Consumer financing is an important tool in a flooring retailer's arsenal, however, retailers must take precautions to protect their businesses against fraud. Michael Barrows, general manager of Atlanta Flooring Design Centers in Suwanee, Georgia, shares his experience dealing with cases of customer fraud that could have cost the retail operation nearly $30,000 and other retail stores in his county more than $100,000. 

This is a reminder for all of us that utilize finance options for our customers that there are pitfalls. This sequence of events took place in our outlet location between mid-February and March of 2023.

On February 21, 2023, a gentleman entered our store to purchase material for a do-it-yourself (DIY) project and wanted to utilize pre-approved financing and had information needed to process, as well as a valid Georgia driver's license. It was in the amount of $14,475.42.

On March 1, 2023, a young lady entered our store to purchase material for a DIY project and wanted to utilize pre-approved financing. She had all the required info needed to process the transaction, as well as a valid Georgia license. It was in the amount of $13,640.46.

Early on March 1, we received notice from the finance company that the gentleman purchasing was not who he claimed to be and the license was a fake. At that time, the driver was here to pick up material for another customer and our employees noticed he was the same delivery person. It rang some bells, but he had already left. The same day the first customer called us and stated he needed some more material. We thought we had them. We notified the police and the finance company fraud dept. It was kind of cool we had our own sting operation. Unfortunately, he only sent a driver this time to pick up the material, and he did not appear himself. The police had nothing on the driver, as he was sent to pick it up and deliver to a local address, so he was released after some questioning. 

A police report was written, information was sent to the fraud department of the finance company, and we also notified our manufacturer partner. We took the initiative to call around to some other dealers in the area and warn them, and sure enough, we were too late—they had also been duped. The numbers, including ours, were over $100,000, and we believe it was the same duo who committed the crimes.

The police stated there was nothing they could do. The finance company requested the information we had on paper and stated they would review. I never got another call from them on this issue. We have cameras, so we had good photos of fraudsters, showing them signing for the order and picking up the materials. No one from the bank requested the photos. 

We received a letter from the finance company notifying us that the amounts would be deducted from our bank account, but it was fraud and we sent everything they needed. I called, and the bank's response was, “Did you not read your contract? It states that you are responsible for all fraudulent charges.”  

Sure enough, the contract states: “Not withstanding subparagraph 9(a)(i), you agree that you are responsible for all transaction(s) that we deem, in our sole discretion, to be fraudulent and that we may reject or revoke acceptance of any invoice containing such transactions."

We need to use financing, but we need to be diligent—especially on material-only orders. We must verify and verify again the ID and whom they say they are.