Good Wednesday morning everyone. Have you or your merchant ever been slammed? We’ll come back to this shortly. Yesterday one of my merchants received a call stating they were with his merchant services “escalated accounts department”. After a bit of questioning to the merchant they had his processors name (Graphite Payments) and they were now with “Graphite Payments Escalated Accounts department” and they told him that he was using the wrong terminal and being charged the wrong fees per his SIC Code,and that he needed to fill out a new form to receive his new terminal and agree to new fees. Perhaps you can see where it’s headed already.
Shortly after he received the email with his new paperwork he called me. needless to say, he was smart enough to know it was not from us.
I went to his location and low and behold he was being scammed or the proper term is slammed.
This is the 2nd time on of my merchants have been approached this way. I’ve also seen it one other time with a potential merchant who was locked into three different leasing companies. below are some tips and safe practices so that you can share with your merchants to safe guard them from the slammers.
What is a merchant account slamming scam?
The term “slamming” refers to a deceptive sales practice intended to switch a customer’s service provider without his or her knowledge or consent. This ripoff tactic first popped up in the telecommunications industry in the 1980s, when unethical telecom providers would notify AT&T of a customer’s intention to cancel service and switch carriers without the customer’s permission. This would result in the unethical provider gaining a new customer, but it would also leave that customer dealing with unexpected fees and multiple bills for a single service.
Slamming has since spilled over into the credit card processing industry, but in a different form. Instead of filing a fake cancellation in the name of the merchant, unscrupulous merchant account providers can scam unsuspecting merchants by posing as their current provider and reprogramming their terminals or setting them up in a lease.
So how does merchant account slamming work?
In a credit card processing slamming scam, an unethical agent calls up a merchant and pretends to be that merchant’s current provider. Since it can be difficult to obtain the name of the merchant’s actual provider or sales rep, the agent will usually claim to be a representative from “merchant services,” “the processing company,” “the bank,” “Visa/MasterCard,” or some other vague entity.
The ripoff agent will then inform the merchant that his or her processing equipment is out of date, noncompliant with EMV/PCI standards, or incompatible with a new feature that the company is providing. The ripoff agent may offer to send someone out to “reprogram” or “update” the merchant’s terminal for free, or if by telephone will email a new application and leasing agreement.
By allowing his or her terminal to be reprogrammed or replaced the merchant will start paying processing and leasing fees to the unethical ripoff agent’s company. But the merchant will also still owe the monthly fees under his or her former processing agreement, resulting in double billing.
To make matters worse, the merchant may even be in breach of that original contract. This is because most merchant services agreements include clauses stating that the merchant must not process payments through any other company, often under penalty of harsh termination fees. The merchant may not receive an opportunity to explain the mistake, or worse, the merchant’s original provider may not even care to listen to an explanation.
What can be done to prevent slamming scams?
Avoiding a slamming scam might seem like a matter of simple common sense to some people, but it’s best to educate yourself and your merchants as to keep certain precautionary measures in mind to avoid falling victim to this tactic.
1. Verify the caller’s identity – If a sales rep identifies himself or herself as being with “Visa,” “MasterCard,” “merchant services,” “the bank,” “the processor,” or anything else besides your specific account manager calling from your specific merchant account provider, you should be suspicious. Visa and MasterCard do not directly service merchant accounts.
2. Don’t let jargon confuse you – If a phone representative is trying to convince you that your processing equipment isn’t compliant with PCI standards, the EMV switch, the Durbin law, or “the new regulations,” don’t be fooled. The same rule applies to any claims about how you could be qualifying for lower rates. Hang up and contact your provider on your own to ask them about any changes you should know about.
3. Don’t consent to a change of service over the phone – If the caller offers to schedule a visit to reprogram your terminal, or if they offer to email/ fax you some paperwork to get a new terminal shipped to you, don’t fall for it. Slammers are notorious for sending over incomplete paperwork that obscures their identity while still legally binding you into a new processing agreement.
Report the numbers and stated identities of the callers to your state’s attorney general – Although the credit card processing industry tends to receive very little regulation as a whole, there has been a recent crackdown on companies who misrepresent themselves both over the phone and in their documentation. A pair of lawsuits filed against Merchant Services Direct, LLC (now known as Sphyra) and Northern Leasing Systems indicate that regulators are starting to wise up to deceptive tactics within the industry, meaning that they may want to hear from you about any suspicious phone calls you receive.
Do any of you have any experience with slamming scams?
Let me know by emailing me below.
At Graphite Payments we offer true pricing for your merchants with no hidden fees and Touch screen POS that are free to place. We offer our sales agents one of the best compensation packages in the industry.
Also,we NEVER, EVER trick or cheat a merchant into a lease.
For more information about joining Graphite Payments and growing your portfolio please feel free to contact me
at David@GraphitePayments.com or 888-228-1011 ext 935 to discuss partnering with Graphite Payments.
Happy Selling,
David
“You are your greatest asset. Put your time, effort and money into training, grooming, and encouraging your greatest asset”
Tom Hopkins
Payment Lynx Daily 