Protecting Small Business from Credit Card Processing Scams, Part 1

There are sadly many financial scammers out there in the world, and a common target for these individuals and entities is small businesses. There are many types of scams as well, including several within the credit card processing realm.

At Merchant Card Advisors, our small business credit card processing services, which include high-risk companies who may struggle to find other processors, including several fraud and scam prevention themes. In this multi-part blog series, we’ll go over some of the general tactics credit card processing scammers may attempt, the specific scams they’ll try to run, plus how you can avoid all such issues for your business.

General Scammer Tactics

Scammers may try several different specific scams, but these tend to trace back to a few general tactics they take across several businesses or industries. These tactics include:

  • Using unusual, untraceable payment methods that most legitimate companies almost never use – things like gift cards, wire transfers or reloadable cards.
  • Using fear or scare tactics to intimidate you into sending money or confidential business information.
  • Pretending to know other business contacts or have connections with a government agency to get you to trust them and divulge confidential info or make a payment.
  • Creating a sense of urgency to try and rush you into a poor decision.

Specific Scams to Know

A few specific credit card processing scams small business owners should be at least casually aware of (note the connections to the above themes):

  • Lower rates: In some cases, scammers will contact you pretending to be a credit card processor that has secured you far lower interchange rates than your current vendor. They’ll claim they’ve negotiated lower rates with a credit card company and are “passing on” those benefits to you. But such drops in rate are virtually impossible for small businesses, and even if you receive one, you won’t be contacted in this manner.
  • Low-risk wholesale processing: Other scammers will claim a credit card company has designated your business “low-risk” – this is not something companies like Visa or Mastercard are involved with, and should be an immediate red flag. Scammers may also offer “wholesale processing,” a nebulous and confusing term that only serves to complicate the matter.
  • Force authorization: The force authorization feature allows a merchant to push through a given transaction even if a customer’s card is declined. But scammers may develop fake authorization codes for force authorization, placing all the risk on the business merchant by claiming they’ve been declined before while offering this fraudulent code – at which point the merchant will be unable to dispute the charge and may be fully responsible for chargebacks and any fines.

For more on avoiding credit card scammers for small businesses, or to learn about any of our credit card processing services, speak to the staff at Merchant Card Advisors today.

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