Sydney eateries fall victim to online voucher scam

Hospitality businesses are being targeted by an online voucher scam that is leaving them thousands of dollars out of pocket.

At family-owned Korean restaurant Soul Dining, 27 of 38 digital vouchers redeemed since April have been reported as fraudulent.

The Sydney CBD operator has had to foot the bill for $2400 worth of meals and expect the loss to be higher.

Owners Daero Lee and Illa Kim had noticed more foot traffic over the past four months, with more than usual walk-in diners paying for meals with vouchers purchased on the restaurant’s website or the Give and Get Local platform hosted by Square.

Clicks on their voucher site rose 600 per cent, however the owners only noticed the issues when charge disputes began.

The scam involves customers fraudulently claiming their credit cards were compromised to purchase vouchers worth up to $500. These customers then dispute the charges with their financial institutions, leading to chargebacks that are often approved.

19 vouchers are now under investigation.

“The pattern is always the same, they buy a voucher online, come into the restaurant the same or next day, and they’re a walk-in customer so we don’t have any record of them [to rely on during the dispute process],” Kim told Good Food.

“It’s really serious for us … Small businesses really rely on that money, and they’re the ones who are most vulnerable.”

The scam could be either first-party or third-party credit card fraud. In the first, the cardholder buys vouchers and later claims the card was stolen. In the second, someone else uses a stolen card to make the purchase. Both are common, regardless of the POS software. ABS data shows Australians lost $2.2 billion to card fraud last year, and Visa found nine out of 10 businesses have faced first-party fraud.

Kim has reported the scam to NSW police and refunded $2,000 in unused vouchers. This is a significant loss for the restaurant, especially during the current economic challenges facing the hospitality industry. One in 13 businesses may close in the next eight months.

Another victim is Lokha Viet Fusion in Alexandria, which was hit with a $145 chargeback for two digital vouchers.

Co-owner Kim Matada recalled the incident, saying a couple arrived shortly before the restaurant's 3pm closing, presenting a voucher. They claimed to be local residents with a penchant for fusion Vietnamese cuisine and ordered two bowls of soup, two banh mi, and a taco. When it came time to pay, the couple discovered their initial e-voucher was insufficient. They promptly purchased another through the Give and Get Local platform.

“I was thinking, it’s not normal, right? People come in and they pay us cash, or card, why e-gift card? But at the end of the day, it’s just money, so we accepted it,” Matada told Good Food.

“One week later, Square sent us an email saying they’d received two disputes regarding those two transactions … and straight away they took the money out of our linked bank account … we had zero control.”

Darlinghurst sandwich shop Lenny Briskets noted two suspicious online transactions amounting to $100.

Co-owner Deborah Wiseman told Good Food, “It just seemed strange to purchase a gift card, and then use that gift card to purchase an order.”

Soul Dining and Lokha Viet Fusion have now switched off online vouchers.

Jonathan Jackson, 16^th September 2024