Altus Dynamics Blog

WARNING: Credit Card Refund Scam Targeting Nonprofits

Posted by Melissa Alvares on Jan 11, 2016 1:13:08 PM

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 We were recently warned by by one of our online payment system providers, iATS Payments about a credit card refund scam targeting nonprofits.

According to the iATS bulletin, the scam looks like this:

  • A donation is made by credit card to a nonprofit organization using a stolen credit card, often for a large amount such as $3,300 or $2,500.
  • The fraudster (posing as a donor) reaches out to the nonprofit by phone or email with an emotional story, requesting that all or part of the original donation be refunded to a different credit card. Eg. a refund of $3000 may be requested on the original donation of $3,300. The fraudster may claim they only intended to donate $300 and the $3,300 was in error.

  • The nonprofit organization agrees to issue the refund, consenting to the fraudster's request for the refund to be allocated to a different credit card or issued by check.

  • The nonprofit organization receives a chargeback for the original transaction because it was made using a stolen credit card. The fraudster succeeds in illegally aquiring $3,000 from the nonprofit organization.

How do you prevent this?

iATS suggests that to prevent scams like this, ensure that refunds are only made to the original method of payment and are never processed to a different credit card.

You can read more about it in their blog.

Looking for more financial best practices for nonprofits? Download the free guide "5 Tech Secrets for the Evolving Nonprofit"

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This Post Was Written By Melissa Alvares
Melissa truly believes that technology can change the world for the better, and loves that she gets to see that in action every day at Sparkrock. She’s been involved in building computer labs and teaching technology skills in rural Rwanda and Uganda, and locally is a regular volunteer at the Daily Bread Food Bank and mentoring new immigrants through the Toronto Region Immigrant Employment Council (TRIEC)