Ottawa BBQ business out thousands after customer wins disputed credit card refund

An Ottawa business was targeted by a “friendly fraud,” when customers knowingly or mistakenly refute legitimate purchases with their credit card company.

An Ottawa barbecue retailer says it lost thousands of dollars on a high-end grill after a customer disputed the charge and received a full refund, despite proof the product was delivered.

“The customer called our delivery company to say that they were stepping out to pick up their daughter and asked if the barbecue could be left at the back gate of the home and that’s what they did,” said Chuck Shabsove, president of Capital BBQ.

Despite a receipt, proof of delivery, even a registered warranty showing the customer’s name and serial number, the customer claimed he never received the order.

“He registered the grill and so we have definite proof that he got the product, the serial number matches the invoice, and he denies that he got it, and the credit card company sided with him,” said Shabsove.

In the end, the credit card company refunded the customer. Shabsove lost the grill and around $3,000.

“Our margins on barbecue’s aren’t great so we probably have to sell three or four just to recoup the loss that we had on the fraudulent transaction,” he said.

It’s part of what experts call “friendly fraud,” when a customer knowingly or mistakenly refutes a legitimate purchase with their credit card company. It’s a growing concern for small businesses across Canada.

When false claims happen, it’s often the business that gets burned, winning only 20 to 30 per cent of chargeback disputes, according to Clearly Payments.

“There are some different types of payment technologies that are coming onto the market and perhaps that will start to lessen the risks to merchants but at the moment, this does feel like a highly risky situation in many cases,” said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).

CFIB says two thirds of small business experienced fraud in the past three years with many pointing to chargebacks as a growing concern.

A store in the Greater Toronto Area called Barbecues Galore tells CTV News it lost $42,000 in just six weeks, losses they believe are linked to fraudulent chargebacks.

“The fact that this is happening more and more often should be sending alarm bells to the credit card industry and the government that something needs to change,” said Kelly.

Shabsove is filing a report with Ottawa Police Service, but he says it’s not just money he’s losing.

“If a merchant has too many chargebacks, their rates will go up and you’re flagged as a high-risk merchant. It’s ridiculous,” he said.

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