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How Small Businesses Can Protect Themselves Against the Deceitful Practice of SlammingJuly 19, 2019
You may be familiar with the term slamming – this is the practice of changing a customer’s service provider without his or her knowledge or agreement. Back in the 1980s, it was a common practice in the telecom industry. Unscrupulous telecom providers would inform AT&T that a customer wished to cancel their service and switch to a new carrier. However, this intimation to AT&T was provided without the knowledge of the customer in question. The result was that the unethical telecom provider gained a new customer, but the consumer himself was left to deal with multiple bills for the same service.
Merchant Account Slamming in the Credit Card Processing Industry
Today, a similar kind of scam is carried out in the credit card processing industry. An unscrupulous agent calls the merchant and tells him that there is a problem with his payment processing equipment. The slammer can make any excuse, common ones being that the equipment is out-of-date, non-compliant with PCI standards, and/or incompatible with a new feature rolled out by the service provider.
To avoid detection, the unethical agent claims to be calling from “merchant services,” “the processing company,” “the bank,” “Visa/MasterCard,” or some other random entity. He offers to send a salesperson to fix the problem for free. What really ensues is that the representative from the unethical agent reprograms the merchant’s terminal so that it processes payment through the slammer’s company instead of the original service provider’s.
Once the terminal is reprogrammed, the merchant automatically starts paying processing fees to the slammer’s company. Unfortunately, this can be in violation of the contract that the merchant had entered into with the original processing company. Most such agreements state that if the merchant processes payments through another company, he is liable to pay penalties. Add to this the fact that the merchant is still being charged monthly fees under his former processing agreement, and you can imagine the kind of trouble that he must now face.
What Can a Merchant Do to Avoid Being a Victim of Slamming?
Perhaps the worst part is that the merchant’s original service provider may not be willing to listen to his explanations and may be unsympathetic towards the fact that he has been victimized. Thus, every merchant should exercise some precautions to ensure that he never becomes prey to the practice of slamming.
Firstly, make sure you confirm the identity of the person who calls claiming to be a representative of your payment processing service provider. Do not trust anyone who is unable to state the name of your provider company and account manager.
Secondly, don’t get carried away by jargon such as non-PCI compliant, Durbin law regulations, etc. Don’t believe any claims made by the caller that by having your terminal updated, you would qualify for lower rates. Instead, hang up on that call and independently dial your service provider’s number to understand if there are any changes you should know about.
Slammers are adept at sending incomplete paperwork that effectively hides their identity, and at the same time binds you to the new agreement. So never agree to a change of service over the phone. Ignore all offers to send a representative over to reprogram your terminal or offers to fax you some paperwork to ship a new terminal to you - unless you are really sure that it is your original service provider.
Finally, in case you receive any dubious phone calls, make sure you report the number to your state’s attorney general so that action can be taken against them.
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