THE CHARGEBACK SCAM

I received a call from a friend recently. She was suspicious of a “church pastor” who had emailed her inquiring about purchasing a few thousand dollars’ worth of playground equipment. They wanted to retrieve the equipment directly from the manufacturer.

Had she gone through with the deal with the pastor, it would have resulted in a pact with the devil dissected as follows: Her company would process the credit card or “cashier’s check.” The payment would actually show up in the company’s bank account. The “pastor” or his representative would retrieve the equipment from the factory. Some days or weeks later, the playground equipment company would receive a call from their bank informing them that the credit card was stolen or the cashier’s check was bogus and would result in a “chargeback.” A chargeback is the reversal of an exchange of funds from a consumer's bank account or credit card. The “pastor” would have already fenced the goods for cold hard cash.

Variants of this scam involve using a free phone service called “Deaf Relay.” This service is what the deaf and speech-disabled people use to speak to the hearing community. This taxpayer-funded service allows a person with a specially-equipped text telephone or internet connection to call a Text Message Relay Service. The operator dials the number for them and relays the text conversation to the hearing person then relays to the deaf person what the hearing person says. These operators are required by law to relay everything said even if they suspect a scam. The scammers using these services usually reside in Nigeria or Russia. Some of these scams have been tracked back to a federal prison. Yep, prisoners are conducting scams like this from prison on our dime. Nice, huh?

Out of curiosity, I recently played along with one of these scams. The person on the other end of the phone said he wanted to purchase 5 expensive notebook computers. I quoted him a ridiculously high price for each notebook computer and he “agreed” to the price. He then gave me a credit card number. I “accepted” that payment but told him there was evidently a limit placed on the card. So he gave me another credit card number. I “accepted” that one. He then asked me to double the quantity and gave me yet another credit card number. I was to ship all the equipment to an address in Boston. Once the “transaction” was completed, I told the operator to relay “Bite me, scammer!” then reported the stolen credit card numbers to VISA. Had I been foolish enough to actually go through with the transaction, my bank account would have been obese for few days while I enjoyed a spending spree then I’d get a chargeback from the credit card company. I would still be on the hook for the purchase of the equipment from my distributor.

These scams don’t always involve large purchases. I’ve heard from sporting goods stores for small quantities of tennis shoes. Many Ebay sellers receive inflated offers from people offering to buy an item without even bidding on it. As always, be skeptical!