Protect Your Business: “Tire Scam” and How to Spot It

Protect Your Business: “Tire Scam” and How to Spot It

Tire shops and other businesses that sell valuable merchandise and accept phone payments are being targeted by a clever and costly scam. Scammers are using stolen credit card information to place large orders, then using a third party to pick up the goods. The business is left holding the bag—and the loss—when the legitimate cardholder reports the fraud.

Here's how the tire scam works and what you can do to protect yourself.

How the Scam Unfolds

1. The Order: A scammer calls a business, often a tire shop, to place a large order of expensive items. They might claim to be from an out-of-state company to explain why they can't come in person.
2. Remote Payment: The scammer insists on paying with a credit card over the phone. They may try multiple stolen cards, claiming each one has an issue, until one is successfully processed. To seem legitimate, they may even send fake images of a driver's license and credit card.
3. Third-Party Pickup: The scammer arranges for a "driver" or "business associate" to pick up the items. This prevents the business from verifying the cardholder in person. The tires are often picked up by an unsuspecting rideshare driver or tow truck service.
4. The Chargeback: Once the tires are gone, the real owner of the stolen credit card reports the fraudulent charge. The bank then issues a chargeback, and the business is responsible for the lost merchandise and the cost of the tires.

Keep an eye out for these warning signs:

• An unusually large or sudden order.
• The customer is in a rush to pick up the items.
• All communication is remote (phone, email, text), and the cardholder never appears in person.
• The buyer insists on a third party for pickup.
• The customer becomes aggressive or threatening when you ask for more information.
• They offer multiple credit cards with different billing information.
• The purchase doesn't include installation.
• They want the tires shipped to an unusual address, like an apartment.

How to Protect Your Business

• Insist on In-Person Verification: For large purchases, require the cardholder to be present with a matching photo ID. A legitimate customer will understand this.
• Refuse Third-Party Pickups: Create a strict policy against allowing a third party to collect merchandise for over-the-phone orders.
• Trust Your Gut: If something feels wrong, it probably is. You have the right to refuse a sale if you suspect fraud.
• Educate Your Staff: Make sure all employees are aware of this scam and know the red flags.
• Demand a Secure Payment Method: For phone orders, consider more secure options like a digital signature or an electronic funds transfer (ACH) for known customers.
• Verify the Business: If the customer claims to be from a company, verify the business’s information and reputation online.
• Call the Credit Card Company: If you process a phone order, call the credit card company directly to verify the charge is legitimate.

This scam is happening all along the East Coast and as far away as Texas. By staying vigilant and implementing these protective measures, you can safeguard your business from this costly fraud.