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Payscout Blog

How to Avoid Merchant Account Scams

Posted by Lyn McKay on May 7, 2015 1:00:00 PM

CybercrimeMerchant account scams are a relatively new form of cybercrime. However, the number of scams impacting the U.S. and abroad are growing rapidly. This simply means that business owners accepting debit and credit card payments and process through a merchant account need to take the necessary steps to protect themselves from becoming victims. Some merchant account scams are specifically targeting businesses that work with debit and credit card processing businesses to process the transactions for their customers.

These particular types of scams have the ability to target both the physical store and online marketplace. These scams are specially designed to get credit and identity information about the businesses and their clients. It is a good thing that there are ways to prevent yourself from becoming the target of a merchant account scam. Businesses should take the following steps to secure their data, and protect their employees, money and customers:

  • Research before you sign a contract: New businesses are usually the primary targets of scams, because they are generally less educated about the merchant account fee process. This allows scammers posing as legitimate merchant account providers to take advantage of them. So, do your homework before signing with a merchant services provider! Check with your local Better Business Bureau to see if they are a legitimately registered business.
  • Trust in peer reviews: Before signing with a merchant services provider, check out their reputation online. Go through their complaints records, status of services and consumer reports. Check their online reviews as well. Do their customers seem happy with them? You should also keep an eye on a company’s social media accounts as people frequently post complaints against companies on their social media accounts versus a website.
  • Compare charges: You should compare every transaction charge on charge statements against the transactions in your financial business records. This ensures that the charged amount and time of each transaction lines up with what is in your personal records. Doing this on a regular basis will help you keep informed about your account and will enable you to catch inaccuracies quickly.

There are many different types of scams that can be applied to merchant accounts. We’ve compiled a short list of the most popular scams to help you recognize them:

  • Partial scam - The most common partial scam is the ‘hidden fee’ scam where concealed fees, rates and extra charges (usually applied by the processing bank), suddenly pop-up, or remain hidden and unaccounted for until the eCommerce merchant receives the bill from the processing bank.
  • Full-scale scam – A full-scale scam is where a merchant applies for a merchant account with a provider that doesn’t actually exist. After filling in a surprisingly short membership form, merchants will get an expensive bill with a high deposit rate in order to suck the maximum amount of money out of the merchant without raising suspicion. After getting the merchant’s money, the scam provider will simply disappear. Emails go unanswered, websites are erased and telephone lines are disconnected. Merchants unlucky enough to fall for this scam will most likely never see their money again.
  • Backdoor scam - A backdoor scam involves changing the program code of a gateway in order to provide a backdoor (hole) for a third-party scammer to connect to later on, when the gateway is in use.

You can prevent falling victim to a merchant account scam simply by working with a credible merchant services provider such as Payscout. Check us out online or contact one of our customer service specialists at 888-689-6088 to find out how we will partner with you to help you securely grow your business.

 

Topics: Merchant Services, Credit and Debit Card Processing