • Requests to deliver to a freight forwarder

Card Transaction Issues

There are certain indicators that a buyer may be using a list of multiple stolen credit card numbers to attempt 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.

Monitor the Transaction Status report in your Square Dashboard to keep tabs on your card declines – if you see multiple declines in a row from the same card or buyer, they may be trying to ‘test’ the card until a payment successfully goes through.

How to Protect Your Business

Implementing an effective fraud prevention strategy that utilises best practices can help make your payments more secure and reduce the risk of fraud related disputes from happening. Find the best practices, and work to create a strategy that best suits your business’ needs.

  • Communicate with your customers to confirm their orders – get in touch to confirm an order before dispatching goods. If the contact details provided by your customer do not work, this can indicate an order was placed with fake details.

  • 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 (Royal Mail, DPD, UPS, etc.).

  • Avoid splitting large orders into multiple small payments.

  • Match the billing postcode 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).

  • Verify the buyer’s identity – you can Google the buyer’s contact details to see if they have any results for spam reports, ask for government-issued photo ID to verify the buyer’s identity, request to see the payment card upon collection or delivery, etc.

If you suspect fraud, the safest option is always to refund the payment and 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

Square Fraud Email Notifications

To keep your account safe, Square offers 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 do not dispatch 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 one 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.

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