We insured a sports apparel store and someone came in to buy sneakers and used a credit card to buy them. Days later the credit card company would not deposit the funds to the merchant as they used a fraudulent credit card. Is this considered theft under the policy?
I do not believe there is any direct physical loss as the items we sold and a transaction took place.
I have attached our sf-4 policy and our general agreement sf-20.
Do you believe coverage exists?
New York Subscriber
This loss is excluded under the exclusion for voluntary parting. The employee was given a bogus credit card to purchase sneakers; the employee processed the transaction based on the belief that the credit card was legitimate. That is voluntary parting. The credit card company refusing to deposit the funds isn’t a theft of funds per se, but the loss of the sneakers based on the belief that the card was legitimate constitutes voluntary parting, which is excluded.