Three years after fulfilling his aspiration of establishing a farm near his childhood home, Matt Penney and his partner were swindled of $20,000, derailing their business expansion plans. Penney expressed how disheartening the scam was, impacting every aspect of their operations.
In April, Pengrove Farms, known for its top-notch locally sourced meat and regional goods, was contacted by a purported catering company. Despite no apparent warning signs following the initial order, complications arose during the subsequent transaction, raising concerns about the vulnerabilities faced by small businesses in Quebec targeted by scammers.
In mid-June, Square, the payment processing platform utilized by the farm, alerted the family that all transactions with the caterers, totaling $20,000, were fraudulent. Consequently, the family was held accountable for reimbursing Square for the financial loss.
Alana Cosgrove, the co-owner of Pengrove Farms, highlighted the significant impact of losing $20,000 on their business, emphasizing the need to settle outstanding payments to suppliers to sustain operations.
The couple detailed how the fraudsters established a rapport with them through regular communication, even visiting in person to collect their order, which they believed had been fully paid for. This method of building trust before executing the scam was described by Andréanne Bergeron, a criminology professor at L’Université de Montréal, as a sophisticated approach exploiting trust mechanisms.
In Quebec, payment platforms lack the regulations afforded to banks or insurance companies, resulting in merchants bearing the chargeback liability. Frédérique Lissoir, a business law professor at the University of Ottawa, underscored the absence of protections for merchants under Quebec’s Money-Services Businesses Act, unlike in other jurisdictions such as the European Union or the United Kingdom.
Square indicated that combating fraud targeting small businesses is a pressing issue, with no standard insurance coverage available due to the prevalence of such scams. The co-owners of Pengrove Farms expressed their realization that small businesses lack the same safeguards as consumers, necessitating policy changes to enhance protection against fraudulent activities.
Despite the setback, the family received overwhelming support from the community through a GoFundMe campaign and weekly market visitors, enabling them to mitigate some of their losses. They are now advocating for increased awareness and legislative measures to safeguard businesses from falling victim to similar scams in the future.