A fraud tale: Credit card scams

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Automotive repair shops should never accept a credit card unless the person taking the payment can physically see the card, an accountant who works with shops urged.

Otherwise, the card owner can dispute the claim — and will often win.

This was an issue that picked up during COVID times as cars were dropped off at the doors. Shop staff likely never saw the customer in person and credit card information was exchanged over the phone.

One client of Hunt Demarest, senior accountant at Paar, Melis & Associates, did $7,300 worth of work for a new client. He got the authorization; the process was done by the book. The payment was made and car was delivered.

Then the customer disputed the charge with the credit card company. The company called up the shop and said they’re taking the money back. The shop owner tried to fight the dispute, showing the authorization to do the work.

The company then asked if he physically had the credit card when processing payment. He did not. He didn’t have a signature from the customer either. And that was it, case closed, dispute in favour of the customer.

“They didn’t want to hear anything else about this,” Demarest said.

“They will always, always, always, always side with the customers — 99.9 per cent of the time, even if you have all your ducks in a row.”

Shops also have no leverage in this situation.

“What are you going to do? You’re going to stop taking Visa? You’re going to stop taking American Express? I don’t think so,” Demarest pointed out.

In this case, the shop owner couldn’t have predicted it. But there may be red flags that this could happen under a different guise, he observed.

For example, someone says their boyfriend or uncle is going to pay for the repair. You may not care because someone is paying at the end of the day, right? Well, that uncle could call in with their credit card info and have you process it. Next thing you know, the uncle disputes it on the grounds that it wasn’t them who made the payment. There’s one name on the invoice and a different name on the credit card transaction. The credit card company will side with the customer.

Some shops will require that the name on the credit card match the name on the invoice. If a customer says they don’t have the money, that’s not the shop’s problem, Demarest said.

At the end of the day, he said, shops need to guard against these dangers.