Refund Scam

What is it?

These scams occur when criminals target business’s card payment terminals to change transactions from sales to refunds.

They use various distraction techniques so that staff are taken away from the physical location of the terminal while they then issue multiple refunds to their card. In some cases, they present different cards to that on which the original sale took place for the refund to be processed.

How to spot a refund scam

  1. There are refunds or charges on your end of day transactions that don’t match to a corresponding sale
  2. The card used to obtain a refund is different to that on which the original transaction took place
  3. The same credit/debit cards are used for the refund to be processed
  4. The card payment terminal has been swopped, and may even print receipts associated with another business

Example

Gloria’s boutique clothing shop was open for business as usual. She had spent most of her life savings to pursue her dream and had recently been able to employ another member of staff , Elena,  to help her.

Later that day, two men entered the shop looking to purchase gifts for their respective wives. Having sought Elena’s help, one of the men made his way to the till to make payment. Elena started to put the transaction through as normal, entering the amount owed before pressing enter.

Just as the customer drew out his card to insert it into the terminal, the man’s friend called Elena over for some help. Assured by the man at the till of his capability of making the payment, she headed over. As soon as Gloria’s back was turned, the man at the till cancelled the transaction, and processed several refunds to his card.

Before Elena had time to check the original sale, the second man changed his mind about his purchase and both men rushed off. As she was going through her business’s weekly transactions, Gloria noticed several unusual refunds that didn’t match any purchases. It was only after some investigation that Gloria realised that the transactions were linked to the two men who had visited her shop to make purchases for their wives and subsequently left in a hurry. She contacted her business’s bank immediately, who informed her that she had fallen for a refund scam.

If you think your business has fallen for a scam, contact your business bank immediately.

Report it to Action Fraud on 0300 123 2040 or via actionfraud.police.uk. If you are in Scotland, please report to Police Scotland directly by calling 101 or Advice Direct Scotland on 0808 164 6400.

Always Remember

Only process a refund to the card used in the original transaction. You can check this by ensuring that the last four digits of the card number matches the original purchase details held on your business’s system.

Ensure card payment terminals are stored in a secure location away from customer access when not in use.

Be vigilant of attempts made by the customer(s) to distract your staff during the payment process. If your staff note any suspicious behaviour or customers make sure they report it to management immediately and keep a hold of any CCTV footage.

Ensure terminals are visible at all times when issuing refunds and are never solely left with the customer

Check your business’s end of day sales and payments daily for any unusual refunds or charges that don’t match to a corresponding sale. If you have any concerns make sure you report it to your card processor immediately.

Change card payment terminals to PIN access for refunds. Limit the number of staff who have the authority to authorise refunds and inform them of the PIN, which should be changed on a regular basis.

Be wary of unexpected offers to “replace” your existing terminal with an alternative

If your business doesn’t provide refunds and has fallen for this scam, contact your card acquirer who may be able to lower the refund limit

If you have visited a website you think is suspicious you can report it to the National Cyber Security Centre.

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Scam warning: Criminals may purport to be from Take Five, using our official branding on websites, social media posts, literature, on the phone or by text. Take Five doesn’t provide endorsement or approval for any products/services and would never call or text anyone.

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