Selling gift cards, memberships, and packages online, while convenient, can open your business to fraudulent activity. This is an unfortunate, universal reality for all digital payment processing platforms.
Mangomint's payment processing is powered by Stripe, one of the most trusted and secure payment processors available. Every card entered into the system—whether manually or online—runs through security checks before it can be charged or stored. However, no payment processor can guarantee full protection from fraud in every scenario.
Below are some tips on how you and your team can protect your revenue from potential scams.
Four Common Types of Fraud
Stolen Card Use
This happens when someone uses a stolen credit card to purchase a gift card, place a deposit, or add a card on file. Because the person committing fraud has the necessary information to pass security checks, the transaction may not be flagged initially. You may not even know the card was stolen until the dispute arrives.
Friendly Fraud
Difficult to detect, this type of fraud happens when a real customer makes a purchase or receives a service using their own payment method, then later disputes the charge with their bank, claiming it was unauthorized.
Account Takeover
This occurs when someone gains unauthorized access to a legitimate account. While rare, it does happen. This could involve a hacked payment processing account with a different bank account added, or potentially unauthorized use of another person's membership or package credits.
Refund Scams
If someone pushes for a credit card refund through an alternative method—Venmo, Zelle, or any payment method other than the original credit card—this is a red flag. If you don’t issue a refund to the original credit card, they can file a claim with their credit card company stating they never received the refund, even if you issued one through an alternative method. We strongly recommend refunding to the original payment method.
Note: Fraud attempts typically increase during the holiday season. Stay extra vigilant during these high-traffic periods.
Red Flags to Watch Out For
Suspicious contact information: Temporary email services, nonsensical addresses, or emails that don't match the customer's name
Incomplete or unusual names: Single letters, clear fake names, or names that don't match payment information
Immediate redemption attempts: Gift cards or packages purchased and redeemed the same day or the next day
Requests for alternative refund methods: Any push to refund through Venmo, Zelle, or other services instead of the original payment method
Multi-party fraud scenarios: When a legitimate customer allows someone else to use their payment method for services, then disputes the charge, claiming they never visited your business
Best Practices for Protecting Your Revenue
Use Internal Notifications: Turning on internal notifications for all online sales keeps you aware of transactions as they occur. If something’s wrong, you’ll know about it right away.
Refund ONLY to the Original Payment Method: No Venmo. No Zelle. No exceptions. This is non-negotiable!
Review Immediate Redemptions Carefully: Typically, legitimate customers don't purchase and immediately use gift cards or packages. While not always an issue, these instances could indicate a problem.
Verify Customer Information: Check that names, emails, and payment details appear legitimate before fulfilling high-value orders. If the contact information doesn’t match the payment details or the mailing address seems fake, you may need to investigate further in order to verify.
Educate Yourself and Your Team: Understanding how fraud occurs makes you better equipped to spot it before it impacts your business. It’s always a good idea to stay informed about the latest fraud schemes in your area, and to train your team on what to look for as well.
Consider Your Risk Tolerance: Mangomint offers cards-on-file, Client Self-Checkout, and online sales for gift cards, memberships, and packages. These are optional ways to streamline your client experience, but they should only be used if you’re comfortable with the risk involved. Evaluate which online features make sense for your business and choose the ones that balance convenience with your comfort level.
The reality is that any business accepting digital transactions faces an inherent risk. No system can eliminate fraud entirely, but awareness and vigilance can significantly reduce your exposure.
Stay alert, trust your instincts, and don't hesitate to question transactions that seem off. Protecting your revenue starts with recognizing the signs.
And, as a Mangomint customer, if you ever need a second opinion on a red flag, you can reach out to our Support team anytime. We can help you assess the situation and provide guidance as needed.
Clara Winter is the Copywriter at Mangomint. She uses her Psychology degree, UX design training, and digital marketing expertise to craft thoughtful, human-centered content that helps salon and spa owners grow their businesses. Fun fact: Clara knows her esthetician’s coffee order by heart and brings it to every appointment.
