Chargeback scam hits SMB

An Ontario gift shop lost nearly C$4,000 after filling two phone orders, then saw both card payments reversed in chargebacks. (cp24.com) Christina Kotiadis, who owns Lemon and Lavender in Toronto’s Bloor West Village, told CTV News a woman claiming to be an elderly caller from the United Kingdom placed one order for just over C$2,100 and a second for nearly C$1,800 before Christmas. A driver picked up the wrapped goods from the store. (cp24.com) The money initially appeared to clear, but the shop later learned the credit card had been stolen and the real cardholder’s bank reversed the transactions. Kotiadis said the name and Canadian phone number used on the order did not match the actual cardholder’s information. (cp24.com) A chargeback is the card system’s way to pull back a payment after a customer disputes it with their bank. Visa says the issuing bank reviews the case and can reverse the payment, while Mastercard says merchants need transaction records and proof of delivery to fight the dispute. (corporate.visa.com) (mastercard.com) That puts small merchants at risk when they release goods before they are certain the buyer, card and delivery details all line up. Mastercard’s merchant guide says chargeback windows can extend well beyond the sale date, and Visa says disputes can stem from fraud, unrecognized charges or customer complaints. (mastercard.us) (corporate.visa.com) Kotiadis told CTV she later heard from other Ontario businesses that had received similar calls from a supposed grandmother in the United Kingdom buying gifts for grandchildren. She said her store now directs phone orders to its website instead of manually keying in card details over the phone. (cp24.com) The Canadian Anti-Fraud Centre says it collects reports on fraud and identity theft across the country, including payment scams that use stolen credentials. Its public guidance urges businesses and consumers to report suspected fraud so patterns can be tracked across jurisdictions. (antifraudcentre-centreantifraude.ca) For merchants, the loss is not just the sale amount. Kotiadis said the store also lost the merchandise and time spent fighting the dispute, and the case ended with a basic lesson of card payments: a settled transaction is not always a final one. (cp24.com)