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.
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