It has been almost a year now since restaurants in California have been forced to close all or part of their dining facilities. For many small restauranteurs, the take-out business has kept them afloat…. but barely. Most Californians are sympathetic to the plight of the small restauranteur and many of us make a special effort to give our business to these small operators. But some have found a way to take advantage of the situation. I’m calling it the “Covid dine and dash.”
The Los Angeles Times recently featured several small restaurants that have been victims of a take-out scam. The scams are so pervasive that one well-known Korean restaurant has been forced out of business. The scams take various forms, but they all involve calling in a to-go order and charging the order over the phone on a credit card. Sometimes the credit card is fraudulent, but it appears that the more frequent scam is that someone will call in a large order and after it is picked up or delivered, the customer will call in to their credit card company to dispute the charge.
The customer will claim they never got the order, the order received was incomplete or incorrect, or claim someone other than the cardholder placed the order. The credit card companies will side with the consumer and place a hold on the charge. It is then up to the restauranteur to prove the charge was legit. This can be difficult for the restauranteur to prove. Restauranteurs who have been victimized over and over by some variation of this scam have now had to take extra measures such as photographing every order, requiring customers to pay in person and show their identification, and other safeguards.
If this happened on occasion, the restaurateur may mark it up to an error made by the restaurant, but this is happening frequently and among many different restaurants. The scams are costing restaurants thousands of dollars and threatening their already thin margins. Sometimes the scams involve huge orders costing a lot of money. The LA Times article featured stories involving orders of over $700, $600, and $1,300, where the customer then disputed the charge. Some restauranteurs have reported these scams to the police, but it is difficult to prove and prosecute.
In most of the cases highlighted by the LA Times article, the conduct is theft rather than credit card fraud. If the customer is using his or her own card, it is not technically credit card fraud, which requires either using a stolen credit card or using a counterfeit or altered credit card. When the customer charges a to-go order on his or her own card and then fraudulently disputes the charge, the customer has obtained the restaurants property under false pretenses (a promise to pay without intending to pay), this is theft by false pretenses.
We all hope that our lives will get back to normal soon and the small businesses can stay afloat until then. Sadly, some businesses will not make it and it is sadder still that some restaurants will be forced out of business by the Covid dine and dash.
Orange County criminal defense attorney William Weinberg has been defending individuals accused of criminal conduct for over 25 years. He is available for a free consultation to discuss your criminal matter and to advise you of your options. You may reach him by calling him at his Irvine office at 949-474-8008 or by emailing him at firstname.lastname@example.org.