credit card processing scams

How Merchant Account Scams Are Important To You Important Credit Card Processing Scams

In the news today, we mostly hear about credit card fraud as it relates to stolen credit card data and how the data can be used fraudulently.  However, a sizable, yet often unknown element of cybercriminals are so-called “merchant account scams.” Cybercriminals use personal data they have obtained on the dark web to apply and set up phony merchant accounts.  They require a significantly higher level of expertise because they have to portray the company as a legit entity.  The potential gains stand to be considerably higher and often result in a great deal of damage to the legitimate business as well as the legitimate business owner they are portraying.  Below are three of the most common forms of merchant account schemes.

Fake E-Commerce Sites

In this scheme, a fraudster sets up a website that mirrors a real business.  The criminal will go as far as copying some of the content and even scraping the legitimate logo.  The cybercriminal then links everything to their account including a checking account that they’ve personally opened.  Once that is complete, then they set up a bogus e-commerce store for purchases to be made using stolen payment information (credit/debit cards and bank accounts). This type of scheme can be very costly, and many times the real owner or business isn’t aware of the activity until they start getting calls from collectors or people unhappy with what’s transpiring.  Unfortunately, by the time awareness has been raised thousands of dollars may have been processed.


Legitimate Merchant Accounts for Payment Refunds

Another tactic used by a cybercriminal is to hijack legitimate merchant accounts and then issue payment refunds to stolen or fraudulent credit/debit cards. This particular scheme requires the criminal to possess active debit/credit cards, which are also acquired by purchase on the dark web.  This particular merchant service scam is more difficult but is very profitable for the cybercriminals and is far more damaging to everyone involved.  These types of merchant refund schemes aren’t seen very often and are typically very short-lived because business owners typically pay close attention to refunds.


Opening a Legitimate Merchant Account

Another harmful scheme is the cybercriminal hiring a front man to open a legitimate merchant account for the sole purpose of cashing out.  Cashing out via prepaid or gift cards purchased or loaded with stolen funds.  Prepaid cards and gift cards have a lower chance of a chargeback so they can go undetected for a longer period.  In this environment, vendors are known for providing such services only for high-value transactions, such as $10,000 each.  Thus, serving as an intermediary point in case of a wire transfer or bank check payment is not available.


Stay Vigilant

At Digital Financial Group we see approximately one application a month that is fraudulent.  There are thousands of businesses just like our across the U.S. so the impact of these types of criminals are potentially large.  Every application that we receive is heavily scrutinized and reviewed for its thoroughness and legitimacy.  However, over the years the cybercriminals have gotten better and better about attempting to look legitimate in their schemes.  They set up fake websites, fake phone numbers that are close to the real ones, and even go as far as using identities of people who have recently passed away.  Unfortunately, it’s all done to steal a few dollars.  If you start getting strange calls about your business and product sales or refunds that you are not aware of, pay attention.  It may be a fraudulent account that someone has set up in your name or could be one of the schemes listed above.

If you still have questions or would like more information about any of these topics, feel free to reach out to us.  We provide honest, straightforward, unbiased, representation to save you hours of frustration and headaches.  To learn more about how Digital Financial Group can help you and your business, feel free to reach out to us at or call 623-764-7471.

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