Square has fared pretty well in the mobile payments business, and now the company, founded by Jack Dorsey, is preparing to go public. As part of that process, Square has given potential investors a deeper look at the risks and uncertainties that it regularly contends with. And while Square hasn't dealt with too many unforeseen crises, one case mentioned in the company's S1 filing stands out. A scammer who posed as a seller of travel vouchers on Square has cost the company millions. $5.7 million, to be specific — though that number may be Square citing the worst-case outcome. BuzzFeed News did some digging and discovered that the person responsible is 30-year-old Patricia Urbanovsky, who used Square under the name of Creative Creations, her events planning company based in Nebraska.

This wasn't exactly what you'd call a genius criminal scheme. Urbanovsky sold "bogus discounted travel vouchers," according to the report, and when buyers demanded refunds, Creative Creations ignored the requests and never paid anything back. That left Square on the hook, since the company admits that it's often ultimately responsible for chargebacks and making things right with buyers who are targets of fraud. Square told Omaha police that it processed over $7 million in card payments from Creative Creations between last October and March, according to BuzzFeed News, and so far it's had to eat $2.8 million in chargeback fees. At least 1,500 customers allegedly fell for the ploy, and both the FBI and IRS are now investigating the case.

It's very unlikely that Urbanovsky will come up with the money necessary to cover millions in refunds, her frustrated lawyer admitted to BuzzFeed News. “This is a case that I didn’t charge enough money for,” he said. Square has already said it'll "take the loss" brought on by the scheme. Square's loss rate for transactions is typically lower than rivals like PayPal, so it's not like the company gets suckered to this extent very often. But it's still an embarrassing black eye for Square as it heads for an IPO and a new era in the company's history.