Three years after achieving their dream of owning a farm near their childhood home, Matt Penney and his partner were swindled out of $20,000, dealing a severe blow to their business aspirations. “It just crushes your dream. Kills the momentum – that’s the tough part,” expressed Penney. In April, Pengrove Farms, known for its premium local meat and regional products, was contacted by a purported catering company. Despite no initial red flags, issues arose during subsequent transactions, highlighting the vulnerability of small Quebec businesses to fraudulent activities.

Square, the payment processing platform utilized by Pengrove Farms, informed the family in mid-June that all transactions with the caterers, amounting to approximately $20,000, were fraudulent. This left the family responsible for reimbursing Square for the entire sum. Alana Cosgrove, co-owner of Pengrove Farms, emphasized the significant impact of this loss on their operations, stating, “It’s kind of like a make-or-break type amount. We’re here basically full time. We have a young family.”

The scammers had carefully cultivated a sense of trust with the couple, engaging in conversations, making jokes, and even visiting in person to collect orders. Andréanne Bergeron, a Criminology professor at L’Université de Montréal, explained that fraudsters exploit trust to execute sophisticated schemes, leveraging psychological mechanisms to deceive businesses. In Quebec, merchants bear the burden of fraudulent payments as payment platforms lack regulatory oversight similar to banks or insurance companies.

Frédérique Lissoir, a business law professor, highlighted the absence of protections for merchants in Quebec’s financial services legislation, unlike in the European Union or the United Kingdom. The onus falls on the merchant to cover losses incurred due to fraud. While Square acknowledged the issue of fraud against small businesses, insurance coverage for such incidents has become rare, leaving businesses vulnerable.

The family is advocating for policy changes to safeguard businesses from similar scams, having experienced firsthand the lack of consumer-like protections. Through community support and a crowdfunding campaign, Pengrove Farms has received substantial assistance to mitigate their losses. Cosgrove expressed gratitude for the overwhelming community response and emphasized the need to raise awareness about their ordeal.