Furniture Merchant Accounts. Are They Ripe For Fraud?Furniture Merchant Accounts are exploding like its Defcon 1. This may be an exaggeration, as the world is not coming to an end; however, normal furniture store merchant accounts seem to be on their last legs. Big banks are not only declining new accounts; but also closing existing merchant accounts if the merchant’s financials show a struggling business. Even some 3rd party processors have added the Furniture store merchant to the “Unacceptable Merchant” list. Why? Because Furniture stores can look like “business as usual” way past the point when they pull the Bankruptcy Protection Law out of their dresser or bureau.
Here is a typical but grim example:A nationally known furniture store chain declared bankruptcy at one of their stores. The store had been an individual franchise and wasn’t connected to the chain it turns out. Before declaring Bankruptcy, the store received $700,000 in MasterCard and VISA orders. However, the store grabbed the money and never delivered the furniture to the purchasers. 100% of the cardholders charged back the $700,000. Despite the possible out right fraud, the merchant is protected with a formally declared bankruptcy and the merchant account provider or bank eats the $700K.
Here’s another example: A three location furniture store chain open and accepting credit cards for four years, decided it was time to close its doors. Since furniture stores often deliver 3-6 weeks after a cardholder furniture order, everything looked fine. The store pulled in $390,000 in credit card orders and closed their doors declaring bankruptcy the next day. None of the furniture ordered was delivered to cardholders. It was an outright criminal action. All the cardholders charged back Again. So far, the processor or bank has eaten the $390K. Sure, you can pursue Personal Guarantees if you can find the owners. In this last case, the owner had sold his house months before in preparation of leaving and really didn’t have any assets. Who knows where the $390K went? Proving fraud is a lot harder than it appears. You also have to find the perpetrators and they are usually hiding. So, if you need to be approved for a merchant account as a Furniture merchant, remember the following: 1. Be prepared to pay a higher rate 2. Be prepared to show your financials when asked 3. Sometime reserves might be required 4. Maintain great credit 5. Maintain good communication with the processor To acquire a merchant account for your furniture business, click on:
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