September 8, 2009
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BBB Warns Small Businesses, Pt.2
Friendly fraud definedThere are a number of ways criminals use "friendly fraud" to steal credit card numbers or scam businesses out of free merchandise. The most common methods are those where thieves falsify claims. One popular scam occurs when the thief orders an item online and claims he didn't receive the item or that it was the wrong item. In some cases, the individual will claim that his credit card was either lost or stolen and did not order nor receive the items charged to his account. In all cases, the individual contacts the credit card company or bank and demands a refund or credit on his account for the goods or services.
There is nothing friendly about these credit card customers who receive credit for the merchandise they claim to have not received. To make matters worse, they often sell the items and pocket the money. Websites such as eBay or craigslist as well as flea markets have become popular arenas for these thieves to carry out their business. In these cases, business owners take a double hit. First, they credit the customer's credit card account the cost of the item without receiving the merchandise in return; and then they lose the cost of sale on the merchandise.
When business owners become suspicious that a customer may be falsifying a claim and deny his reimbursement request, the thief will take his complaint to the credit card company. Prior to issuing any credit, the lender investigates the situation and asks to hear both sides of the story. In many cases, the lender credits the customer's account and the owner loses his battle. In the case of the classified ad predator, the thief poses as the newspaper's representative and calls the contact in the advertisement. The imposter tells the customer they are calling to confirm the ad and payment information in an attempt to get the customer's card information. Once they have obtained the information, they use the card to make fraudulent purchases.