Fraud Alert For ACH Debit Refunds
Cause Inspired Media would like to inform clients to be aware of fraud-like behavior targeting nonprofit organizations.
Using ACH Debit, individuals intending to commit fraud make a payment, then ask for a refund before the transaction has cleared the bank. Merchants will then refund the payment, but only to discover a week later that the ACH Debit has been rejected.
A common way scammers have pulled this off in the past is by donating a larger sum of money, like $10,000. They call the nonprofit to apologize and say they only meant to donate $100. After immediately refunding the difference, organizations find out about ten days later that the original amount is rejected.
To protect against fraudulence, it is recommend that organizations wait ten days after ACH Debit funds have been deposited and “settled” into their account before issuing any refunds.