Merchant Credit Card Fraud

As already discussed, fraud is one of the worst things that accompanies credit cards – bank issuers cheat their cardholders, cardholders cheat the merchants and the merchant cheat the customers. It looks like a vicious circle and probably it is because all this has been going for years and although measures have been taken to reduce credit card fraud, credit card fraud exists and inflicts incredible losses to all the parties in the triangle. After we saw how credit card issuers and customers cheat, now it is time to review some of the tricks merchants use. It is useful to know all these little dirty secrets because very often fraud is preventable and when we know how a merchant can cheat us, if we are watchful, we could even stop them or at least not pay for something we have nor ordered.

Merchant credit card fraud comes in several basic forms: nondelivery, overcharging , insider trading and charging for goods and services that have not been ordered. Nondelivery, as the name implies, is simply when you order the goods, pay for them with your credit card but actually you don't get them or get them damaged. In this relation, it is important to say that this form of fraud is not limited to credit cards only but applies to all kinds of purchases when you prepay the goods. Nondelivery is one of the most frequent types of merchant credit card fraud and it is especially hard to prove when you are delivered something but it is not exactly what you paid for.

Overcharging is another favorite dirty trick that merchants love especially. Overcharging is when the merchant charges you more than the agreed amount. These charges can be for shipping (but they have been mentioned nowhere and you become aware of them the moment you pay for) or for other various costs that the merchant decides you have to pay. For instance, sometimes merchants make promotions and they decrease the prices of goods but when you later look at your credit card statement, you don't see a discounted price for the goods.

Insider trading is a considerable problem for credit card issuers mainly because their disloyal employees have access to hundreds of thousands of credit card numbers but unfortunately the problem exists with merchants as well. Basically insider training occurs when an employee takes advantage of his or her position and the access to credit card data they have. One of the forms of insider trading is to use customers' credit card numbers to make unauthorized purchases and the worst form, which also constitutes a very serious crime, is to sell this data on the black market to third parties.

Charging for goods and services that have not been ordered is also a major trick. Many scams use exactly this approach in order to pump money from customers' credit cards. There are several varieties of this trick – charging twice for the same purchase, including not ordered goods to a legitimate purchase and charging later. If you are watchful, you can catch this scam and you will be able to protest it and get your money back.

Charging twice for the same purchase means either that two separate purchases are registered (but the client signs only one of them) or that in a separate purchase (usually a long list of goods) the same item is marked twice. A similar cheat is to include to your long list of purchases goods that you have not ordered. Most often this happens at supermarkets, if there is not enough control over the cashiers or at restaurants where you simply pay for the lunch or dinner of somebody else. Because of this, it is always a good idea to watch out and check what is marked on your bills.

Charging later is also a typical scam. Once you have made a purchase with a merchant and they have your credit card data, they use it later to bill you again – for goods that you have not ordered and you never get or even to buy goods with your credit card from another merchant. Again, if you read your credit card statements carefully, chances are that you will notice the scam, dispute it according to the procedure and get your money back.