True Story of a Merchant Scam

Angela HudginsPersonal Stories, Scams Against MerchantsLeave a Comment

We recently signed up a new merchant account for a young man who just bought a business. This is his first experience owning a business. He understood he needed card processing. The previous owner was our client and had been for many years and now he was selling his business to this young man and recommending he get set up for card processing with us.

All is going along well until the young man calls us a week later with a question. The previous owner wanted to buy a truck from the new young owner and asked if he could pay him for it through his new merchant services account. Now you would think that this guy would have known better, but money gets in the way of things. It was smart of the young man to call us and ask if this was legit.

The answer, of course, is a resounding NO. The merchant is not selling trucks. He has a completely different product. When we set up a merchant account, one of the questions on the application is, “What products or services do you sell?” Another question is, “ What is your average ticket for your product or service?” Selling a personal vehicle through a merchant account is FRAUD. And yes, the processor will 100% assuredly figure it out and hold the transaction from depositing into the merchant’s bank account until they can verify the product sold.

One reason the processor will figure this out is that the transaction amount will be much greater than the average ticket declared on the application. Then the processor will ask to see a copy of the invoice for this large ticket to verify if it fits into the normal product line of the merchant, which of course, it does not. Therefore, the charge will be denied. In these types of situations, the merchant would lose the product he sold and the money would never hit his merchant account. In our story, since the young man called to ask before selling his truck via his business merchant account, we were able to avert a problem. Hopefully, this story will alert you to proper practices and safeguards that merchants must abide by to protect themselves.

Feel free to call us at 505-296-2847 with any questions about possible fraud. We have 20 years of experience and will be most happy to help you even if you are not our client.

If you feel that you have been subjected to possible fraud, we would recommend speaking with an attorney who specializes in business law such as Law 4 Small Business. They offer a wide variety of different business services including a one-on-one flat rate consultation.