Small business owners defrauded, then left by banks to take $23K loss

When a $23,000 order for food truck equipment came in to Brigitte and Dan Loik's struggling restaurant equipment business in June, the couple hoped it was a sign the tough times were turning around.

The Burnaby, B.C., business was struggling to stay afloat during the pandemic.

The customer called himself Barry Alard, and had the identification and Visa card to match. Over the next week and a half, he came in several times to pick up parts of the order and pay for them.

But when that order turned out to be credit card fraud, the couple says they were hung out to dry twice: once by the fraudster who drove off with the goods, then by the banks.

"It just blows my mind that they can do this to us," Brigitte told Go Public. "Why is this on me?"

Each time, Brigitte says she did everything required under the bank's rules: checked the man's identification and signature against the card and made sure he used the chip and PIN.

She also got authorization codes approving all of the transactions. But by the end of July, Chase Bank, which handled the Loiks' credit card transactions, had pulled $23,032.80 out of their business account without warning.

The bank said the legitimate cardholder was claiming fraud and that the Loiks were on the hook for the money because no chip and PIN was used in the transactions.

"None of it makes sense," Brigitte said. "I was standing about three feet away and saw him physically put the card into the machine … He did enter a PIN and then he was standing there waiting for it to be approved. I swear by the life of my mother, and I would swear on it in court."

Bank fraud expert Vanessa lafolla says she's surprised Chase went after the Loiks "in such a strenuous way."

The former bank teller turned fraud prevention researcher at St. Mary's University in Halifax says, despite what most banks say, no system is foolproof.

In this case, she said, "what you likely have is a spoofed card or an otherwise fraudulent card that has been created to specifically defraud merchants … there's really no way for the merchants to protect themselves from something like that."

The Loiks tried for months to resolve the issue themselves. 

After Go Public contacted Chase, the bank initially offered to return $5,000 as a "goodwill gesture," saying it had reviewed the account and understood "the challenges the chargebacks have caused."