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Avoiding Fraudulent Credit Card Transactions

Tips to protect your distributorship

In recent months, there has been an influx of credit card scams in the distribution industry. It seems that every time a way is found to combat the efforts of the dishonest trying to obtain free equipment, they resort to much bolder tactics. This article outlines some scenarios that may sound familiar to you as an owner or to your accounting staff. I will also provide a list of best practices and resources in the event that you find that your business may be at risk.

The Relay Call
A relay call comes through with a person pretending to be deaf, thus needing assistance in placing the order. This tool, which is intended to aid the hearing-impaired community, is being used as a buffer so that the perpetrator cannot be tracked down when it is realized that they have used a stolen credit card to pay for items that they want shipped either within the United States or to other countries. This can result in the stolen card holder calling his bank and requesting a chargeback for the items in question.

The Call-In Order with a Split Bill
This crafty individual actually places an order over the phone and requests that you split the payment onto two separate credit cards. This should be a huge red flag to all persons working the counter at all branch locations. These cards are usually stolen and the perpetrator does not know the spending limit, so they ask that you split the order to ensure that the card is not declined.

Hello Marketing Director,

I will like to place an order for Equipment from your company.kindly get back to me if you have the equipment listed below..

Single-wheel casters
1.25” x 3” fastenings
Part Number 213-0629
Quantities…………. 50 Pieces

So kindly get back to me the total cost and shipping cost via Fedex.I will be glad to get back to me the total cost,so that i can forward you my credit card details for the payment of the products.Thanks

Jones Morgan

The Internet Inquiry
This is one of my favorites. I am on the vendor list for an association I provide services to, and even though I am not an equipment manufacturer, I get e-mail requests for quotes on equipment and supplies. The e-mails also ask if I ship to remote locations. Clearly these blanket Internet inquiries should be treated with caution. Out of curiosity, I responded to the inquiry at right. It was clear that there was a language barrier, because the e-mail recipient was unable to answer any of my questions pertaining to their company location, phone number, address or any information indicating that it was a legitimate business.

The Ship Across the Country
This should be a red flag, because if someone is calling one of your branch locations to place an order that they want shipped somewhere that they could easily walk into another distributorship and buy off the floor, why would they pay for shipping? These guys ask for a price and are willing to pay whatever you quote them, even if it is at list pricing. Of course, they want to pay with a credit card and will usually agree to pay shipping. (Now, wouldn’t it be great if real customers were so compliant???)

The Call-In and Pick-Up
This person will call in an order and give a credit card number for the sale and then come pick up the merchandise. If they can come pick it up, then they should be able to pay by swiping the card at the counter, NOT prior to.

If you encounter anything that sounds like the examples above, here are some tips that you can implement as policies at your branch locations:

  • Ask for the CVV number. This is the Card Verification Value. It is the three-digit number on the back of the card.
  • Make sure that the shipping and billing address are the same. Use the AVS (Address Verification System) function.
  • Ask for the 800 number to the issuing bank and call it if you feel that a customer is too vague or reluctant in providing proper billing information.
  • Call the customer’s main office to validate a sale. Some former and disgruntled employees who once had access to the company account to obtain supplies may be trying to load their own arsenal for their own business and leave you holding the bag. Don’t assume that they have permission to use a credit card, call to verify.

Communicate this to your branches, since these instances most likely happen there, and it can be too late by the time the issue gets to corporate accounting. Don’t assume that just because a card gets an authorization number, the sale will be legitimate. Get the proper information, and if the customer is not willing to provide you with the details you ask for, do not make the sale. It is a lot cheaper to turn down bad business than to lose inventory.

Meet the Author
Teri Nock Hunter is director of associations and strategic partners for Pay By Touch Payment Solutions, located in Atlanta, Georgia, and on the Web at www.paybytouch.com.

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