Credit Card Fraud - Restaurants/Clubs

Like you, I keep copies of receipts when I tip at restaurants. I then go back and cross reference the credit card statements. I have never had an instance (yet) where the restaurant changed the tip to a higher amount. I assume management and not the individual servers enter in the tip amounts from the receipts at many of these places so as to avoid constant headaches with the credit card companies.

What I am starting to see more are restaurants that will charge you a 3-3.5% service charge when you pay with a credit card versus cash. They are putting the service fee the credit cards charge the restaurant, directly onto the customer.

The only time I had a bogus charge put on my credit card was when I used it to make a purchase from a vending machine. It wasn't much, but nonetheless it was bogus. Most likely it would go unnoticed or people wouldn't remember the cost as they were travelling through the area.

@Sinclair, I think the interbank rate for most businesses is much lower than 3.5%, if they’re charging that much as a fee for using your card they are ripping you off. BTW when I was in business before I retired my fee for MC, Visa, & Discover was .560% a bit more than a half point, and I never had any problems taking plastic it actually increased my sales by over 33% I looked at it as a win/win.

Eh I think these days it rare to see a business getting charged less than 3% for a card swipe. I know some companies offer lower introductory rates for a few months, some maybe even up to a year but IME…

^ Swipe fees depend upon volume if your average sale is high and your total sales volume is over certain minimums you can shop your bank and pay much less than 3% per swipe

If you have a smaller business you can join several different associations like The National Federation of Independent Businesses, or Trade Associations as well as your local Chamber of Commerce and get better rates than the 3% you’re talking about.

I pay 2.4%, but I don't do enough volume to lower it, so it's just a cost of doing business.

I'm surprised you guys are paying 2.5-3%. I'm pretty sure typical is more like 0.5-1.5 for actual merchant accounts, unless you're talking services like Square/Clover that real small businesses and side hustlers use. Even for high risk customers with a history of charge backs, I'd be surprised to see a rate over 2/2.5 for card present transactions. There is also usually a per-transaction charge, usually .05-.20 kinda thing that applies to pre-auth, auth, and adjustments. So a strip club could do a pre-auth to open a tab, and an adjustment to add a tip or an auth+adjustment for a single purchase, meaning they'd pay the per-transaction cost twice.

Anyway, I've never had issues with fraud on my account after using it at a restaurant or bar. But I do not ever give my card to people who are going to make photo copies of it, along with my drivers license, like is the policy of many strip clubs. I have had issues with fraud as a result of the home depot fiasco where their systems were compromised. I also had issues that I think stemmed from a skimmer at a gas station. In both cases the credit card company paused the charges, did an investigation, and reverted them. The only real hassle for me was having to call in to dispute & wait two days for a replacement card.

I've only had issues with fraud a few times, but always a few dollars extra on the tip, never anything significant. And it's never happened at a SC for me. FWIW, I think SCs are constantly worried about fraud and getting their payment providers yanked, that's why they do things like photocopy your ID. (One SC I was at in FL once had a credit card processor that took your picture when you used it.) In any case, because they don't want to get nixed by Visa, the risk of CC fraud at any given club is low in my opinion. And if it does happen, it's likely going to be a few dollars extra on the tip added by the wait staff, not an enormous fraud.

Here's a fun tip though to prevent fraud from happening. Make your tip add up so that the tens of the total match the cents. For example, say I'm paying a drink bill of $65.50. I'd tip exactly $16.31 on this bill so that the total comes out to $81.81. If the bill was $162.40, I'd tip exactly $32.54, for a total of $194.94.

If you get in this habit, you can quickly and easily scan your CC statement to look for outliers where your cents don't match your tens:

✅$81.81 ✅$194.94 ✅$65.65 ❌$95.05

Since I've been in the habit of tipping like this, I have spotted plenty of cases where a waiter or waitress keyed in the wrong amount, either intentionally or unintentionally. Usually it's not worth battling over a few bucks, but on at least one occasion, I've successfully initiated a dispute over the waiter padding the tip, just to make a point.

Maybe something got past me but I don’t see much out of the ordinary on my statement every month.

When I had the issues with Fraud, it was pretty obvious. The one I think was skimmer related, I had a bunch of local gas stations that I never go to on my statement. The other one was a bunch of online stores that I never shop at, but there were also a few Amazon purchases that were a giant pain in the ass to figure out. Because I do buy a fair amount of shit at Amazon & the way group charges together when they ship them instead of when I order them makes it hard to reconcile.

I've had restaurants inflate their tip 3 times. 1st time I assumed it was an innocent mistake. Second time (same restaurant) it was clearly a recurring pattern. Haven't been back since and I vaguely think they didn't survive covid. Third time, tourist town, they knew I wasn't coming back, added $5 to the tip. Bastards. I've also had one server charge me for a drink I never ordered. Didn't get the itemized bill until it was too late.

In California, for a few years now, restaurants and bars have been adding a 3 or 4% surcharge to cover the high minimum wage forced by some municipalities. Who knows what's happening since the forced $20 minimum wage. I've seen stories of businesses closing or cutting staff.

I've never had tips added to a charge but I've had my credit card hacked 3 times. It's gotten to the point that I check my cards online every morning when I wake up. Doing that, I caught a bogus $20 charge before anything serious could be done.

I am sitting in a restaurant right now finishing dejeuner. The bill just came, and it is 4% more if you pay by credit card.

^ If enough people reduce tip by 4%, servers will leave to work elswwhere, resulting in short-staffing, resulting in lower customer experience, resulting in lower revenue, resulting in restaurant closure.

Credit card fees are a cost of doing business, and should not be passed onto customers as surcharges. I would rather see a 5% increase in menu prices than a 4% surcharge, as a surcharge seems grimy.

And, there is a cost to cash handling, including bank fees and lost cash, as well as increased time to count/reconcile.

If we stop patronizing these businesses that tack on a surcharge for using these products, my bet is that most of these companies will not be profitable and drop these gouging tactics.

Originally the credit card companies had agreements with the merchants that expressly forbid the addition of such a surcharge, and when these credit card firms started the merchants would complain if they were denied access to their services that they would lose business by not having the ability to use these services.

Just a thought if their customers were limited to purchases that they could cover immediately their ability to sell would be limited and their bottom line would be impacted and not in a positive way.