One area restaurant manager who put aside his excitement over a large catering order most likely saved the business hundreds of dollars in a fraud scheme from an out of country scam artist using TTY relay operators.
John Clogg, manager of Chai’s Thai Restaurant in Minneapolis, said his business and their sister restaurant, Mango Thai Cuisine in St. Paul, were both contacted within one week by an alleged unknown customer via hearing impaired TTY (Text Telephone Yoke) and received two extraordinary large catering orders using credit cards.
Clogg said his concern is that during difficult times, restaurant owners will be very receptive to such orders to bring in a boost to make up for the downturn. He would like restaurants to be cautious and be assured that the order is legitimate.
“I would just warn any restaurant to be careful with orders over phone relay,” he said. “We have directed all staff that if they do encounter an order for such services to request that they come in to the restaurant in person and give the order.”
It was a lot of little things that made it apparent that this was not a legitimate customer. Chai’s is a small restaurant with regulars who dine in, with the occasional appetizer tray or luncheon for 40 people or less at nearby University of Minnesota.
An order for 200 and then 400 people from someone who has never been to the restaurant or was familiar is unheard of, according to Clogg.
The scammer could not provide information about how they heard of Chai’s, and an order that size for the day after Thanksgiving sent up all kinds of caution signs. He thought that a potential customer would be very inquisitive about the ability of the restaurant to fill such an order.
When he explained the difficulty of transporting such a large order for a small restaurant and the difficult of keeping it warm, the caller asked for to overcharge to the credit card bill by $950 plus 15 percent for tax purposes, and to send cash via Western Union to a private party that would contact a company to transport the food.
Clogg said the TTY was slowing the communications and he asked the caller to use email. The reply was nearly illegible, and so he suspected the person was not in this country.
“I could not get an address throughout all of the emails I was sending,” he said.
Clogg spent much of Thanksgiving Day holiday online research these types of scams and learned many of them originate from Central Africa. He could not be sure where it came from but the use of the phone relay he felt was a ploy to build sympathy for the order and to mask the origin of the call.
He assumed that the credit card number was stolen and if it worked the real customer and the card company would have taken the funds back. It would have meant the scammer got laundered and untraceable money and the restaurant would have been out approximately $1,000 plus food preparation and employee time.
“We would have been out a whole lot of product,” he added.
Dan Hendrickson of the Better Business Bureau of Minnesota and North Dakota, said this particular scam is a combination of two scams. Had the restaurant fallen for it, they would have charged the credit card and then wired the overage money for the ‘delivery service’ via Western Union. When it was discovered the credit card used was stolen they would have been out any money they would have sent to the scammers.
“The people that operate them get a few victims and then move on to the next market – fast,” he added.
Factors of TTY fraud:
- Buyer orders multiple quantities of high-end products;
- Shipping destinations are out-of-state or out-of-country;
- Overnight or expedited shipping is requested to what appears to be a residential address, but might also be misrepresented as a business address; and/or
- Initial credit card number is declined by the bank and the customer offers an alternative number.
- Caller does not question the purchase price and makes no effort to negotiate a deal. Businesses should always exercise due diligence to ensure that an order is legitimate or that a buyer actually possesses the credit card he or she is using. The Better Business
Take steps to protect your business:
- If the customer is using a TTY Relay Operator ask the customer for his/her full name, address and telephone number.
- Ask the customer to provide the name of the issuing bank and its toll-free customer service number as printed on the back of all credit cards.
- Ask the customer for the three or four digit Card Verification Code that is found near the account number on the back or front of a credit card.
- Tell the buyer that you will check with the bank and call them back. When you do that, keep good notes. Verify all information the buyer gives. If a buyer objects, explain that these procedures are for their protection, as well.
- If the caller still objects to providing any of the above information, abandon the conversation and advise that you are not prepared to do business this way.
- If the buyer insists on paying with a certified check, wait until the funds are in your bank account, before shipping the merchandise.
Tips for Businesses to Avoid Overpayment Scams
Customers that send checks for amounts much greater than the product or service being purchased could leave a business victim to a “check overpayment scam” if the customer requests a return of the excess funds.
Businesses that deposit the customer checks ultimately find out they are counterfeit. Unfortunately, that fact is discovered after the check is initially accepted for deposit by the bank and, the business has forwarded the “overpayment” to the scammer, leaving the business liable for the losses.
When accepting checks from unknown parties:
- Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address and telephone number.
- Don’t assume that the check is legitimate, even if it’s a cashier’s check, just because your bank accepts it for deposit. It may take weeks for the bank to learn that it is counterfeit.
- Don’t accept a check for more than the purchase price of the product or service, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check and do not send the merchandise.
- You are the party who is ultimately liable to your financial institution. Be careful!
- Verify all bank checks, as well as certified checks, with the issuing bank. Get the bank’s phone number from directory assistance or an Internet site that you know to be reputable, not from the person who gave you the check. If in doubt, you may want to ask for a check drawn on a local bank, or a bank with a local branch.
If you suspect that your business has been the victim of a check overpayment scam, contact the U.S. Postal Inspectors (phone 1-800-372-8347) or the Internet Fraud Complaint Center, Federal Bureau of Investigation (http://www.ifccfbi.gov/). Then, contact your local BBB to warn other businesses in the area that they may be targeted.
Friday, December 11, 2009