Champaign restaurants losing hundreds in new type of fraud

CHAMPAIGN, Ill. (WAND) - For the last three months, restaurants have seen an increase in "friendly" fraud. Also known as chargeback fraud, this happens when customers order something, receive it, and then tell their credit card company that the charge was fraudulent.

When this occurs, the restaurant is responsible for the original charge, and a chargeback fee. Additionally, if there are enough chargebacks, businesses' credit card processing fees increase for every order.

"Ever since January, Sun Singer Restaurant has lost about $1,100 in chargebacks," said Rick Carbaugh, General Manager of Sun Singer Restaurant. "We've had 11 chargebacks since January, which for comparison's sake, between 2021 and 2024, we had four chargebacks total."

Carbaugh said most of these chargebacks came from deliveries to student housing. The customers would use incorrect phone numbers and emails, which meant the restaurant couldn't contact them. This issue got so bad that Sun Singer had to stop providing the option for online payment and all delivery services.

"It's reduced the number of orders that we've been getting because we're not doing deliveries and people sometimes don't like the inconvenience," said Carbaugh. "Some people need that service, and we can't offer it because all those payments are online and we can't risk taking online payments."

Sun Singer isn't the only restaurant facing friendly fraud. Suzu's Bakery has also had issues with legitimate orders being marked as illegitimate.

"They would order and then come in and pick it up, and I would confirm 'is this your order and your name?' and they would say yes," said Maxx Sentowski, Front of House Manager at Suzu's Bakery. "Then they would take the order and then chargeback would happen like three weeks later."

Sentowski says they still accept online orders, but have gotten a lot more cautious. They rely heavily on order ahead, or delivery orders, so they don't want to turn it off completely.

Both establishments have tried to fight back on every charge, but have not gotten money back. Suzu's even has video proof of people paying for items and coming in to pick them up, but the point of sale service, Toast, won't allow them to submit it.

"It's so upsetting that people are taking advantage of this," said Alex Sentowski, head chef at Suzu's. "We are unable to advocate for ourselves or even upload any videos or images of the person coming in and actually taking the order from them. "

Both Sentowski and Carbaugh have connected with the police over the issue, but they say they can't help them. Carbaugh is trying to connect with more restaurants to see if they are experiencing the same problem to see if they can work together to combat the issue.