The Peterborough Police Service is warning large and small businesses alike to use extreme caution when conducting over the phone credit card transactions after a local contracting supply store was scammed out of more than $200,000.
Between mid-October 2018 and mid-November 2018 two unknown males called a local contracting supply store and ordered home renovation supplies. During each transaction the store employee processed the credit card information over the phone. Each time a transaction was approved an unknown person attended the store the next day and picked up the goods. The total product ordered was approximately $202,000.
In mid-November the store owners contacted the Peterborough Police Service to report being the victim of a card-not-present scam.
A card-not-present scam is a payment transaction made where the cardholder is not physically present during the transaction. Instead, the credit card is processed over the phone with the scammer providing stolen or bogus credit card information.
“Merchants need to use extreme caution when conducting credit card transactions over the phone. This is a very dangerous way of conducting sales that makes the merchant extremely vulnerable to fraud,” says Detective Constable Keith Calderwood, Peterborough Police Service Fraud Unit.
“Merchants also need to be fully aware that credit card companies will not reimburse businesses for lost revenue as a result of a card-not-present scam.”
Detective Constable Calderwood states if a business must conduct over the phone transactions it should only be done with customers they are familiar with and have done business with before.
“New customers need to physically come into the store and show either the actual credit card or a copy of the credit card before the business releases any goods or products. This will help ensure the person’s identity and the credit card information,” says Detective Constable Calderwood.
“Develop a best practice for your business and speak with your payment processor company about the risks and responsibilities.”
The Peterborough Police Service is also investigating a second fraud that recently took place at a local business.
On October 27, 2018 a man and woman attended a Simcoe Street store and made a purchase totalling approximately $450. While making the purchase the male suspect distracted the clerk while the female suspect hid the pin pad out of the clerk’s view. While the credit card was inserted the female suspected inputted a 13 digit override reference number into the machine and then swiped a second unknown card along the side of the pin pad. This action authorized the purchase. The male and female then took the products and left the store.
The store manager was notified days later that the credit card company was not honouring the purchase due to the credit card being stolen. A payment processing company that supplies the handheld terminal also advised they would not be covering the loss.
Detective Constable Calderwood says store employees should be attentive when a customer is making a purchase with a pin pad and warning bells should go off if it appears a longer code is being entered. He notes that employees often turn away or are not paying attention when a customer is using the pin pad in order to provide privacy but some measure of awareness needs to take place.
“Customers are also reminded to track their bank statements frequently during the holiday period to ensure they are not being scammed. Credit card companies have apps that will update customers in real time on any large purchases made,” he says.
“With the holiday shopping season ramping up and Black Friday taking place tomorrow we are urging store owners and employees to remain vigilant during transactions of any type,” says Detective Constable Calderwood.
Both incidents are currently under investigation.
If local businesses have any questions or concerns please call Detective Constable Calderwood at 705-876-1122 ext. 214
For more information please contact the Canadian Anti-Fraud Centre toll free at 1-888-495-8501 or visit online