When it comes to fraud in the world of business, Identity theft and other forms of customer-side cybercrimes tend to get the most attention. However, the frequently downplayed merchant account fraud is one of the most prevalent causes of financial loss for merchants.

If you are a business owner looking to start accepting debit and credit card payments, taking the right precautions will protect you from becoming a victim. Read on to uncover the most common forms of merchant account scams and what you can do to avoid them.

What are the popular merchant account scams?

Fraudulent merchant account providers have a variety of tactics at their disposal. Payment experts typically group the scams that result from these tactics into three forms: partial scams, full-scale scams, and backdoor scams.

1.      Partial scams

If your merchant account provider intentionally misleads you about its products and fees, they are running a partial scam. The hidden fees partial scam, for example, starts with a provider concealing extra charges to lure you into signing up with them. These charges later pop-up, or worse, remain hidden and unaccounted for until you receive a bill from your bank.

2.      Full-scale scams

In a full-scale scam, a merchant applies for an account with a fraudster posing as a merchant account provider. These criminals often target merchants looking for the cheapest rates. The first bill is usually higher than usual to suck out as much money as possible before you begin to suspect. Once the application is complete, the provider disappears.

3.      Backdoor scams

A backdoor scam involves altering a gateway’s program code to create a “backdoor” through which a malicious third-party can connect when the gateway is in use. Although it is an uncommon practice, some dubious merchant account providers create backdoors when programming their gateways into a merchant’s website.

How Can You Avoid Fraudulent Merchant Account Providers?

Falling victim to merchant account fraud can mean the end of your business. Fortunately, you can minimize the possibility of the right precautions.

1.      Do your research

Small businesses often fall victim to scammers because they are generally less educated about merchant account processes. Doing your homework before signing up gives you the sixth sense to notice contract terms that seem too good to be true. You can also reach out to your local authorities to confirm that they are a registered business,

2.      Read and re-read the contract

Before signing up, ask your prospective provider to share the full contract with you to examine it. Insist on getting a comprehensive breakdown of all the charges applied by both the payment processor and your bank. Furthermore, ensure you double-check and question all the suspiciously low rates.

3.      Trust online reviews

Before shaking hands with a merchant services provider, look up their reputation online. Client reviews on a provider’s website and social media accounts are a sure way to judge the legitimacy and quality of their services.

Independent articles and forums on expert websites can also be useful when choosing a provider. If you are interested in Worldpay, for example, look up Worldpay Reviews on Google and see if the provider has enough praises to make it an excellent choice for your business.

Watch out for scammers!

To prevent getting scammed, you need to take your quest for a merchant account provider very seriously. While the steps above seem basic, doing them right can guarantee your business a 99 percent scam-free experience.

Author Bio:

Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie on his backyard porch, as should all right-thinking people.

Leave a Comment