Why is there no real protection for Gift Card fraud and action taken against scammer?

[Atlanta88]

We recently started heavily marketing our online Gift Cards through Square over the holidays and during Valentines Day.  Right before, during and just after Valentines Day we had a small group of scammers buy online Gift Cards using stolen Visa cards and come and use for our business services.  They purchased cards in the $200 to $250 range. 

During one of the usage of these Gift cards for our services we noticed that one of the couples (a male and a female) using the Gift cards was acting a little suspicious, so we asked for a copy of the males drivers license and he nervously gave it to us, probably because the female he was sharing the service with was a girlfriend and probably did not know her boyfriend was using a fraudulent Gift card.  Another couple using another Gift card we got a picture of them as they upgraded to our private service room and one of those in the group was acting little suspicious (the male), the female was happy to get their picture taken because she probably had no idea her boyfriend was using a fraudulent Gift card. 

Later in the month, Square provided a notice that some of our recent Gift Cards were in dispute.  We provided evidence of the use of services along with drivers license and pictures of the scammers using our services for those Gift card dispute.  We eventually lost our disputes and no reason was given.  We are the loosers here as we have paid our workers whom performed the service and had to give the value of the Gift cards back.  What is so surprising is that neither Square nor Visa is taking no financial responsibility or action to go after the scammers which we provided solid identities in the form of driver's license, photos and names!!!  This does not seem right at all, they are just going to do it again and it will probably be another small business next.   

To make matters worse,  during this COVID-19 shutdown with our business taking in no revenue over the last several weeks, Square was insensitive and went into our account this week (early April 2020) on 3 occasions this week to take money our of our bank account and pay back the disputes to Visa.

EVERYONE needs to beware here if you plan to use the online Gift cards.  There needs to be better protection by Square and the Credit Card companies on the online Gift Card purchasing and usage.  At minimum better fraudulent triggers with some financial protection.  AND if given the identities of the fraudulent action, then go after each one of them properly, that is not the job as a small business!

[AshaTea]

Hi @Atlanta88,”

Just wanted to let you know that the same thing happened to us too (eGift card purchased, used, then disputed successfully NOT in our favor). Thanks for writing this and trying to bring awareness to the seller community. Hopefully Square will recognize that this is a significant risk for businesses and find a way to provide protection/support.

[Atlanta88]

Hi AshaTea,

Appreciate the comment.  Still bothers us that there is no action on this when it is blatantly obvious this is being abuse.  You think if Square or Visa are provided evidence they would act upon this.  Guess this is too small for them to address being big companies, but for the small businesses this can be painful. Bottom, line, we have addressed this by not selling eGift cards online and ask any customers wanting to buy them to come to our business and purchase in person.

[aesthetics1]

Hi @Atlanta88,”

We are currently in dispute and the customers seem like the exact profile of those that hit us up!!  Only they purchased an e-gift card on square and then brought it to us to then purchase $2000 worth of product.  We were able to validate that the purchase via square dashboard.  So with it seemingly valid, although a rare occurrence, they had a really well tailored routine/act that made it all make sense!  Then they disputed it 3 weeks later--I am not willing to loose $2000, PLUS the cost of the numerous high end products they walked out of our office with!!  Would you be willing to privately message me (maybe a different platform) to discuss the drivers license and look of these pathetic people??!!!  I cannot think of how else this should have been handled on our side and Im looking for some more help!  

[hitechgadgets]

This just happened to us today For $2600.. my payment is pending for tomorrow.. I'm assuming I might not get that. I will be calling square regarding this tomorrow. What was your solution to this? Did you get your money back?

[_Violet]

Hi @hitechgadgets - Thanks for reaching out to us here on the Square Seller Community.

We understand dealing with disputes can be a pain. We’re here to help!

While Square doesn’t decide who wins or loses a dispute (that’s up to the bank that issued your customer’s payment card), we can help make your case to the bank.

For a brief breakdown of how we assist you during the disputes process, check out our Payment Disputes Walkthrough.

For more information visit our Support Center to learn about why chargebacks occur and how you can avoid them in the future.

At any point during a dispute, you can visit your Square Disputes Dashboard for more information about the disputed payment, including a copy of the transaction receipt and the customer claim we received from the bank.

[HC_Charlie]

I haven’t had any experience with disputed gift cards but I wonder if for large e-gift card purchases a “hold” of a period of days could be enabled, thus allowing for someone to dispute the charge if the origination card was stolen? Is the time period from a purchase with a stolen card to e-gift card purchase to actual redemption too short for someone to be alerted? I know, not convenient for last minute gift giving on a purchasers part. 

[donuts1]

We had 147 e gift cards activated of various amounts by a single person. They then emailed saying they wanted to donate to charity.  I turned off the e gift feature to stop any more from being purchased. I tried to call Square and the were closed. The person on the chat was clueless. Finally spoke to someone on the phone and they were clueless as well. Not sure what to do at this point. None of the cards have been used but I assume the charge backs are coming. 

[Dusty1]

Adding my voice to the din.  I'm wondering at what point the sellers will be protected when we make every effort on our end to check ID, get photos, etc when a customer uses a fraudulent card.  If we do OUR due diligence, why are we being penalized?  We've had two fraudulent gift cards this month.  One is still outstanding but since we're almost positive it's fake, are we supposed to just tell a supposed customer that we can't ring them up?  It feels like a very weird spot to put a small business in.  

[WineSneak]

We had two eGift cards disputed for a total of $600. Fortunately, they had not been used. We no longer have the eGift Card option activated. I was shocked to learn that we have no protection for something Square sold. 

[WineSneak]

That's a hard position to be in. You could zero them out as we did. But in our case, the CC charge was disputed. We no longer have the option of purchasing eGift Cards available on our site. 

[Kassi_]

Hey there, @Atlanta88 - 

There have been some recent developments when it comes to protection and Gift Cards. Now, there is the ability to add 3D Secure (3DS) to your eGift Card order site. 

Check out the launch announcement, here with all of the information!

[WHYSOHARDTODO]

Square e-gift cards left us vulnerable to fraud. 

Regarding disputes, we will always be the loser, even with ALL of the proof that the customer purchased and received merchandise. Banks and big companies win, screwing over small businesses.