Small businesses rely on credit card purchases for their income, but one Calgary company is taking a hard hit following an alleged fraud and says it’s getting little support from its service providers.
“Everyone seems to be ignoring us,” says Lindsey Heintz, a co-owner of Wicked Alternative Body Fashion. “Nobody has ever gotten back to me. We’re going on a couple of weeks now.”
Just before 11 a.m. on Dec. 4, Heintz says a man arrived at the business’s Chinook Centre location to purchase a small item with a Mastercard. However, Heintz says when the man was given a handheld debit terminal to pay, he managed to issue himself a refund of $4,800. Then, the man swiftly walked away.
Wicked Alternative Body Fashion uses a Moneris machine to accept credit card payments and Heintz says the company initially came to bat for him after the theft occurred.
“We immediately called Moneris, our debit terminal and provider, told them the story and they put a hold on everything. The next day, our money was refunded to us and we thought that was the end of the story.”
However, Heintz says it was only the beginning.
“This individual disputed it with Mastercard. So, when that happens, Mastercard requires certain documentation that we have to provide to them to prove it was a legitimate transaction or there was something in error. We did that through Moneris…. We uploaded all the documentation that we had,” Heintz said.
He says Mastercard then denied their initial claim and returned the money to the alleged fraudster.
“We’re just between a rock and a hard place. We just don’t know what to do.”
He says his company is not a megacorporation that can afford to simply let a loss of this size go.
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“We’re a small, family-owned business. Right now, we have about 16 employees in the three locations.”
Heintz says it could not have been an error on the side of his employee because they are not trained to provide refunds.
“We don’t do refunds, because with our product, it’s a Health Canada issue because it’s body jewelry. There’s no refunds, no returns.”
Furthermore, he says this should be an easy situation to prove as no transaction of nearly $5,000 has been made at the store in the past.
“He’s never made a $4,800 purchase ever with us. Most of our items are $30 to $60. We have the odd item that’s $300 and we might sell one of those a year. For that amount to be taken from us and people to say there’s not enough evidence, well, there is enough evidence,” Heintz said.
Arthur Schafer, a professor and founding director of the Centre for Professional and Applied Ethics at the University of Manitoba, says this case shows a lack of support for small businesses.
“One expects that (banks and credit card issuers) will have safety systems in place to protect individuals and small business owners against fraudsters, against exploitation, against criminals,” Schafer said.
“In this case, none of the red flags were flagged…. Now they seem to be dragging their heels with respect to making whole the business owner who was the victim of the fraud.”
He says the flags should have been raised the moment the transaction went through and the bank should have never released the funds to the alleged fraudster until after everything was resolved.
“The story just doesn’t make sense…. It was an atypical transaction, it was the wrong amount given this business,” Schafer said.
He says situations like these can result in a complete breakdown of trust between banks and customers.
“It’s really puzzling. I think it will undermine people’s confidence in the integrity of the systems in place at BMO and Mastercard and Moneris. I think the company should immediately investigate what has gone wrong at their end, because they’re clearly at fault.”
For Heintz and his family, the loss goes beyond financial, creating emotional turmoil at the end of an already challenging year.
“It’s devasted me and my wife and my daughter, who’s also a partner. It’s affected our staff — we’re small. We’ve been going through a tough year, like everybody in retail. This last year has been really, really difficult with the economy,” Heintz said.
“We actually broke down a bit over this. We’re trying to do everything that we can to recoup this money. We need this money back. It’s rightfully ours and it was stolen from us. You feel violated too. It was a punch in the gut, a real hard punch in the gut.”
For Schafer, knowing the banks have the backs of their clients is key to retaining future trust.
“When something goes wrong, they have the ability to absorb the loss much more than any individual or business owner, so I’d like to know what their policy is; I think the public would like to know.
Moneris says it always advises retailers to be observant during transactions and to use admin passwords to unlock an action such as a refund.
Heintz says his employee was trying to give the user privacy while they would typically be entering their PIN.
Mastercard says it will work with the merchant’s bank and the consumer’s issuing bank to understand the situation.
“Chargebacks in such cases are managed directly between these banks,” a spokesperson said in a short statement on Thursday.
While he and his family continue to absorb the financial blow, Heintz says he’s still hoping things are made right down the line.
”At first I was optimistic, but now I don’t even know what to think about all this.”
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Calgary business out nearly $5,000 after alleged refund fraud
