Square allowed a fraudulent credit card, and I'm the one who is liable for the funds.

[Shambhala]

I had a transaction on my online store that was paid by a credit card that was fraudulently acquired and I sent the product to the address without knowing it was a stolen card. The rightful owner of the card notified their bank and square launched an inquiry. The result, now a month later, is that I am liable for the funds and the money will be repaid to the owner of the card by me. 
I am furious that Square has 1. No system to check if a card is being used fraudulently, like they have no security checks whatsoever? check that the postal code matches, anything? 2. They have no insurance for this sort of thing? It's just on me a small business owner to cover the fraud? It wasn't me that committed fraud but somehow I'm supposed to pay? 3. How do I know that that customer didn't receive the products I sent and then just claim it was fraud? There is no information for me to prove that.

I'm so done with all of this. This is not worth the aggravation and cost. Square has let me down and I'm looking for a new provider with better security.

[homeprogreen · Accepted solution]

The seller is the one that received the funds so of course they are the one that has to repay the money. The only way to avoid assuming the liability for fraudulent transactions is to only do face to face card present transactions and even then they have to either tap or use the chip. All card issuers and card processors have announced that the liabilities for fraudulent transactions are on the seller for all transactions involving swiped cards or manually entered card numbers. 

[homeprogreen · Accepted solution]

The seller is the one that received the funds so of course they are the one that has to repay the money. The only way to avoid assuming the liability for fraudulent transactions is to only do face to face card present transactions and even then they have to either tap or use the chip. All card issuers and card processors have announced that the liabilities for fraudulent transactions are on the seller for all transactions involving swiped cards or manually entered card numbers. 

[Sammie_C]

I am sorry to hear that this has occurred, @Shambhala. 

@homeprogreen, is correct about this. Square as the card processor does not hold responsibility for these types of situations. I do understand your frustration though and can definitely send your feedback over to the corresponding teams.

I appreciate you reaching out about this, and please let us know if there is anything we can help you with.

[Shambhala]

Why does square not give me any recourse to challenge the fraud? They "acted on my behalf" in negotiating with the card owner's bank. I am not involved in this process whatsoever, I am not informed the name of the bank, the name of the card owner, and yet I am the one who is defrauded - as I said before how do I know that the card owner did not buy the products, receive them from me when I shipped them and then claim it was fraud so that they could be reimbursed?

who at square will even answer this question?

[Sammie_C]

Thank you for reaching out on this matter again, @Shambhala.

I first wanted to state that we do offer a Disputes process where you have the ability to respond and/or challenge a Dispute. While here on the Square Community we are unable to go over Dispute specifics, we would recommend reaching out to Customer Support and chatting with our Disputes team for more specific information on a particular Dispute.

To help answer your inquiries here though, here are a few helpful articles I can provide:

• Ways to Prevent Disputes: Here is a helpful article going over ways that Sellers can protect themselves from potential payment disputes.
• Risk Manager: Are you familiar with Square's Risk Manager? Here you can set up your own rules and guidelines to help deter fraudulent payments.
• 3D Secure: This sounds like it may be exactly what you are looking for. When a rule is created in Risk Manager and has 3D Secure implemented, customers may be required to verify that they are authorized to use the card that is making the purchase.

In summary, while these protective measures can help reduce risk, it is important to understand that cardholders have a fundamental right to dispute charges. This cannot be eliminated by Square or any other payment processor. This is not insurance and Square does not assume financial responsibility for payments, regardless of the risk assessment outcome.

I hope that this helps a bit. Please let us know if you have any other questions or concerns.

[Shambhala]

Is this all available in Canada - I feel like I posted this in the US site

[Shambhala]

Also - why was this information not included in the correspondence I received from Square during this event? DO you not think this is relevant to my case, and that information should be provided in the email that was sent to me,  rather than just :
"We challenged this payment dispute on your behalf. Unfortunately, the bank has resolved the case in the cardholder’s favor. This decision is final, and Square does not have the right to challenge the dispute further. " and "The banks give us no rights to continue to challenge the cardholder’s dispute claim after they make a final decision. If you want to pursue this further, you can consult with a lawyer and initiate a legal process with the cardholder." 

The link in my dashboard for "help" was a dead link shown here so that was not helpful.:
"Learn more about protecting your future sales with Square Contracts."

I'm going to go out on a limb here and say Square did not "challenge this on my behalf" - I'm going to suggest that they in fact did nothing on my behalf and are not acting in good faith because "Square as the card processor does not hold responsibility for these types of situations. " so why would they even care, they have removed themselves from liability so they have no reason to act on my behalf. 

How am I supposed to initiate a legal process on my own (even if I had the means to do this) when Square has shielded the cardholder's identity and the banks identity from me? 

[JTPets · Accepted solution]

I strongly encourage you to activate Risk Manager - WHY This is not on by default I CANNOT wrap my head around @Sammie_C perhaps you can ask about that.

See this guide here: https://squareup.com/help/ca/en/article/6816-navigating-square-risk-manager