Another Credit Card Scam – Business owners and retailers in particular need to be careful.

On May 1, I posted an article on a couple of credit card scams that had crossed my desk.

Iwas advised of another one today by a Melbourne based broker with a similar but different variation of a scam. Here it is in the broker’s words.

Hi Al[l]an,

Always enjoy your comments however I have one for you to ponder.

A client sells furniture (outdoor furniture to be exact) and has successfully managed to gain a large % of sales from the internet using his on-line shop. Order are taken either from the on-line shop itself, however a large percentage are taken via the phone as people often call to ask questions before purchasing.

Unfortunately an issue has arisen where the Insured has taken an order over the phone from someone who has seen the item on his web site.  His staff have taken the order, obtained credit card details and arranged for the goods to be delivered.

The goods are delivered by courier at the address specified and signed off as being delivered by the courier.

Two weeks later, the bank calls to say the credit card number used was for an overseas card (in this case the USA) and the bank has withdrawn the payment made. (As the Insured, does not have a signature, the bank will not honour the transaction.) The insured speaks to the courier company who produced a ‘proof of delivery’ document with some form of signature and upon investigation of the property at which the goods where said to have been delivered, it if found the occupier is not the purchaser and denies any receipt or delivery of any goods.

Hence, my client has lost the stock, is unable to recovery the cost via the bank and has effectively had goods stolen from trickery.

The business package wording does not provide any compensation as there was not forced entry and I would doubt a management liability wording will extend to cover the loss under any crime or fidelity extension.

Hence, my question, can this sort of risk be insured? And if so, how?

Upon looking at a number of client who all deal with internet sales, I can only imagine that this may become a major issue in the future.

Hope you can assist.

Many thanks Alan,



Hi Michael,

There is a lot of this around. I did address it in a blog entry on 1 May 2012.

I know of no cover that provides protection for this business risk. The client and everyone involved in receiving credit card payments really has to read very carefully the terms and conditions of credit card transactions and not process any payment until they received approval. If in doubt he should ring up and seek approval from the credit card carrier prior to the release of any goods and make careful notes of the conversation including any approval number and the name of the person providing the approval.

Sorry it is an expensive lesson but one that is certainly doing the rounds.


Michael replied

Many thanks Allan,



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