Three years after achieving his goal of owning a farm close to his childhood home, Matt Penney and his partner fell prey to a scam that cost them $20,000 and derailed their business expansion plans.
Penney expressed his disappointment, stating, “It just crushes your dream and momentum. It affects every aspect of our business.”
In April, Pengrove Farms was approached by a company posing as a catering business. The farm specializes in selling premium locally sourced meat and regional products.
Penney mentioned that everything seemed normal initially, with no red flags noticed after the first order. However, issues arose during the subsequent order when part of the payment from the company failed, raising concerns about the vulnerability of small Quebec businesses to fraudsters.
By mid-June, Square, the payment processing platform utilized by the farm, informed the family that all transactions with the caterers, totaling approximately $20,000, were fraudulent. Consequently, the family was held responsible for reimbursing Square for the incurred loss.
Alana Cosgrove, the co-owner of Pengrove Farms, described the situation as critical, stating, “It’s a make-or-break amount for us. We are fully dedicated to this business and have a young family to support.”
The couple revealed that the scammers had built a rapport with them, engaging in friendly conversations, and even physically showing up to collect their order, leading them to believe the payment was legitimate.
Andréanne Bergeron, a criminology professor at L’Université de Montréal, explained that fraudsters exploit trust established through initial transactions to carry out larger scams, playing on psychological mechanisms related to trust.
In Quebec, payment platforms lack regulation like banks or insurance companies, placing the burden of chargeback liability on merchants. This legal loophole leaves businesses like Pengrove Farms liable to return fraudulently obtained funds to the platform.
Frédérique Lissoir, a law professor at the University of Ottawa, highlighted the absence of protections for merchants under Quebec’s Money-Services Businesses Act and advocated for legislation similar to those in the European Union or the United Kingdom to safeguard businesses from fraud.
Despite facing financial setbacks, Pengrove Farms received tremendous support from the community through a GoFundMe campaign and local market sales, enabling them to mitigate some of the losses.
The family aims to collaborate with legislators to propose new laws safeguarding businesses from such scams, emphasizing the need for enhanced policy measures to prevent similar incidents in the future.