Three years after achieving their dream of owning a farm close to their childhood home, Matt Penney and his partner were scammed out of $20,000, jeopardizing their business growth plans. Penney expressed how devastating the situation was, stating that it not only impacted their finances but also affected every aspect of their business operations.
In April, Pengrove Farms, known for selling high-quality locally sourced meat and regional products, was contacted by a purported catering business. Penney mentioned that initially, everything seemed normal with no apparent red flags. However, issues arose during a subsequent order when the payment from the company did not go through, highlighting the vulnerability of small Quebec businesses to fraudulent activities.
By mid-June, Square, the payment processing platform used by the farm, alerted the family that all transactions with the caterers, totaling approximately $20,000, were fraudulent. The family was then informed that they were responsible for reimbursing Square for the losses, putting a significant strain on their finances.
Alana Cosgrove, co-owner of Pengrove Farms, emphasized the significant impact of losing $20,000 on their operations, stating that despite the setback, they still needed to pay their suppliers to sustain their business.
The couple revealed that the scammers had built a rapport with them, engaging in conversations and even making personal visits to pick up orders. This sense of trust was exploited by the fraudsters, leading to the substantial financial loss suffered by the farm.
In Quebec, payment platform sites lack the same regulatory protections as banks or insurance companies, leaving merchants like Pengrove Farms accountable for chargeback liabilities. Frédérique Lissoir, a banking law professor, highlighted the gap in protections for businesses under the Money-Services Businesses Act in Quebec.
Lissoir pointed out that unlike other jurisdictions such as the European Union or the United Kingdom, Quebec lacks specific legislation to safeguard businesses from fraudulent activities like these, leaving merchants vulnerable to losses.
While Square acknowledged the issue of fraudsters targeting small businesses, the responsibility for losses ultimately falls on the merchants in Quebec. Lissoir emphasized the need for policy changes to better protect businesses facing such scams.
Penney underscored the need for enhanced protections for small businesses, noting the stark reality that they are not covered in the same way consumers are, leaving them liable for all losses incurred.