A small business says it has been left "gutted" by an online credit card refund scam, prompting calls from retail groups to strengthen protections for business owners.
The Jim Bradley Speedball Company in Melbourne fell victim to a scam known as "friendly fraud", where consumers claim a "chargeback" on their credit card to secure a refund, despite having received their goods they ordered online.
The company has been hit twice in recent months.
In the most recent case a customer bought a boutique piece of sports equipment worth more than $1,000 from the company's online store.
After the equipment was delivered, the same customer claimed he had not authorised the Visa payment and it was refunded, leaving the business out of pocket.
Employee Michael McLeod said the customer then advertised the goods for sale on the Gumtree website on the same day it was delivered.
"They even used our same photos that we use on our website as well and then just put it on there at the same price he bought it at as well," he told the ABC.
"[I feel] gutted, Australian business, Australian made, Australian owned, we're just trying to keep the doors up and having people pull these stunts is just not right."
Victoria Police has confirmed it is investigating the matter.
It is the latest in a growing number of cases dubbed "friendly fraud".
The company's owner Nick Waterman said the scam has been devastating.
"We've got wages to pay, we want to keep the business going and we want to fight, we want to make things in Australia still," he told the ABC.
The business has disputed the chargeback through its payment provider, a company called Stripe, but it is still out of pocket seven weeks later.
The ABC went to the customer's address where the company said it delivered the sporting equipment.
But the customer Tyson repeatedly claimed he had "no idea" about the situation when he was shown the receipt and a picture of the workout station.
Retailers 'forgotten victims' of online fraud
One major retailer, which did not want to be named, told the ABC it was investigating a number of cases of chargeback fraud.
The National Online Retailers Association (NORA) said businesses were the forgotten victims of online fraud.
NORA's chief executive Paul Greenberg said big businesses could put prices up, but that would have a severe impact on small businesses.
"We'd like to see improvements in the system that could help make things certainly completely secure for the customer but increasingly a more safe experience for the retailer as well," Mr Greenberg said.
"The key fact is that retailers are still at risk an the buck still stops at retailers, but for everybody this is a bit of a plague and an expensive exercise for all the components in the payments process.
"We're calling for a Camp David-style summit, we think it's time and there are technology solution providers who could come to the party as well and we think we could stamp it out."
He said the industry generally saw two kinds of online fraud.
"One is the criminal syndicates dealing in stolen credit card information and that information is then used by fraudsters to get scammed goods off online retailers around Australia.
"The second aspect or area of 'card not present' fraud is what I term 'friendly fraud', which is a small minority of consumers attempting to game the system by applying for chargebacks for goods they might have already received."
Online fraud rising
Card-not-present fraud, where a transaction is completely remote, rose by 21 per cent in the last financial year, according to the Australian Payments Clearing Association.
There is no detailed data quantifying what proportion of that figure can attributed to fraudulent chargebacks.
The Financial Ombudsmans Service (FOS) received 13 complaints about chargebacks in the first three months of this financial year.
And there has been a steep rise in the number of disputes FOS has received about payment systems, direct transfers or merchant facilities.
"Compared to last year, the number of merchant chargeback disputes seems to have increased quite dramatically," said Philip Field, the Lead Ombudsman for Banking and Finance.
"If they continue to increase at that level quarter after quarter it's certainly something we'll be raising with the banks to find out what's going on."
Visa has told the ABC chargebacks are an issue for banks because they issue cards to consumers and manage bank accounts.
The company said it would only assess a dispute if there was not a mutual outcome between parties after the banks involved investigated the matter.
In a statement, the Australian Bankers Association told the ABC a customer can request a chargeback for a "variety of reasons" such as if they "didn't receive purchased goods or they didn't authorise a transaction".
"If customers would like to dispute a transaction they should do this with their bank," the ABA said.
"The bank will work to resolve the chargeback with the business or retailer where the transaction occurred.
"The time it takes to resolve the issue depends on when the bank receives all the information it needs from the customer and retailer."
No comments:
Post a Comment