Credit card scam targeting small businesses

1 May 2009

SCAMwatch is warning small to medium businesses to be on the look out for unusual or complicated orders from overseas, particularly orders which are being paid for by credit card.

The 'prospective buyer' claims that they have made a credit card payment for more than the agreed price. They will then request the unsuspecting business owner to forward the excess money onto freight companies, travel agents or various other businesses usually via wire or money transfer. This scam appears to be a variation on the cheque overpayment scam.
 
SCAMwatch understands that large or complicated orders were placed by a person or business based overseas. These orders were placed for both goods and services, such as restaurant and hotel bookings. No specific business sector is targeted, with industries ranging from garden turf to tyres.

In many instances, businesses have reported that the order was clearly suspicious. For example, a buyer in West Africa placed an order for garden turf. Other business owners became suspicious as the prospective buyer offered to pay for the goods or services through a complicated set of transactions involving the transfer of monies from one or more parties.

However, other businesses reported losses.

Given the economic downturn, a lucrative order can be seen as a windfall, but businesses should be cautious and warn staff responsible for taking orders or making payments about this scam.

Warning signs

  • A large or complicated order is placed by someone based overseas.
  • They insist on paying by credit card (or cheque/moneygram), but will pay more than the invoiced price so that the money can be transferred on by the seller to a third party such as freight companies, travel agents or various other businesses.
  • A number of credit card numbers are used, in some cases the numbers are in close sequence.
  • The seller is usually asked to transfer the excess funds via wire or money transfer.

Protect yourself

  • Be suspicious of any unexpected complicated or suspicious orders from overseas. Be wary of payments which involve a number of credit cards, several separate orders or large orders where transport is likely to cost more than the value of the product.
  • Only accept the invoiced price and do not send the goods until the payment is verified by your bank.
  • A bank can provide assistance on how to verify the credit card numbers as they may be stolen or auto-generated.
  • Only deal with trusted freight companies that you can contact via details obtain independently such as from the phone book. Never use the details provided by the prospective 'buyer'.
  • Do not send money to anyone you do not know or trust and avoid money transfers.

Report

Report the matter via the report a scam page in SCAMwatch.

More information

Explore SCAMwatch to find out more about cheque overpayment scams and other scams that commonly target Australians.


 

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