Merchant account scams and credit card fraud against small businesses are newer crimes, but they are crimes that are quickly growing. Small businesses that routinely accept their customers’ credit cards have to start taking precautions to avoid being a victim of one of these kind of scams.
A merchant account scam is able to target a business’ website and their physical store. Typically these scams begin when a credit card processing company charges a business too much to process credit cards. This can be done in a variety of ways. Other scams, are designed to get the credit identity information of a business’ clients.
Fortunately there are a couple of different ways for a business to avoid getting taken by one of these scams. Small businesses can start by carefully reading through merchant services reviews. Merchant services reviews are typically found online and rate various credit card processing companies. When other small businesses use a dishonest credit card processor, these reviews are usually the first place where complaints are posted.
Because there are so many new credit card processing companies, however, the scam artists are able to move quickly without getting caught. New companies are often not reviewed, making it necessary for a small business to take steps to protect itself.
One of the most popular merchant account scams is overcharging a business on their credit card processing fees. New businesses are usually the most common victims of these types of scams because they have not done enough research on how much these fees should actually cost them. Small businesses should look at several different credit card processing companies to avoid getting ripped off.
In many cases, small business owners are suspicious of a new credit card processor. In order to check if a processor is legitimate, a small business should test them out. The easiest way to do this is to make a few small transactions with a couple of credit cards that can be easily cancelled. A small business owner who is trying this test should only make test purchases during the first month he or she tries a new service. After a business owner gets his or her first statement of processing charges from its merchant account processor, he or she should review each of the charges on the account. In order for a business owner to check this statement properly, he or she should compare each and every transaction charge on the credit card processing statement to the matching transaction in the business’ financial records.
While the business owner is reviewing the statement, he or she should also make sure that the times and charge amounts of every single transaction matches up with the times and charge amounts of the credit card transactions that are recorded in the business’ records. After reviewing these transactions, a small business owner should make sure that the credit card processing service rates charged by the processing company for each credit card transaction match up exactly with what was agreed upon when the small business originally signed a processing contract.
While the business owner is busy checking through their records, he or she should also take the time to confirm the amount and type of the “return” and “charge back” transactions that are listed on the credit card processor’s charge list. A business owner should make sure that his or her records of these kind of transactions match up with the amount of these types of transactions that the merchant account processor has listed on its business account statement.
Adding extra charge back and return fees is one of the hardest scams for a small business to detect. In fact, this scam can go on uncaught by a business owner for years. Since these kinds of transactions don’t usually affect the finances of a business very few business owners will keep any records of them.
Every time money is returned to a customer on their credit card, the merchant services company will usually charge a fee that is based on the total sale amount of the transaction. A scam artist can make hundreds or thousands a month simply by adding a couple of extra return charges to their clients’ merchant account statements.