SCAMWATCH!! Credit card fraud hits dealers

Public news

South Australian automotive dealers have been targeted by scammers using stolen credit card details to pay for vehicles.

Scenario 1:

A customer attended the dealership and purchased the vehicle by quoting a credit card number, expiry date and CVV number, telling the dealer that the card was damaged. The dealer put the transaction through the EFTPOS terminal, similar to an over-the-phone credit card payment. The payment went through and the vehicle was delivered on the spot.

About one month later, the dealer was notified by their merchant bank that it was a fraudulent transaction and the dealer had to pay the money back to the bank.

The dealer lost the vehicle and cost of the transaction.

Scenario 2:

A customer enquired about a vehicle over the phone and then paid for it in full. He attended the dealership and took delivery of the vehicle. The next day the dealer received a call from the rightful owner of the credit card who had noticed the transaction on her account. The dealer called his bank and was told that the transaction would be reversed.

The dealer lost the vehicle and cost of the transaction.

Scenario 3:

A dealer took an initial $3000 deposit over the phone for a vehicle sale. In subsequent conversations with the customer, the Business Manager noticed a number of red flags:

  • The customer couldn’t pick the vehicle up in person - they wanted to send a friend to pick it up
  • The vehicle needed to be registered in someone else’s name
  • When the customer was told that at least the cardholder would have to come in at delivery to pay for the vehicle there were more excuses and the customer insisted on paying the remaining $7000 over the phone
  • The Business Manager refused and the customer then wanted to cancel the deal but instead of refunding the $3000 back on the credit card, the customer wanted it deposited into a different bank account!

The Business Manager of course refused and after a few more days the “customer” was not contactable. The dealer held the vehicle (and the $3000) for a few weeks and eventually received a notification from their bank of the fraudulent transaction.

The dealer paid the $3000 back to the bank and was no worse off except for the stress of the ordeal and the time of the vehicle being off the market.

Great work by the Business Manager and demonstrates that you should always be vigilant and watch for red flags!

The MTA has a business partnership with CBA. You can find guidelines for operating your EFTPOS facilities by clicking here.

Of particular interest is the advice on fraudulent transactions and the MTA and CBA recommend the following:

For in store transactions, never accept a card if:

  • the terminal doesn’t recognise the card
  • the card expiry date has passed
  • the card or the signature has been visibly altered or tampered with
  • the signature doesn’t match that on the back of the card
  • the card is damaged

For over the phone transactions:

  • Request the card verification code (three digit number on the back)
  • Consider using a security program such as MasterCard SecureCode or Verified by Visa. These additional layers of security provide, among other things, mechanisms such as an SMS that gets sent to the customer before allowing the transaction to proceed
  • Ask for comprehensive customer details and do validity checks
  • Follow up with an order confirmation
  • If sending stock to the customer, always use your own courier
  • Ask for identification on delivery and do not leave goods at unattended addresses
  • For in store collections, insist on matching the customer’s I.D. with the same credit card used for the initial transaction
  • Consider the use of maximum transaction amount controls as a business policy

If you have any questions, or would like to report a similar incident that has happened to you please contact your Industry Engagement Specialist, Nathan Groves, by clicking here.