Hi, my name is “so and so” and I need a website designed. Are you the owner and do you accept credit cards?
Those words are the clue to a scam that is targeting website designers and small hosting companies.
Typically as well, if your cell phone number is advertised as a business number you’ll receive the message in a text message, and if not, the scammer will try to get you to provide them your cell phone number so they can text you under the pretext that they are hearing impaired.
On the surface the inquiry will come across as totally legitimate. They will have a legitimate sounding business need. Of the many we have received most are either to build an eCommerce solution for a clothing related business or some type of import/export business. They’ll point you to an existing website and state they want something similar to it and can you do it.
And they’ll offer a budget that sounds reasonable and a little juicy to pull you in, often in the $3000-$5000 range.
And, it may or may not occur just as I described but there is one thing that will ALWAYS Happen which should immediately tip you off you are about to get ripped off.
Once you agree to pursue the deal they’ll mention they have a “consultant” or “graphics person” or something akin to this that they will bring into the loop that has all of the design materials, content, graphics etc. Or some variable of this. Important clue is a third party.
This is where the setup for the scam begins and here is how you are about to get ripped off. And this scam has been going on for a long time regardless of the industry you are in.
First, once you sign on to this deal they will pay you via credit card. Likely for the “full amount” saying they are in a hurry, want the job done in a month and so are paying you in advance since they “trust” you. They’ll make some sort of excuse to provide a sense of reasonableness for their next request such as they are going to be traveling, and so they are going to add in the amount to pay their “consultant” and once their consultant provides you with the necessary materials you are to pay them directly using the overpayment they provide you.
And that is how they are about to rip you off. Because the payment they make will clear your bank. You’ll have the money in your account because the credit card, for the time being, is valid. (And they may pay with more than one credit card since often they have to use multiple credit cards to pump up the charge amount) Thus, on the surface you think you just hit the jackpot. And if you are a small one-person operator chances are you are already spending the money. And within a few days you’ll pay the consultant out of the excess funds they provided as requested.
And you will never hear from them again nor have any way to find them. They just stole your money. The credit card(s) they used were stolen. The credit card processor/bank is going to want back every dime they paid you. And you are legally responsible for it as the merchant. A week or two later or sometimes longer the credit card company will report those transactions as fraud. And your credit card processor will hit up your bank account for the full amount, potentially wiping you out. If you don’t have the money to pay it back you will have some pretty serious consequences. It will likely affect your relationship with your processor. You could and probably will be sued by them if you don’t pay it back. If you don’t pay them you could be blacklisted from being able to process credit cards with any merchant processor. Basically, you’re now screwed.
We’ve received over a dozen of these requests in the last 24 months and they follow along the lines we just painted. In fact, the majority of them have been remarkably similar in their context and language so once you see one of them you should easily recognize it. Of course, still be vigilant as they will probably try and change it around to mask their intentions.
The one fail-safe is NEVER fall for sending any part of your payment for service to some third party consultant, shipper, editor or whatever. The minute that comes into play know it for what it is and immediately refund every dime of the payments to those credit cards because there is a 99.9% chance in my opinion based upon industry security practices and standards, this is a fraud in the making. There may be some situation where this is not so but I cannot think of one.
In almost 20 years of business we’ve never been ripped off or seen these types of requests before in our industry (although we’ve seen them in other industries typically eCommerce related) so I think it is a new angle by the scammers. That’s not to say it hasn’t been targeting our industry for some time perhaps only that we’ve just gotten on the radar for some reason.
The first time we received one, about 24 months ago, we didn’t recognize it as a fraud until the part about sending an overpayment and having us pay the third party directly came up. Up until that point we jumped through all of the hoops assuming this was a legitimate inquiry. But as soon as that part of the scam began we recognized it immediately because internet security is something we are highly aware of and train our clients on and this is an old well known scam. We’ve had at least one client that did not pay attention to our security tutorials and got taken this way for about $12,000 that he couldn’t pay back to the processor, got sued over and subsequently lost his ability to accept credit cards and now is stuck with Paypal only as a payment solution for his eCommerce site. Fortunately in our case we had not yet finalized the deal nor collected any money (for one we are always a little wary because of the security hat we wear when the approach to us is out of the ordinary as this one was).
Two, anyone that actually gets past our personal radar would likely get tripped up when the payment is processed because we use MAXMIND in our payment processing system and its never failed us yet to trigger fraud alerts or downright block the payment altogether in cases where the alert is above a certain threshold.
So keep an eye out for this. Hopefully you are not finding this article the hard way!
When someone offers to overpay you for services on the pretext of you submitting the overpayment to a third party, chances are its a scam and you will pay for it in the end.
Any attempt to pay you and receive back some of the money as rebate or for any reason is suspect.
So if it looks too good to be true is not an ordinary and customary deal, probably a red flag is in there somewhere.
Pay attention. And use a good fraud detection system when you process credit card payments.