A credit card scam is sweeping through the flooring retail community, in some instances successfully stealing thousands of dollars from unsuspecting dealers in lost revenue and materials.
While this scam is not new, its frequency has accelerated in recent months, according to retailers. And in some cases, despite safeguards in place, retailers report they have still been hoodwinked. “This scam is rampant across the industry right now—it’s a huge issue,” said Kelby Frederick, owner of My Flooring America, in Denton, Texas, echoing a sentiment shared by others.
Frederick said his business was burned by the digital scam in the past and almost got hit again. As he explained, “On my weekly manager call I was told that one of our salespeople took an order just yesterday. Luckily, our operations people intervened because they recognized some of our standards were not met. This way we caught it before we got burned. At the end of the day, if the salesperson takes the order and processes it, then it’s too late. Since our industry is antiquated in this area, the scammers know we are an easy target.”
How it works
Although there are different variations to how the scam might work, here is one familiar scenario: A potential “customer” contacts the retailer and orders products over the phone requesting a will-call pickup. The customer is usually in a hurry and needs the product right away. They provide the retailer with a credit card or ACH payment over the phone that goes through.
After that, the “customer” will say something to the effect of: “I’m sending my guy (or my installer) to come and pick up the order.” Sometime later, usually after the order has been picked up, the credit card company will alert the retailer that a stolen credit card was used in the transaction and will then charge the retailer back for the purchase. Because the retailer accepted the stolen card they have no recourse with the processor, nor with the bank, nor with Visa/American Express. In many cases, the dealer is out thousands of dollars.
This scam is a threat to all flooring dealers taking credit card or ACH payments over the phone in a cash-and-carry situation, industry experts agree. “We actually had this happen to us,” said Sheldon Yoder, owner of Budget Carpet and Flooring, Columbus, Ohio. “Credit card scams are a real issue in flooring for cash-and-carry orders with over-the-phone orders as well as emailed payment links. We have implemented that any cash-and-carry order must be processed in person in the store or be a repeat customer.”
For other retailers, the scam worked even with precautions in place. “We were aware of the scam and sent out emails to our managers and sales staff,” said John Taylor, owner of Taylor’s Carpet One Floor & Home, Fort Myers, Fla. “We also discussed it in detail with our management team to get the word out. Sadly, one of our salespeople did not listen or understand the scam and therefore we became a victim costing us a good amount of money. We did follow much of our standard policies, but it didn’t matter in the end as it was not enough to protect us.”
(For the full story, see the June 5/12, 2023 edition of Floor Covering News.)