A Halifax business owner was defrauded. Then she had to pay a penalty for it

In October, Laura MacNutt, a small business owner in Halifax, experienced a devastating blow to her e-commerce store, KingsPIER Vintage. She had made significant sales, totaling thousands of dollars, only to later discover that the transactions were fraudulent. The customers had picked up the items in person, but weeks later, Shopify, the host of her online store, notified her of chargebacks initiated by the credit card owners.

MacNutt, unfamiliar with the concept of chargebacks, was required to provide evidence to Shopify to support her case. Despite submitting security camera footage of the customers picking up the items, she ultimately lost both the merchandise and the income. Shopify not only retained its processing fees but also charged her a $15 fraud fee per transaction, resulting in a total loss of $7,400 for MacNutt.

Unfortunately, MacNutt’s experience is not unique. According to the RCMP, fraud in Nova Scotia is on the rise, with card-not-present fraud being a common tactic used by fraudsters, especially when targeting smaller merchants like MacNutt. Cpl. Mitch Thompson of the Nova Scotia RCMP’s commercial crime section explained that legitimate reasons for chargebacks include damaged goods, services not provided, or stolen credit cards.

Despite reporting the incident to Halifax Regional Police, MacNutt has yet to find a resolution through law enforcement or Shopify. The lack of support from Shopify, which offers chargeback protection as part of its services, has left MacNutt feeling abandoned and vulnerable.

Vanessa Iafolla, a fraud victimization consultant, highlighted the challenges faced by business owners who use e-commerce platforms like Shopify. She emphasized that these intermediaries can leave merchants worse off when fraudulent chargebacks occur, as they end up bearing the financial burden and additional fees associated with the transactions.

Iafolla called for stricter government oversight and increased protection for retailers using e-commerce platforms to prevent such fraudulent activities. She stressed the need for all stakeholders, including Shopify, credit card companies, banks, and policymakers, to work together to combat fraud effectively.

MacNutt echoed these sentiments, expressing her hope for change within the e-commerce industry. She emphasized the importance of retailers being respected and considered by platforms like Shopify to prevent future incidents of fraud. Ultimately, MacNutt’s experience serves as a cautionary tale for small business owners navigating the complex world of online commerce and the risks associated with fraudulent activities.