Having to sue customers who filed fraudulent chargebacks

Latest post Mon, Apr 3 2017 1:29 PM by mibtp. 28 replies.
  • Wed, Apr 13 2011 4:04 PM In reply to

    • Drew
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    • Joined on Thu, Mar 30 2000
    • PA
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    Re: Having to sue customers who filed fraudulent chargebacks

    Rewrite your terms of sale to include GA as the jurisdiction and spell out all matters to to  XX County court and insert a prevailing party  attorney fee and add in a decent interest rate  and add in costs to go to customer site and physically pick up and return the stuff --or whatever your attorney thinks you can pack into the terms of sale and see what happens.!! 



  • Wed, Apr 13 2011 5:39 PM In reply to

    • LG81
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    Re: Having to sue customers who filed fraudulent chargebacks

    mibtp:

    Does anyone know if Google has to provide the seller with the buyer card number and bank issuer?

    Check your terms of service agreement with Google.  It's likely that your dispute process would be handled through them and not the issuing bank, but it all depends on your TOS.

    mibtp:
    They keep item and tax deduction!

     They should only be deducting the amount paid in excess of the fair value of the item.  E.g., if they bought a pair of skis with a market value of $895 but the donated $1,100, they should only record $205 as a charitable deduction.  Hopefully you are providing this type of information to your donors/purchasers.

  • Wed, Apr 13 2011 5:56 PM In reply to

    • mibtp
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    Re: Having to sue customers who filed fraudulent chargebacks

    That's not the issue. But to answer your question, yes, they got the Fair Market Value deduction as well as the item.  

     

    The issue is the buyer has the item, the deduction and we're left in the hole for $1100.

    Yes, Google handles the dispute, but I have no idea if they will proceed with the Arbitration that I requested, and that is a right of a Merchant.  There is no way to speak to anyone at Google about this.  And when you email them, you get a canned response most of the time.

     

     

  • Wed, Apr 13 2011 6:03 PM In reply to

    • LG81
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    Re: Having to sue customers who filed fraudulent chargebacks

    mibtp:

    That's not the issue. But to answer your question, yes, they got the Fair Market Value deduction as well as the item.  

    I know that's not the issue, but you mentioned it in your post.  It is incorrect for the "donor" to take deduction for the full amount.  S/he should only deduct the amount paid over FMV.

    You need to follow whatever process Google sets out.  If that doesn't work, try going directly after the individual.  If you are unhpapy with Google check-out, you may want to consider no longer using it. 

  • Fri, Nov 25 2011 10:41 AM In reply to

    • HMnuts
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    Re: Having to sue customers who filed fraudulent chargebacks

    Why would you be stupid enough to let someone pay you $4,000 by credit card?

    You only accept wire transfers for amounts like that. Once someone sends you money by wire transfer they cannot charge it back. And if they refuse to pay like that then they are broke to begin with.

  • Fri, Nov 25 2011 11:11 AM In reply to

    • HMnuts
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    Re: Having to sue customers who filed fraudulent chargebacks

    Wire transfers are final payments. Once they have been accepted by the beneficiary's bank in the U.S., they cannot be reversed by the originator without the consent of the beneficiary.

  • Fri, Nov 25 2011 11:58 AM In reply to

    • LG81
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    Re: Having to sue customers who filed fraudulent chargebacks

    HMnuts:

    Wire transfers are final payments. Once they have been accepted by the beneficiary's bank in the U.S., they cannot be reversed by the originator without the consent of the beneficiary.

    #1 - This statement is incorrect.  Although it is quite difficult to reverse a wire without the beneficiary's (ies) consent, it can be done.  Wire transfers are not always final.

    #2 - You are responding to a stale post.  Your last post also indicates a lack of understanding.  While sure, OP's business may be one wherein credit card payments may be unwise, it is unwise to make a blanket statement that no company should ever accept a credit card payment of $4k.  The majority of governmental agencies (approx 90%) require their vendors to accept their p-cards (which are credit cards).  Outside of the government, there are many, many, many companies that will transact significant purchases with p-cards.  Even outside of p-cards, $4k is not a huge credit-card purchase.  The vendor has to mind credit card matters; that goes without saying.  Merchant Services also require a certain level of PCI compliance.  (I cannot explain PCI compliance briefly, so I won't.  The level, self-assessments, and audit rights vary greatly by company, industry, company histroy, etc.)

     

     

     

  • Thu, Jan 5 2012 7:36 PM In reply to

    Re: Having to sue customers who filed fraudulent chargebacks

    smitty90...i think you and I may be dealing with the same woman. I have an identical issue currently going on. I also make handmade products and currently dealing with someone from Arkansas who ordered over $50,000 worth of merchandise and after delivery of the products did a chargeback. I won the first chargeback but she then changed her mind using the poor excuse of "not as described" but we made it according to her specifications hence the word "custom", that is still being fought. The merchant has no control or power to fight people like this. this particular woman has awful reviews about her...only wish I had seen it prior to getting into business with her. I also ordered thousands of dollars worth of supplies to produce this order, cannot return the items for credit. she never mentioned damage or "not as described" and as soon as the items were received at her warehouse she initiated the chargeback. Praying that your situation ends well. But you know we do have power in information. We need to spread the word like wildfire to help avoid another small business falling victim to this sad, pathetic individual. Sad thing is had there been actual damage I would have replaced all items.

    the chargeback system needs a major overhaul, well in my situation I will see this B*^%ch in court because she was stupid enough to visit my facility which gave me  jursidictional rights to pursue in my parish. And for the record, she was my only chargeback EVER and I lost my merchant account and it also took me months to get another.

  • Fri, Oct 18 2013 12:34 AM In reply to

    Re: Having to sue customers who filed fraudulent chargebacks

    Hi i was google it and I found you post I want to know what you finally did you sue paypal or u won the chargeback Im interest because Im having the same problem on paypal with scammer, thank if u can help me...

  • Mon, Dec 19 2016 2:17 AM In reply to

    • KeyWestDan
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    Re: Having to sue customers who filed fraudulent chargebacks

     

    I see after starting my reply that this is an old threat, so I am writing this response for all the people who will stumble across it with a google search like I did.

    First I would recommend breaking up the transaction. For custom orders, esp in the thousands, require a 25 to 50 percent deposit. Then charge the balance prior to shipping. Get signed orders. Provide fabric samples, etc. and have the customer sign off on it. Take photographs of your products before shipping. Provide good customer service.  That way a customer would have to do two chargebacks and you would have much more evidence to defeat it.

     

    As for a civil action, you would have to research your state's long arm jurisdiction. See what is needed in your state to create long arm jurisdiction.  In Florida, small claims is under $5,000. As a general rule an officer of a corporation or member of an LLC can file a civil action in small claims court without an attorney. Lots of caselaw on this and this is a common rule in all states. A few states actually prohibit lawyers in small claims.

    Small claims is limited to money damages. You can generally do breach of contract actions. Many things can not be filed in small claims including claims for emotional damages, things like Libel, any injunctive action or action in equity is prohibited, etc. You need to check the rules in your state, although they are often not well spelled out.

    The risk for the defendant is that you show up in court with an attorney and you win. Then you file for an award of attorney fees and that is tacked onto the judgment. The defendant has to appear or hire a local attorney to be represented in court. Failure to appear in person or by counsel is a default judgment and you get what you asked for. I have seen attorney fees of $1,500 or more for a standard small claims case.

    Collecting is another matter. After you get a judgment signed by the judge you would need to hire an attorney in the defendant's county. The attorney would file and domesticate your judgment in that county with the clerk of courts. Then the attorney would issue a subpoena duces tecum which requires the defendant to appear in the lawyer's office with all their financial records. Your attorney can then execute against their bank account, etc. and there is nothing they can do to stop you.

    You could never get $15k on a $4k chargeback. Damages can be not spectulative. You have to PROVE your actual damages. Things that a customer could not reasonably foresee, like your merchant account problems could not be proven and it is also likely such damages can not be maintained in a small claims court. 

     

  • Mon, Dec 19 2016 2:32 AM In reply to

    • KeyWestDan
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    Re: Having to sue customers who filed fraudulent chargebacks

    Unless the purchase was made out of a PayPal balance, it is a chargeback that PayPal has nothing to do with except acting as a middleman to collect your information and send it to the card issuer to rebut the chargeback.

    You can NOT sue PayPal or any other third party, like Amazon, as they did not do the chargeback and you would just lose a bunch more money if you were dumb enough to try.

    When a chargeback is done against your PayPal account it is not done by PayPal, it is done by the card issuer and they immediately and automatically snatch the money back from PayPal. If the merchant wins the chargeback (most card holders win) then the money is credited back to your account.

    I send customers PayPal invoices and they can pay it out of their account or any debit or credit card.

    Chargebacks for debit cards are more difficult for the customer than a credit card.

    Also emails can form a valid contract under case law since 1996.  Suing people in other states requires long arm jurisdiction but case law decisions in many states make obtaining that increasingly easy including mail, faxes, telephone calls and email.

     

  • Mon, Apr 3 2017 8:31 AM In reply to

    Re: Having to sue customers who filed fraudulent chargebacks

    I have the same problem as does every retial store in America. I had proof of delivery PLUS a signed release form from the customer. The charge back occurred months after delivery - nine months after the sale. The limit is 120 days, however; all the customer has to do is lie saying that the product is defective or not as described. Then, the customer has up to 530 days after delivery to chargeback, get a full refund, and keep the goods. Its theft, it's illegal, and the new EMV rules make it perfectly acceptable. Bank of America Merchant Services stated on the charge back, "You have no rights in a chargeback dispute if you don't scan the chip." BOA sides with the card holder, because chargeback fraud is perfectly acceptable in the new EMV law (Stands for Europay, Mastercard, and VISA). Companies offering chargeback prtection have no control over the EMV rules. The merchant will lose a chargeback if the card is not present (CNP), not matter what is done to protect yourself. The only solution at this time is to refuse to accept credit cards. Soon, no store in America will accept a credit card. In my case - the customer ordered a custom made stone dining table from Italy worth $ 5,000. I lost the $ 5,000 earned on the sale, shipped plus I lost the $ 5,000 table that the customer refused to sign, plus I lost $ 2,500 I paid the factory. Todal loss on a $ 5,000 chargeback is $ 12,500. After the charge back - consumers can keep or sell the product. The customer lives in New Jersey, I operate from South Carolina. The maximum amount of a claim in small claims court in my state is $ 7,500. Even if I sued the customer in my state, the customer may have the case thrown out of court. And even if you win in yoru state, collecting in another states is almost impossible. Suing in the customers state is high risk and expensive. Keep in mind, the customer can have any case moved from small claims court to regular court. And the customer can counter sue you in his cheap - cheap for him, expensive for you. The bottom line is that soon, no store in America will accept a credit card. You are a fool if you do. Even if you swipe the chip - the chargebacks rules do not chang.e Before the new EMV rules - I accepted over $ 4 million in credit cards and never had a charge back that I didn't win. Today, the credit card companines will side with the customer in a card not present transation. In other words, all online sales are in jerpody. Something must be done at the Federal level, or eCommerce is over. Most do not not know about the new EMV rules. All card not present transactions are deemed "non-coimpliant." No matter what they try to sell you today - nothing works. PaPAL and Square are subject to the same EMV law. These processors are safer than a bank merchant accout, because PayPal does fight the chrgebacks. But again, even if you have Proof of Delivery, nothing will protect your store from chagebacks. We need government action. Until then, my store will never accept a credit card again. Thanks for your story. It's very important for awarness. 

  • Mon, Apr 3 2017 1:29 PM In reply to

    • mibtp
      Consumer
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    • Joined on Wed, Apr 13 2011
    • CA
    • Posts 3

    Re: Having to sue customers who filed fraudulent chargebacks

    That is just horrible. I was just taken too, but for much less; $500. Someone bought VIP tickets to an event through our charity fundraiser. They changed mind and wanted refund. We asked them to return the tax paperwork first before the refund would be issued. They did not.

    We refunded all but $500 (amount of tax deduction) and again requested the return of the paperwork so that they could not claim a tax-deduction and get a full refund). Instead, they did a chargeback and won.

    We have mailed in a form to the IRS reporting their possible fragulent activity; but don't expect much.

    Gill Fisher:

    I have the same problem as does every retial store in America. I had proof of delivery PLUS a signed release form from the customer. The charge back occurred months after delivery - nine months after the sale. The limit is 120 days, however; all the customer has to do is lie saying that the product is defective or not as described. Then, the customer has up to 530 days after delivery to chargeback, get a full refund, and keep the goods. Its theft, it's illegal, and the new EMV rules make it perfectly acceptable. Bank of America Merchant Services stated on the charge back, "You have no rights in a chargeback dispute if you don't scan the chip." BOA sides with the card holder, because chargeback fraud is perfectly acceptable in the new EMV law (Stands for Europay, Mastercard, and VISA). Companies offering chargeback prtection have no control over the EMV rules. The merchant will lose a chargeback if the card is not present (CNP), not matter what is done to protect yourself. The only solution at this time is to refuse to accept credit cards. Soon, no store in America will accept a credit card. In my case - the customer ordered a custom made stone dining table from Italy worth $ 5,000. I lost the $ 5,000 earned on the sale, shipped plus I lost the $ 5,000 table that the customer refused to sign, plus I lost $ 2,500 I paid the factory. Todal loss on a $ 5,000 chargeback is $ 12,500. After the charge back - consumers can keep or sell the product. The customer lives in New Jersey, I operate from South Carolina. The maximum amount of a claim in small claims court in my state is $ 7,500. Even if I sued the customer in my state, the customer may have the case thrown out of court. And even if you win in yoru state, collecting in another states is almost impossible. Suing in the customers state is high risk and expensive. Keep in mind, the customer can have any case moved from small claims court to regular court. And the customer can counter sue you in his cheap - cheap for him, expensive for you. The bottom line is that soon, no store in America will accept a credit card. You are a fool if you do. Even if you swipe the chip - the chargebacks rules do not chang.e Before the new EMV rules - I accepted over $ 4 million in credit cards and never had a charge back that I didn't win. Today, the credit card companines will side with the customer in a card not present transation. In other words, all online sales are in jerpody. Something must be done at the Federal level, or eCommerce is over. Most do not not know about the new EMV rules. All card not present transactions are deemed "non-coimpliant." No matter what they try to sell you today - nothing works. PaPAL and Square are subject to the same EMV law. These processors are safer than a bank merchant accout, because PayPal does fight the chrgebacks. But again, even if you have Proof of Delivery, nothing will protect your store from chagebacks. We need government action. Until then, my store will never accept a credit card again. Thanks for your story. It's very important for awarness. 

     

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