Square, a payment processing company that has recently filed paperwork to go public, has been scammed out of millions by a Nebraska woman who sold bogus discounted travel vouchers under her company named Creative Creations. The scam had cost Square losses for the first half of 2015, and the Wall Street indicated that it "raised questions" about the payment processing company's ability to prevent fraudulent activities.
According to reports, the person responsible for scamming Square out of millions is a 30-year old Nebraska woman who goes by the name of Patricia Urbanovsky. Under the name of Creative Creations, she had sold bogus discounted travel vouchers. Buyers had demanded refunds from Urbanovsky's company but were only ignored.
The scam had left Square responsible, since the company is more often than not responsible for chargebacks to set things straight with buyers who have been victims of fradulent activities. Reports say that Square had processed over USD $7 million in card payments from Urbanovsky's company. The company told Omaha police that it was out USD $2.8 million in chargebacks, or payments that have been refunded to customers who have complained and disputed the charges on their accounts. There have been over 1,500 customers that fell for the scam, and both the IRS and the FBI are currently on the case.
Steven Lefler, Urbanovsky's lawyer, had spoken to BuzzFeed News, saying that it is highly unlikely that they will be able to pay the victims of the scam back. "I have been asked that from creditors, attorney generals, to better business bureaus. If there's money, we'll pay everybody back, but I don't think there will be any money," he said.
The loss rate of Square from transactions is better than rivals such as PayPal, in which transaction and loss rate spell for 0.27 percent of the total payment volume from the last three months that ended in June this year. As such, it would not be likely that the company will be scammed like this as often.
