Fraud Risks

• Chargeback Fraud
  • Customers disputing charges after services have been rendered.
• Identity Theft
  • Use of stolen payment information for expensive installations or repairs.
• Friendly Fraud
  • Clients claiming dissatisfaction to obtain refunds despite satisfactory service.
• Employee Fraud
  • Staff misappropriating funds or offering unauthorized discounts.
• Invoice Manipulation
  • Altering service invoices to overcharge customers or underreport income.

Regulatory Challenges

• PCI DSS Compliance
  • Ensuring secure handling of payment card data.
• Licensing and Certification
  • Compliance with state and local licensing requirements for contractors.
• Consumer Protection Laws
  • Transparent disclosure of services, pricing, and warranty terms.
• Environmental Regulations
  • Proper disposal of hazardous materials and adherence to emissions standards.
• Data Protection Laws
  • Compliance with GDPR, CCPA, and other privacy regulations.

Chargeback Triggers

• Service Dissatisfaction
  • Claims that services were not performed adequately or as agreed.
• Unauthorized Transactions
  • Charges not recognized by the cardholder.
• Billing Errors
  • Incorrect charges, duplicate transactions, or hidden fees.
• Non-Delivery of Services
  • Scheduled services not performed, leading to disputes.
• Miscommunication
  • Confusion over estimates, final pricing, or scope of work.

‍

High-Value Transactions from New Clients

• Significant payments without prior business history.

Multiple Payments in Short Succession

• Rapid transactions using the same or different payment methods.

Mismatch in Customer Information

• Discrepancies between billing details and service locations.

Overpayments Followed by Refund Requests

• Clients overpaying and requesting refunds to different accounts.

Unusual Payment Methods

• Requests to use multiple cards or untraceable payment forms.

‍

Business Verification

• Confirm valid contractor licenses and certifications.
• Verify physical business address and contact information.
• Check compliance with industry regulations and safety standards.
• Review the company's history, years in operation, and reputation.

Financial Assessment

• Review financial statements for revenue stability and profitability.
• Analyze average transaction amounts and processing volumes.
• Assess the impact of seasonal demand on cash flow.

Risk Evaluation

• Examine historical chargeback ratios and reasons.
• Assess fraud prevention measures and security protocols.
• Review policies for estimates, contracts, and dispute resolution.

Policy Review

• Ensure clear terms and conditions for services and pricing.
• Verify that warranty, refund, and cancellation policies are transparent.
• Evaluate data protection and privacy policies for compliance.

Technology Assessment

• Confirm the use of secure, up-to-date payment processing systems.
• Ensure mobile payment solutions are PCI DSS compliant.
• Verify implementation of encryption and tokenization for data protection.

Reputation Analysis

• Check online reviews and ratings on platforms like Yelp, Google, and industry-specific sites.
• Investigate any history of regulatory violations or legal issues.
• Assess customer satisfaction and complaint resolution effectiveness.

‍

• Spike in Chargebacks After Major Projects
  • Increased disputes following large installations, possibly due to service issues or fraud.
• Employee Misconduct
  • Staff offering unauthorized discounts or diverting funds for personal gain.
• Unusual Payment Requests
  • Clients insisting on paying more than the quoted amount and requesting refunds.
• Discrepancies in Service Documentation
  • Inconsistent records between work orders and billing statements.
• Multiple Complaints About Non-Delivery
  • Frequent reports of services not rendered despite payments made.

‍

Business Operations

• What specific services do you offer (heating, plumbing, air conditioning, or comprehensive HVAC)?
• How long have you been operating in the contracting industry?
• Do you serve residential, commercial, or both types of clients?

Payment Processing Methods

• What payment options do you accept?
• Do you offer financing or installment plans for large projects?
• How do you handle payments collected at customer locations?

Fraud Prevention Measures

• What security protocols are in place to protect payment data?
• Do you utilize any fraud detection tools or services?
• How do you verify customer identities, especially for high-value transactions?

Regulatory Compliance

• Are you compliant with PCI DSS and data protection regulations?
• How do you ensure adherence to licensing and safety laws?
• Do you have procedures for proper disposal of hazardous materials?

Refund and Cancellation Policies

• What is your policy on project cancellations and refunds?
• How are these policies communicated to customers?
• Do you provide written estimates and contracts before starting work?

Customer Service

• What channels do you provide for client support and inquiries?
• What is your average response time for resolving issues?
• How do you handle complaints regarding services or billing?

‍

Transaction Monitoring

• Implement real-time alerts for suspicious activities.
• Regularly review transaction reports for anomalies or patterns indicative of fraud.
• Monitor high-value transactions and frequent refund requests.

Compliance Checks

• Ensure continuous adherence to PCI DSS and industry regulations.
• Stay updated on changes in licensing requirements and implement necessary adjustments.
• Conduct regular audits of payment systems and data security measures.

Security Updates

• Keep systems and software up to date with security patches.
• Implement advanced security features like encryption, tokenization, and secure mobile payment solutions.
• Train staff on the latest cybersecurity practices and data protection policies.

Merchant Communication

• Maintain open dialogue regarding changes in business operations or services offered.
• Provide resources and support for fraud prevention and compliance.
• Encourage reporting of any suspicious activities or security concerns.

Risk Assessment Adjustments

• Reevaluate risk parameters based on changes in transaction volumes or patterns.
• Update underwriting policies as necessary to reflect current risks.
• Monitor seasonal trends that may affect demand and transaction activity.

Customer Feedback Analysis

• Monitor reviews and feedback on social media and review platforms.
• Address negative feedback promptly to improve client satisfaction.
• Use feedback to identify potential areas of risk or concern.

‍