Refund fraud involves the use of a terminal to issue an invalid refund with no corresponding spend. It is often committed by employees crediting refunds to their own account or that of their family/friends. To avoid detection they may also use a stolen credit card to process a large purchase and then refund the same amount to a different account or card.
To protect your business from fraudulent refund activity, you must always process a refund to the same card that was used for the original sale. This is a clause within the CommBank Merchant Agreement.
If a customer asks you to do any of the above or if you’re suspicious of a refund request, call us immediately on 1800 230 177 for Australian based support 24/7.
Ricky owns a fish and chip shop and serves a customer who is purchasing dinner for his family. Ricky hands the customer the terminal and asks the customer to complete the transaction worth $30. The customer quickly clears the $30 and then completes a new MOTO transaction for $3,000. The customer passes the terminal back to Ricky before complaining that he has been incorrectly charged $3,000. Ricky assumes he is responsible for the mistake and apologies. Ricky also agrees to refund the customer to a different card.
A couple of weeks later, Ricky receives a chargeback for the $3,000 transaction and is also liable for a chargeback fee. Ricky also has no way to recover the $3,000 he refunded to the different card.