L.A. restaurant closes after high-tech "dine and dash" scheme




  • In Business
  • 2021-02-27 22:02:57Z
  • By CBS MoneyWatch
 

Though many restaurants remain closed during the pandemic, for those that remain open, dining and dashing remains a problem - and even forced one Los Angeles restaurant owner to close up shop, CBS Los Angeles reports

According to the Los Angeles Times, a growing number of the city's restaurants have struggled as scammers take advantage of internet ordering to use fraudulent credit cards or request refunds, claiming they never received part or all of an order.  

The Korean Fusion Cafe "Spoon by H" had the ingredients to become an L.A. success story but is the epitome of a small business, with owner and chef Yoonjin Hwang working 15-hour days to run the restaurant with her mother and brother.

"We have no staff. We have no cooks. I have to do everything by myself," said Hwang. "Like so many other small businesses we were hit hard by the pandemic. All we could do was just like take it day by day and do whatever we could to stay afloat."

But as restaurants increasingly receive takeout orders online and through apps, they face a new challenge called "friendly fraud" or "chargebacks." In the scam, a customer orders food, often through a delivery service, then receives their meal, but disputes the charge with their credit card company to get a refund.

One day, Hwang got her biggest order ever, for more than $700.

"He came and he picked up the food, and then one week later he disputed the charge," Hwang said.

She lost the food and the money, and it kept happening - over and over.

"I just felt so incredibly helpless and frustrated. We just couldn't keep running our business like this," she said. So, she made the decision to close the restaurant for good. Saturday is set to be her last day, much to her customers' dismay.

"When I found out it was closing, I was just devastated," said Alyse Whitney, a customer.

But patrons saw her struggles and stepped in to help, raising more than $60,000 on a GoFundMe page.

Hwang said, "It's been wonderful reminder that there is more good in the people around us and in our communities."

Hwang plans to pay off her debt with the money raised and said she may consider opening a new business someday with the earnings, but she doesn't know when, or what type of business.

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