Don’t Sing the Credit Card Blues

If businesses don’t impose controls, policies and procedures over credit card processing and they don’t perform daily and monthly reconciliations, employees with access to the credit card systems could process fictitious or fraudulent refund or credit transactions to their personal credit cards. Learn how to avoid this fraud.

A small medical practice with two physicians and a staff of five found out the importance of regularly reviewing its refund activity when it lost more than $10,000 in unauthorized refunds processed over five years through the practice’s credit card system.

The medical practice hadn’t always accepted credit card payments, so it had to constantly send statements to patients to collect fees. At some point, the physician owners realized that if they offered the ability to pay by credit card, their collections would increase, and the outstanding balance from private-paying patients would decrease – especially if payment was collected up front before treatments were provided.

The practice manager (we’ll call her Meg) implemented a merchant system with swipe terminals and posted signs informing patients that the practice now accepted credit card payments. (A practice manager is similar to an office manager of a non-medical entity.) Many patients began paying their copayments and balances with their credit cards, and collections increased for the owners.