Restaurants hurt by customers demanding refunds through food delivery services

Restaurants are going out of business, and it has nothing to do with the menu. It turns out it’s a result of people taking advantage of their kindness.

A case of restaurant failure is due to businesses trying to do a good thing that has quickly gone bad.

Grubhub, Uber Eats, DoorDash and many others are delivering a lot of food, but a lot of restaurants are getting scammed by customers.

In what is an extremely challenging time for restaurants to stay open and in business, they are facing a significant uptick in refund request scams.

Customers are demanding refunds saying food was never delivered and challenging it on their credit cards.

Scott Zoldi, Chief Analytics Officer at FICO, has reviewed the data.

“A 50% increase in fraud reported, right? And some of those frauds could very well be refund fraud, where, you know, someone claims that their card was used not legitimately to purchase the food,” Zoldi said. “I think the problem is probably even larger than that because that’s reported fraud. Sometimes, the refund will just be granted, and it won’t be listed as a specific fraud event.”

When the refund is given, the restaurant eats the loss.

Zoldi says artificial intelligence is being developed for banks to use to help identify potential scammers when they place orders.

If it works, the number of delivery scams will go down.

That should help, as tens of thousands of restaurants nationwide, including dozens in Southwest Florida have shut their doors for a variety of reasons. Many have shut their doors for good.

MORE:

• The Dark Side of Delicious: Decoding Food Delivery Fraud on the Dark Web
• Is COVID-19 Leading to More Food Delivery Fraud?
• 100,000 Restaurants Closed Six Months into Pandemic
• Restaurants are Reportedly Being Hurt By Refund Request Scam