Small Business Credit Card Fraud

[medicencurz]

What is the name of your state? Washington

We recently had a customer buy $2,000 worth of merchandise from the store I work at. At the time he said he had been having problems with his credit card and that he needed to call the bank. After supposedly talking to the bank he said the bank told them that we needed to do an offline transaction. The customer then gave me an approval number which is necessary to complete the transaction. I checked the guide for the credit card machine and followed their instructions for an offline transaction and the transaction went through fine.
We later found out that the credit card he was using was actually declined so the bank charged us instead. The machine at the time never said that the card was declined. However after telling the bank they pretty much ignored us and said that we would have to eat the $2,000. I told them that it did not seem out of the ordinary to me because I have done similar offline transactions in the past with no problem. The person at the bank said that the mistake I made was taking the approval number from the customer and that I personally have to call the bank in those types of situations (which is what I had done in the past).
At the time I just felt stupid and thought that I had simply made a mistake. But after the fact, it occured to me that I followed all of their instructions in the guide book so I don't see how I was to blame. I sent them a letter saying this and they pretty much ignored me and denied my "chargeback adjustment reversal" request. If they had simply put "Make sure you call the bank!! Don't let the customer do it!!" or something to that effect then we wouldn't have had any issue. It would have been nipped in the bud right there. It does me no good for them to tell me what not to do after the fact. I believe that it's the banks responsibility to give me the proper tools to prevent these things from happening. But at this point I don't know what to do because it seems like they're not listening.

 

[medicencurz]

also I forgot to mention. I was under the impression that in order for the offline transaction to go through the approval number has to be a valid number from the bank. I figured that since the machine accepted it the transaction I was fine.
I guess it turns out you can use any number that pops in your head. This also would have been good information to have beforehand.

 

[Zigner]

I followed all of their instructions in the guide book

The instructions state that the customer will give you auth. #'s to use?

 

[CameronNewport]

The person at the bank said that the mistake I made was taking the approval number from the customer and that I personally have to call the bank in those types of situations (which is what I had done in the past).

I hate to say it, but that's just common sense. What's the point of getting the verification number in the first place? It's to verify with the bank that the card presented by the customer can be used. Since you didn't talk to the bank, you didn't verify anything. You just took the customer's word for it. He could have been talking to Uncle Bob for all you know.

The bottom line is that either you or the bank will need to seek payment from the customer. The bank is saying that the burden is yours because you didn't get the bank's approval for the transaction. I think the bank is correct.

 

[CameronNewport]

also I forgot to mention. I was under the impression that in order for the offline transaction to go through the approval number has to be a valid number from the bank. I figured that since the machine accepted it the transaction I was fine.
I guess it turns out you can use any number that pops in your head. This also would have been good information to have beforehand.

This is also common sense. If the transaction is completed offline, then how could the verification number be checked for validation? The bank is correct that the mistake is yours.

 

[medicencurz]

as i mentioned, I was under the impression that the approval number had to be a valid number from the bank. I thought that if you put in a fake number the machine would not accept it. I figured it doesn't matter who gets the number because either way the machine will tell me if it's valid or not. But it turns out that you can put any six digit number in and it will run it as if it's fine. I think my confusion is understandable and the bank should have taken the proper steps to ensure that people aren't tricked in such situations by people that know the loopholes.

 

[Zigner]

I think my confusion is understandable and the bank should have taken the proper steps to ensure that people aren't tricked in such situations by people that know the loopholes.

And *I* think that you should have smelled trouble as soon as the customer gave you his story.
In any case - you need should contact the police to start with.

 

[medicencurz]

to me it didn't seem much different than other offline transactions i've done in the past.

yeah the bank initially told us to contact the police. later on i called the police and they said i had to contact the bank.

 

[Zigner]

ater on i called the police and they said i had to contact the bank.

Call them again - be persistent - work your way up the "chain of command" until you get some action.

 

[CameronNewport]

I think my confusion is understandable and the bank should have taken the proper steps to ensure that people aren't tricked in such situations by people that know the loopholes.

You could sue the bank in small claims court since you feel that the bank is in the wrong. I don't think your confusion is understandable, however. If the transaction is done offline, how would the machine know whether the verification number is valid? The whole point of the offline transaction is that the machine cannot properly determine whether the transaction is approved.