Last week, the Santa Barbara Police Department warned local stores of a new credit card scam.
Now a victim is speaking out.
Vincent Karapetian, owner of the Sofa U Love furniture store chain, says he lost around $15,000 when a seller used a force authorization scam to make a fraudulent purchase.
According to an SBPD report on the scam, credit card authorization code is an alphanumeric password that authorizes a purchase.
“A force authorization may be required for times when a merchant’s payment terminal cannot connect to the network or the amount of the sale is above a predetermined amount,” read the report.
The authorization code allows a merchant to force the transaction through by manually entering a previously obtained authorization code.
Mr. Karapetian’s store manager Marlena Diaz said false charges took place on July 11 at their location on State Street in Santa Barbara.
Ms. Diaz said the scammer purchased a number of showroom pieces including two sectional sofas, coffee tables, pillows and an ottoman. The scammer claimed he lived in Los Angeles and was purchasing the furniture for his daughter who had just bought a house.
“It’s all gone,” said Ms. Diaz who explained she never met the scammer, but he hired a moving crew to remove the items from the store.
She said when the buyer attempted to pay for the items with his credit card, it got declined. He offered to put her on the phone with his credit card company, but Ms. Diaz said as an extra precaution she called her own vendor services company and they authorized the purchase with a force authorization code.
When the scammer’s credit card company issued a chargeback on the purchase days later, they claimed that force authorization code was not valid.
“It’s frustrating to know that we took that extra step…and we still got scammed,” said Ms. Diaz who explained that the funds are currently being held by the credit card company pending an investigation.
“We have a lot of high-end customers,” said Mr. Karapetian who noted Sofa U Love has locations in Thousand Oaks, Woodland Hills, Hollywood and Studio City, among others.
“We want to be able to provide that high-end service for our customers. So, an order that big didn’t immediately raise suspicion. I know I could have done more, when the chargeback went through and I Googled his name I thought ‘On no, we’ve been scammed,’” said Mr. Karapetian who continued that he will continue to provide large orders when possible.
“Maybe we could do something like address verification something along those lines…but at the end of the day, it is what it is.”
SBPD officials urge business owners to never enter an authorization code given by a cardholder to force a transaction and always contact the cardholder’s issuing bank yourself to obtain the valid code.
They also suggest asking for identification for expensive transactions made over the phone and not handing a payment terminal to a customer because they may enter the fraudulent authorization code themselves.