Business Tips

Avoid Third Party Payment Scams


We all know spam emails right? Everyone gets them. Some go to your spam box, others may get through to your inbox. The content of most is ridiculous. Usually they are bait mails, enticing you to click on a button or link in order to settle an invoice or update your profile or whatever. I’m sure you know the score. However, some of these are getting more sophisticated in approach, content and scheme and we feel it is our duty to report a series of emails we received last week which in turn started reeling us in for a bit. How so? Read on.

What Happened?

Fraudsters and con artists are now targeting businesses or individuals who have a presence online and who offer some form of service online, so, web design is a prime candidate as you might expect. An individual contacted us last week, claiming to be a small business owner from a small town in the U.K. He or she had a shop selling clothes, bags and shoes and wanted to expand the business by setting up an online shop / e-commerce site? Great right? First of all the email seemed legitimate. It came from a gmail address, not uncommon, business owners have these addresses before they take the leap to online trading. It was sent to our info address and so went straight to our inbox. The second reply from this individual stated that he or she was hearing impaired and so would like to keep in touch via email. Fine. The old sympathy bait and the fact that they were based overseas meant that this made sense for us as well.

From here on in, was where they really pulled out all the stops. Their replies contained information on product setups that the average person i.e. not a business owner may not know. They mentioned search engine optimisation. They even sent a link to another clothes shop that they liked as a guide for the project. They had a graphic designer dealing with their logo, product shots and site content! We gave them estimates on cost first of all which they said sounded good before finally sending an official quote, which they were happy with and agreed to, within a couple of hours. It was too good to be true really. After another couple of hours and research we were resigned to the fact that we had been baited all along and that the next couple of steps would have meant trouble if we had proceeded.

What is it and how does it work?

This is called a third party payment or payout scam and essentially it’s a way to launder money from a stolen credit card through a legitimate business. In this case, the “potential client” was happy with our final quote and was in a position to pay us a deposit of €1000 to start the project. He or she wanted to pay it by credit card and wanted to know our merchant service to charge the card. Let’s say we had that setup and agreed to everything he or she wanted? Well then the following would have happened…

· We would have agreed to and taken his/her credit card payment if we had that setup.
· If we didn’t have it setup he/she would offer to pay the charges associated with the setup (They actually did offer!)
· He/she would have paid us the €1000 deposit plus let’s say another €1000 or more, depending on what they felt they could get away with.
· We would have noticed the extra money in our account.
· He/she would ask us to transfer €1000 of that money to their “graphic designer” for payment. He/she would even pay us a bit more to do so.
· We would have paid the €1000 from our business account to the “graphic designer” business account.
· That my friends would be “Game Over”, so to speak. Once the transfer from our account to the “graphic designer” account completed, we would have never heard from this person again.
· In the meantime, the owner of the stolen credit card details, would have noticed the payment of over €2000 on their statement, and of course report the unusual behaviour and therefore the money or charge would be rolled or charged back resulting in over €2000 rightly disappearing from our account. Remember though, we’ve already paid the “graphic designer” €1000. We’re not getting that back. That €1000 was sent via bank transfer from one account to another and so would be laundered and withdrawn immediately.
· The result? The entire credit card amount is rolled back from our account. We’ve lost the fake deposit and extra money (again rightfully so) but we’ve already paid a third party €1000 from that so, we lose €1000 of our own money.

What to learn

I guess it’s kind of crude when you look back and read it on paper but I thought it was important to highlight this, especially for individuals, small businesses or start ups desperate to get a client portfolio and some work going for them. It’s so easy to be enticed with the prospect of a new client and a lucrative deal. Please be aware of these scams.

· If it seems too good to be true, it probably is
· The scammer will try and bait you with a sympathy vote (in this case hearing impaired)
· He or she will agree to almost any price or service you throw at them
· Very likely they will not refer to you by name in your email correspondence for some reason
· They will have enough knowledge of the subject matter to make you believe they are legitimate
· They will even supply examples of other work they like.
· Ultimately they will want to pay with a credit card.

If you like this post and information and if you feel it would help people or communities or businesses you know, please consider sharing it and make people aware of these fraudsters. We work too long and hard to be conned out of what we earn and deserve.