Business owners beware

Credit card fraud scheme making


Artist Karl Hoffman thought he was on the verge of selling one of his prized jewelry creations.
An antsy customer engaged him for several days in e-mail correspondence regarding some of Hoffman's pieces. Hoffman was in the midst of charging two of the customer's cards when he accidentally credited the card. When his wife, Audrey, called the credit card company to undo the transaction, she discovered the credit cards were stolen.
Fortunately, Hoffman caught the error before he shipped the jewelry. Otherwise, he would have lost the merchandise. And even if the transaction would have gone through, the credit card company would have held Hoffman liable for the transaction.
"The problem with credit cards is that the business is always responsible," Hoffman said. "You'll have to give the money back, and you're out the piece."
When businesses query their credit card machines for "approval," that only means the money is there. It doesn't mean the business has any assurance that the transaction is legal.
Hoffman's close call with the Indonesian customer made him wary of credit card transactions, especially foreign ones. He said he's never had trouble with local customers, credit cards or checks. But once businesses branch out beyond Moffat County's comfortable boundaries, they need to watch out, Hoffman said.
The jewelry that Hoffman almost lost was a custom cut, heart-shaped piece of black onyx with a heavy gold chain and a diamond. It took him weeks of labor to produce.
In the few days since his brush with the customer, several more people have called requesting similar high-dollar items to be shipped immediately and paid for with credit cards. The callers have seen Hoffman's work in the magazine "Southwest Art." Other artists who advertise in the magazine have had similar experiences, Hoffman said. Jewelry and fine art tempt scam artists, who aim to procure pricey pieces, strip them down, resell them, or even duplicate the work. Sculptures and paintings can be reproduced by various techniques to produce convincing replicas, Hoffman said.
Scam artists, as one Craig business found out, also have purchased computer equipment. A couple years ago, DMA Electronics received a call from England. The customer purchased about $40,000 in computer equipment. Cautious about the large transaction, the company contacted several agencies to check the status of the cards, said Mindy Newell, who owns the company with her husband.
No one told the Newell the cards were stolen, and the transaction was processed. Later, the cards were found to be stolen. The credit card companies came to DMA Electronics for the money.
"We were liable and he was gone," Newell said. Newell said the company is still trying to recover from the loss. Nothing is being done to investigate the fraud, Newell said.
"If it's under $100,000, the Secret Service won't investigate it," Newell said. Since then, scammers have made repeated attempts to buy merchandise from DMA, Newell said. The latest cases involve "TTY" or relay calls, which are normally made by hearing impaired customers. An operator calls and acts as a translator between the customer, who is typing messages, and the business.
Since DMA fell victim to fraud, Newell said the company has a policy of requiring certified funds, instead of credit cards, on purchases by unknown clients. That usually sends them running, Newell said.
Hoffman, too, called his Indonesian customer and said he could process the transaction if the man sent a cashier's check and the check cleared. Hoffman hasn't heard back from the man.
Newell now watches for the signs of suspicious transaction. The caller usually requests a large quantity of merchandise or a high-dollar item and needs it "right now." Hoffman's customer requested the most expensive piece on his Web site. Another sign Newell looks for is pushy customers who want to process the transaction first and work out the details later. Hoffman's customer said he would send the copies of the fronts and backs of the credit cards just as soon as Hoffman finished charging the card.

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