Local businesses should beware the ‘overpay’ scam

Fraudsters pretend to book your business, then rip you off on your credit card

A pretty serious scam continues to circulate throughout North America, and this warning I’m writing doesn’t just apply to Wetaskiwin, Pigeon Lake and Millet, but to anyone on this continent who wants to avoid fraud.

A Pipestone Flyer staff member returned to the office from a day out in the community last Friday with some very alarming news. Several local businesses she spoke to had been attacked by the “overpayment scam” that has circulated around North America since at least 2012.

It’s a relatively sophisticated fraud that is aimed specifically at businesses such as restaurants and hotels (although certain forms of it could be directed at anyone, really). It usually operates like this:

The restaurant or hotel will be contacted by someone through email, or much less likely by phone. This person states they have a large event coming up, possibly a business workshop, a wedding, a funeral or something similar. They’re expecting many guests, upwards of 50, and need to make a reservation or booking and money is no object.

They offer a credit card to cover the deposit and are unable to come into the business in person to pay the deposit for a variety of reasons. Excuses range from “I’m in Europe” to “I’m in the hospital.”

Then a day or so later, the restaurant or hotel is contacted by the fraudster, claiming ‘I’ve changed my mind, I’ve paid you too much, my plans are changing, I’ve cancelled my plans” or any number of other sudden excuses. The fraudster requests a partial or full refund.

What the business owner doesn’t know is that the fraudsters original credit card is either cancelled, stolen or doesn’t even exist, so no deposit was ever made. It can be difficult to discover this as credit card payments take time to process; it may not be possible to get confirmation of the payment within one day.

Although the fraudster’s credit card is phony, the business owner’s isn’t, and the restaurant or hotel is now on tap for who knows how much in missing funds.

My first experience with this fraud was about six years ago at a different newspaper. The RCMP requested I do something in the paper to let local businesses know about this, as a restaurant got taken for about $10,000. I don’t know abut you, but where I come from, that’s a lot of money.

Here is some very good advice from the Canadian Anti-Fraud Center on avoiding the overpayment scam:

Know who you are dealing with; independently confirm your buyer’s name, street address, and telephone number;

Never accept a cheque for more than your selling price;

Never agree to wire back funds to a buyer. A legitimate buyer will not pressure you to do so, and you have limited recourse if there is a problem with a wire transfer;

Resist pressure to “act now.” If the buyer’s offer is good now, it should be good when the cheque clears; if you accept payment by cheque, ask for a cheque drawn on a local bank or a bank with a local branch. You can visit that bank branch to determine if the cheque is legitimate; If the buyer wants to use a service you have not heard of, be sure to check it out to ensure it is reliable. Check its Web site, call its customer service hotline, and read its terms of agreement and privacy policy. If you do not feel comfortable with the service, do not use it.

Stu Salkeld is editor of the Wetaskiwin Pipestone Flyer newspaper and writes a regular column for the paper.

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