Jan 23, 2014
What is the scam?
There is currently a scam targeting nonprofit organizations, and anyone involved with accepting or processing credit card donations should be made aware. This scam involves a request from a fraudster posing as a donor to refund all or a portion of a credit card donation to a completely different card than what was originally used. These scenarios should be treated as highly suspicious and should be handled with caution.
How does it work?
- A donation is made by credit card to a nonprofit organization using a stolen credit card, often for a large amount such as $3,300 or $2,500.
- The fraudster (posing as a donor) reaches out to the nonprofit by phone or email with an emotional story, requesting that all or part of the original donation be refunded to a different credit card. For example, a refund of $3,000 may be requested on the original donation amount of $3,300. The fraudster may claim they only intended to donate $300 and the $3,300 was donated in error.
- The nonprofit organization agrees to issue the refund, consenting to the fraudster’s request for the refund to be allocated to a different credit card or issued by check.
- The nonprofit organization receives a chargeback for the original transaction because it was made using a stolen credit card. The fraudster succeeds in illegally acquiring $3,000 from the nonprofit organization. There is little recourse for the nonprofit organization in this scenario.
How can it be prevented?
Refunds should only be made to the original method of payment and should never be processed to a different card than the original transaction. Also, refunds should never be paid by check for a credit card transaction.
Nonprofit staff should be highly aware and proceed with caution if they come across any scenario where a suspicious refund request is made. If you have questions about situations you’ve encountered, the iATS Customer Care team is available to assist.