Nobody is afraid of discovering fraudulent transactions on the credit card statement, as the amounts are usually refunded without any problems. But that doesn’t mean there aren’t sacrifices or consequences. Banks debit the amount directly from the merchant’s account where the purchase was made.
Posted at 6:30am.
“You have an authorization number and then the money is taken from you. I find that extremely unfair! But nobody is on your side to help you. Zero. We’re busy, I don’t have anyone to handle it. you are stuck here “It’s like a bank not cashing a certified check,” laments Michel Legrand, owner of La Maison du Rôti, a well-known butcher shop in Montreal’s Plateau.
PHOTO PATRICK SANFAÇON, THE PRESS
Michel Legrand, owner of La Maison du Rotis
Trading has seen this scenario a dozen times over the years. Michel Legrand recalls gangsters coming to the scene to buy the most expensive items on the counter and a series of $200-$500 online purchases early in the pandemic.
When the holders of the credit cards used contacted the issuer to reverse the purchase (so-called chargeback), the amounts were debited from La Maison du Roast’s account.
This practice, which is unknown to the general public, can of course cause considerable financial damage to SMEs. Especially since they are charged chargeback fees and transaction fees on top of the transaction amount. Michel Legrand doesn’t think bankers should have that right.
The businessman told me that he had contacted two neighborhood police stations to explain that he was a target of scammers. He was surprised and shocked by her reaction. “They weren’t interested. Point. The cops on the corner of Rachel and Christophe-Colomb didn’t even trick her into learning the story. A little more about Molson. »
Michel Legrand has never disputed the withdrawals made from his account without his consent. “It’s complicated to do. I don’t know how to do it, but in my opinion you have to be persistent and have time. All he has to do is be very vigilant about every transaction, but again, you have to be realistic, he says.
A client, you’re not here to suspect him. The cashier’s job is to handle the cash. If Interac says yes, it is yes. That’s where it stops. […] You have to understand the background of the traders. We are not bankers.
Michel Legrand, owner of La Maison du Rotis
Oddly enough, merchants who have complained for 20 years about the fees credit card issuers charge them for every transaction have never chosen to denounce this practice.
When I went to raise the issue with the province’s main retailer association, the Quebec Council of Retail Trade (CQCD), I was told that I was unable to do so due to a lack of information on the subject.
At the Canadian Federation of Independent Business (CFIB), we are aware of the situation but are looking for solutions. According to François Vincent, vice president of this lobby for Quebec, its members need to be vigilant before selling anything. ” Prevention is better than cure. You must establish a good internal process. Do not accept payments over the phone. Train your staff well. Do not accept a card if the chip does not work. Ask for ID when the property is collected shall be. ”
PHOTO MARCO CAMPANOZZI, PRESS ARCHIVE
François Vincent, Vice President of the Canadian Federation of Independent Business for Quebec
This is also the opinion of Mastercard, which states that all merchants have the necessary tools to prevent online sales to scammers. Most importantly, the ability to text the cardholder a code to ensure they’re actually making a purchase.
Only a minority of businesses are currently using the code-by-text strategy, Aviva Klein, VP of digital payments and cybersecurity at Mastercard, told me. “Many retailers feel that this demand is making the buying process even more difficult. They fear that this extra step will increase the number of abandoned carts. However, this tool is growing in popularity.
PHOTO PROVIDED BY MASTERCARD
Aviva Klein, Vice President of Digital Payments and Cybersecurity at Mastercard
“You need to embrace the magnitude of these risks of chargebacks, fraud and cybersecurity and build that into your upstream management processes. Because when something like that happens, it hurts,” argues François Vincent of the CFIB.
Consumers who take it lightly will eventually become concerned, predicts Aviva Klein, “because commodity prices will rise to cover the increasing number of scams.”
A year’s profit soared
The chargeback was also very costly for online store Alfred, which specializes in collectable wine bottles, and suffered another type of scam. The President of the SME, Guy Doucet, says he has “learned the hard way that in the end it’s the dealer who pays” when it comes to fraud.
Well organized thugs bought him about fifteen bottles for a total of $70,000 after creating three accounts under false identities. While these numbers are impressive, they’re not uncommon for the company. Many of his customers place orders ranging from $30,000 to $40,000 a week.
After the usual checks, Canada Post delivered two orders of fine wines to a private home and a third to a post office in the Saint-Michel neighborhood of Montreal. There, the purchases were picked up by people who, in addition to the signature, also presented an identity card.
A week later, the scammers requested a refund from their credit card issuer, claiming they hadn’t received the three orders. The $70,000 was taken directly from Alfred’s bank account. And to top it off, his account was also charged a total of $3,500 in chargeback and transaction fees.
PHOTO EDOUARD PLANTE-FRÉCHETTE, THE PRESS
Guy Doucet, founder of Alfred Technologies. The company has created an intelligent management system for large restaurant basements.
“It hurt so much. It’s our profits for the whole year that’s gone…” regrets Guy Doucet, admitting that he’s considered closing down his sales department altogether.
However, the contractor had hired private inspectors to prove that the goods had actually been delivered and collected. This gave him the video footage from the pharmacy of the scammer presenting ID and walking away with her box.
The evidence also included a document provided by Canada Post, which used GPS data to show that the bottles had been personally delivered at 13th Avenue in Montreal.
The file prepared by a lawyer was forwarded to the bank and the police contacted. “The bank didn’t listen to us and the police didn’t want to deal with it,” regrets Guy Doucet.
“It is certain that we are discouraged when such a slap happens. We worked all year for free. If we are victims two or three more times, we will close,” says the entrepreneur, adding that he was “in shock as a citizen” when he left the police station.
In the United States, accountability for fraud has been a problem for merchants for nearly two decades, says Doug Kantor, a member of the Merchants Payments Coalition (MPC) Executive Committee. “It’s a problem that’s only getting bigger due to the rising number of fraud cases and rising interchange fees [payés par les détaillants aux émetteurs de cartes de crédit] increase,” he told me over the phone.
Interchange fees (2.24% on average) are even higher there than in Canada (1.5%) and traders caught in a scam unwillingly have to pay twice as they do here.
According to Chargeback Gurus, an American company that helps companies contest bank decisions, chargeback fees range from $20 to $100.
“Merchants are increasingly aware of the true cost of chargebacks. E-commerce companies and other retailers can find their profitability at serious risk if they let an uncontrolled chargeback issue linger for too long,” explains Chargeback Gurus on its website.
Some numbers
38%
of Canadian businesses have been victims of digital payment fraud
38%
became victims of a fraudulent account takeover where the hacker took over the victim’s digital account
36%
Victims of ransomware (malicious software that threatens to publish or block access to data unless a ransom is paid)
Source: Mastercard