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POOLANDSPA.COM DEFRAUDED OF ALMOST $10,000 IN INTERNATIONAL INTERNET
CREDIT CARD FRAUD SCAM
October 18, 2010
By Betty Carter,
Poolandspa.com Newsletter October 2010
Las Vegas, NV USA
ONLINE MERCHANT GETS SCAMMED
Poolandspa.com, an online retailer
of pool & spa supplies, was recently
a victim of an international credit
card theft scam.
Bookkeeper for Poolandspa.com
reports that "In early June, we
started receiving telephone orders
from a "seemingly nice" gentleman
from Florida who needed to purchase
a number of fairly expensive pool
products for his yacht and vacation
house in South America. This
gentleman was so nice, and purchased
a number of items, all over the
phone throughout June and July of
Ethan Johnson, head
of Poolandspa.com's IT Dept. and
also in charge of online fraud
investigations noticed nothing out
of the ordinary. "We have seen
attempts at Internet fraud before,
over the last 18 years selling
online, but normally these unlawful
attempts are committed through
online orders or emails. We
have never seen a situation where a
customer has actually called our
call center, over a period of
months, and placed very specific
phone orders for pool or spa
IT ALL SEEMED SO
INNOCENT AND ORDINARY
Tim Casey, Online
Product manager for Poolandspa.com
says that "We frequently get emails
from foreign customers attempting to
order, like 50 Hayward Super Pumps
all at once, and that certainly sets
off all our bells and whistles
regarding potential internet fraud."
"In this instance,
since the thief (customer ???)
called in his orders, and actually
signed for the delivery of his
products, we did not think that this
was out of the ordinary."
Call Center Manager
Liz Gonzales actually thought she
had befriended this customer. "He
was so nice, and the things that he
ordered made sense, so when
purchased together, none of us ever
suspected anything illegal was going
THEN THE CREDIT CARD CHARGE-BACKS
STARTED TO COME IN
Towards the beginning of September,
right after Labor Day, the credit card charge backs and
customer complaints started rolling in.
"It was crazy here for a couple of days
right when we got back from the Labor Day Holiday
Weekend" reports Janice Beckman from Poolandspa.com's
"We were getting phone calls, faxes and
online complaints from customers that we had no record
of." She continues that "People were calling about
unauthorized charges to their credit cards from a
company called "Poolandspa.com" and they did not even
have a pool nor a spa."
Jeff Baxter, General Manager of
Poolandspa.com's E-commerce division called a meeting
during the second week of September to do a
"fact-finding" investigation as to who these customers
were, what did they (he) purchase, and from whom.....and
using what credit cards.
"I have been involved in various online
businesses for over 15 years and I have never seen
anything like this', he said.
CREDIT CARD COMPANIES TO THE RESCUE ?
Once it was determined that this seemed
to be a fraud, totaling almost $10,000, spanning a
period of two months and consisting of 8 different
orders, a frightening picture started to emerge.
"Believe it or not, this guy had scammed
four different CSA's (Customer Service Agents), three
delivery companies, two freight forwarders and four
different credit card companies over a period of eight
weeks" Jeff reports.
"Not only that, but after a few days on
the phone, it turns out that this was only a tiny part
of a huge International credit card theft ring that was
operating primarily out of New York and Miami", Mr.
Jeff continues that "Although we
followed all the appropriate procedures, including
getting the proper credit card authorizations, and UPS
or Fedex delivery receipts for each and every order we
shipped, none of the major credit card companies were
able to help us out. They just took the money
right out of our bank account and basically said that we
were "screwed", to quote one of the credit card company
NO ONE AVAILABLE TO HELP
Janice Beckman, the company's
Bookkeeper, has run into similar problems working with
other online companies. She took over the fraud
case and spoke to the fraud investigators at American
Express, Discover, Visa & Mastercard, as well as our
Merchant Processor Global Processing and our business
Although they were all sympathetic, they
all admitted that they could do nothing about this, and
that we should contact a federal agency or local law
enforcement. At the time we accepted the credit
card charges - and at the time they were approved - the
unknowing cardholders had not reported their credit card
numbers stolen yet. So therefore the cardholders were
not liable, the credit card companies were not liable,
and the delivery agents (UPS & FEDEX) were not liable
LAW ENFORCEMENT TO THE RESCUE - NOT
So after having almost $10,000
automatically removed from their bank account - as well
as over $8000 already paid to the product suppliers,
Poolandspa.com had to send one of its' Officers to the
local police (Las Vegas Metro), the local Secret Service
Office and the local FBI Office. All of which took the
reports - however insisted that "it was out of their
jurisdiction" for some reason or another.
Mrs. Beckman recalls, "This was
unbelievable....this was a clear-cut crime. We had
the thief's name, phone number, delivery address,
delivery signature for each and every order, emails,
recorded phone calls from the call center...everything.
"Colombo on a binder" could have solved this crime." she
said. But nothing was done.
Jeff says that "It seems that everyone
involved wanted to blame this on everyone else.
All the credit card companies and all the law
enforcement agencies had some different story - some
reason why "they" could not be the people to investigate
this crime. Why do we pay Merchant Fees? Why
do we pay Federal or local taxes for police? This is not
something that any of us could believe. Sure we
believe this type of fraud is possible, but it is almost
more of a crime that there was no one who would even
bother to investigate this for us" he exclaims.
LAST RESORT - INSURANCE TO
THE RESCUE ???
Fraud Investigator Ethan Johnson
goes on to say that "Although we were taken for
a large amount of money in this scam, at least
we thought we has insurance to cover it.
At least that's what the law enforcement
agencies kept telling us." However it
turns out that nothing could be further from the
Upon further investigation, and
numerous days and hours of calls with the
"Internet Fraud Insurance Company" whose policy
was touted to us as "the best thing since sliced
bread"......turns out that the insurance policy
did not cover "victims of a scam".
"What?", says Mr. Baxter. "How can you
sell an Internet Fraud Policy and specifically
exclude "victims of a scam" to an Internet
Company? Is this some legal jargon?
Is this also some Insurance Fraud as well?
Oh my god. What the heck do we pay all
these people for anyway?" he exclaimed.
WAS THE "BOTTOM LINE" ?
Line" in this case was that Poolandspa.com was
out the $10,000 in credit card charges.
Poolandspa.com was out over $8000 paid to the
drop-shippers and suppliers of the products.
Poolandspa.com was out the $3000 it paid for the
special "Internet Fraud Protection" insurance
(which they later cancelled) and Poolandspa.com
was out all the merchant fees, chargeback fees
and legal fees that these transactions incurred.
of the story? As Dan Harrison,
Poolandspa.com's founder says, "You know, you
win some and you lose some. You can have
every safeguard in place throughout your
ordering system and supply chain, but there is
always some thieving hacker somewhere, that is
trying to figure out ways to get around such
procedures, 24/7. We still don't know if
this is connected, but the week after we were
informed of this situation, we read in the
newspaper that "The key people involved in
a huge international credit card fraud cartel
were arrested in New York for stealing and using
hundreds of thousands of stolen credit card
numbers to purchase items over the internet."
the same people that scammed Poolandspa.com?
We will probably never know. But at least
some of these thieves were, in fact, captured.
And maybe, just maybe, this will help some other
unsuspecting, respectable pool & spa Internet
Merchants from being ripped off by these
international hackers and thieves in the future.
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