Online Sales Scams

[mrBlack503]

Is any other Square retail user dealing with the following...

• Customer Buys Product from your site

• You Ship the Product

• You follow up to confirm the Product was received

• Customer confirms

• 30+ days later Square flags one of the two transactions as a dispute from customer, yet the other purchase was no disputed (?)

• Square says dispute reason "customer has no knowledge of transaction"

• You email customer's attached email. Customer again confirms order and claims to have no knowledge of any dispute and didn't ask their bank to dispute either

• Your funds get tied up due to this dispute

• 2 weeks later Square comes back and says dispute results in favor of customer, to which you the seller do not get paid and you are out the product you shipped as well

I am assuming this is nothing more than a common scam, yet as a business I am the one losing at all angles here. 

• Customer has ordered more since...sure enough another dispute from the other transaction not disputed before with the other one. This dispute didn't come in until the other dispute was resolved. 

Why is the seller not protected in this situation? Why isn't Square flagging this account that keeps ordering and then disputing purchases. I obviously stopped sending additional orders, but it's the point that this seems to be a black hole in the online system that doesn't favor the seller at all and there should be or how is a seller supposed to conduct business online? \

Any responses, answers or advise on this situation? 

[Twpchair]

I don’t have any outstanding issues with Square due to our policies. However, I have been receiving numerous messages lately through Messenger that appear to be from Meta, but they are actually scams. I do a lot of advertising with reels and posts, and I have a personal representative assigned to my business. He has identified these scams and has blocked them. 

According to him, there has been a 57% increase in complaints from customers about receiving partial orders, damaged goods, or deliveries sent to the wrong address. For my business, we do not ship items, which raises a huge red flag. He blocks these scammers and their IP addresses. He mentioned that his other accounts, like yours, are facing similar nightmares. 

He advised me to screenshot all correspondence and to save any pictures sent to you of customers displaying their purchases or talking about how much they love the items. It’s crucial to document everything related to orders they received. While this is about Facebook and involves different rules, the situation is the same. 

He mentioned that it’s too easy for long-standing customers with credit cards to dispute charges. The card companies typically don't want to deal with humans a the process and cost-effective  of going back and forth and will side with the customer, which leaves small businesses like ours hanging and leads to negative disputes on our accounts. 

I monitor this issue daily on sites where I order items for my store. For example, I use Temu for floral arrangements, vases, and other display items—not for resale. I sell retail furniture and set up displays to create a welcoming atmosphere. It’s common to see one-click solutions for returns or in-store credit within seconds. 

I realized that if I’m paying $3 for something, it is what it is. So, no, it’s not just you or Square; this has become the new normal for customers. Unfortunately, many either don’t care about the consequences for small businesses or assume they’re covered like they would be with big box stores, which isn’t the case. 

One idea could be to add a disclaimer that encourages customers to reach out to you before contacting their card company: "Before you contact your card company, please reach out to me so we can try to resolve this issue in-house instead of involving multiple institutions." 

This also gives you a chance to investigate. You can check social media to see if a customer has posted about the candle or dress they received. If their card company is indifferent, Square might appreciate seeing those pictures and posts. 

I wish you the best of luck; unfortunately, this seems to be the new normal we all have to face.

[BofBArtStudio]

We have recently had an issue where two e-gift cards were purchased for $100 each.

A week later the gift cards were used to purchase products. 

The next day, the original transactions for the gift card purchases were disputed. 

The name, address, and phone number of the person who purchased the gift cards was available to me and I called them and they said that they never purchased them. 

The person who used the e-gift cards was the recipient of those gift cards. 

I have submitted all the information for the dispute and I'm waiting for a response. 

But I'm not sure if it was a scam or what is going on.

The disputes also said customer has no knowledge of transaction.

[Linda2017]

Hi there,

I am based in the UK and had a similar problem with an online order. Sent out in good faith, few days later square flagged as a dispute. I sent all the information they needed and they sent it to the disputers / complaints bank, waited and waited and came back in favour of the buyer. So there is absolutely no cover for the seller!!! I have lost out on goods and money. Everything seems to be in favour of the customer, how am i supposed to check and prove when someone is buying online that the purcahser is legitimate?

Square needs to sort this. 

[TheRealChipA · Accepted solution]

Hey there @mrBlack503.  Like @BofBArtStudio I’ve had at least one dispute where a scammer purchased an e-gift card, then used that gift card for a purchase online.  The actual owner of the credit card used for the e-gift card successfully won as they should have since they did not actually buy anything, but rather their card was compromised.  So I was out of luck, basically, which I’m afraid @BofBArtStudio  will be, also.  After that happened, I set up Square’s Risk Manager and have not had a dispute for online sales in the past 5-6 years.

Risk Manageris found on our web dashboards at Payments > Risk Manager.

One of the best Risk Manager tools is called 3D Secuere.  You can use it to request that the card-issuing bank do a more thorough verification that a customer is authorized to use the card they are using.  If you set it up correctly, you get stronger guarantees in the event of a dispute.  Some of these are:

• If you have a 3D Secure rule enabled and a payment does not invoke it due to a service outage, system failure, or if a qualifying customer’s card-issuing bank does not have 3D Secure enabled, Square will cover the dispute, also known as a chargeback.

• If you have a 3D Secure rule enabled and a payment goes through because the issuing bank verified it, you are not responsible for covering a fraud chargeback (but may be responsible for other types of disputes).

• If the customer is unable to verify that they are the rightful cardholder, then they will not be able to complete the transaction. However, if the customer verifies that it really is them and that the payment is not fraudulent, then they can complete the transaction. If the transaction is completed and authorized through 3D Secure, the liability for fraud chargebacks then shifts from the seller to the card-issuing bank.

I’d recommend reading through the help documentation in the links I provided, as well as watching the videos.  It will be well worth your time.

Let me know if you have any other questions.  I’m pretty familiar with the ins and outs of Risk Manager, though as an ice cream shop I don’t need it nearly as much as you retailers do.  Still, the time spent setting mine up seems to have been well worth it.

[OzSTS]

I have had the exact same problem on the last 4 out of 5 sales. Turns out the person is selling my item on ebay and buying my Square online item so I essentially become a drop shipper. After the item is delivered they then lodge a dispute so I am out of pocket for the sale with no recourse. I have now enabled the 3D Secure service to see if that stops it. 

[TheRealChipA]

@OzSTS Sorry to hear about this.  Such are the problems of online sales these days!  Ugh.  Anyway, I wanted to mention that 3D Secure won't fix this problem if the eBay seller is using their own credit card to make the purchase from you.  And, even if they aren't, if their buyer gives that seller their card information and that seller uses that info to make the purchase from you, 3D Secure won't be triggered since they passed all the ID verification tests.  This is a case of outright fraud that no algorithm will be able to detect.  It might be that this is one of those cases where your only recourse is to report that eBay seller to eBay and/or get the courts involved.

[BozoBikeBoy]

I have been getting emails claiming a cardholder never received the merchandise they ordered.  Dispute is for $2,303.00.  Two things are apparent from my POV.  1-My Square account has been inactive for two years since I closed my business.  Haven't had a transaction since then.  2-Nothing in my shop costs that much,  That said,  it's pretty annoying getting these emails.  Wonder why and how it keeps happening.