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Friday, September 10, 2010

Credit Card Companies Are Not Your Friends

Wow, that is a blanket and bald statement. However I have a good reason for feeling that way. The credit card companies are currently involved in trying to convince people they are the good guys out to help you. I wonder how much they have actually changed.

The basis for my cynicism occurred about 10 years ago. The Internet was still fairly new and my business got a call from someone in NY who saw our web site. The caller spent a couple of hours on the phone with one of my sales reps, configuring several laptop proposals. After two days of emails back and forth the caller said that he wished to purchase 8 laptops. My rep came to me and asked how he could do a transaction that large over the phone. I told him to get all, note ALL, of the necessary credit card information and then call the credit card company. I instructed him to not only get the transaction authorized, I told him to go to the credit card company’s fraud department and verify the transaction with them as well.

My sales rep jumped through every hoop the card company threw out. After he had approval, we ordered the laptops and shipped them. Our account was credited and we thought the transaction was final.

Imagine our surprise when two months later our credit card account was slammed with an $8000.00 reversal. They just plucked out eight grand and said one of the two credit cards the NY customer used was invalid. After much wailing and gnashing of teeth to absolutely no avail we called the cops. The cops locally said they would contact the cops in the community where the laptops were shipped. Of course, the address was vacant. The local cops said they couldn’t do anything, the NY cops said they couldn’t do anything and the credit card company said, tsk, tsk you lose.

The only good but still confusing fact was that one of the two cards the NY customer used was just fine, so one half of the transaction went through. We did find out that the NY customer had changed his address from a CA address to the NY address the week before the transaction and changed it back the week after the transaction. Oddly enough the credit card company and the cops couldn’t use that fact to pursue the crook.

Who lost in this deal? The credit card company didn’t lose a single dime, in spite of their assurances to us that we were covered, we weren’t. A small business taking an $8000.00 hit is hurt. I realize to the big guys, $8k is chump change, but not to a small business.

My caveat to any of you small business owners that thinks you are protected by your credit card company when you get an authorization, THINK AGAIN.

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