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I’ve been defrauded - any advice?

sagemediasagemedia subscriber Posts: 5
edited March 2007 in Thought Leadership
Over the weekend, an ex-customer defrauded my company by filing a false "unauthorized charge" claim on a payment they had made by Visa, through PayPal. The customer has been and is still using the logo, stationery collateral and brochure designs that were itemized on the invoice for this particular transaction.Despite the fact that I sent PayPal clear and indisputable evidence proving that the charge was 100% legitimate, they still found in the customer`s favour because I am a service-based company. After speaking with them, they are not willing to hear my evidence because I have no third-party courier tracking number to prove "goods were shipped".Needless to say, our company no longer accepts PayPal. As far as I`m concerned, they all but drove the getaway car.So currently I`m out of pocket a pretty hefty amount... and I am very worried that since this method of robbery worked the first time, that this ex-customer may try the same thing with payments they have made for other projects (quadrupling my already significant losses). I want to send a cease-and-desist letter forbidding them from using the design work attached to that payment, but at the same time I don`t want to provoke them into victimizing me further.I am severely disillusioned - not only in this customer for whom I had bent over backward and was extremely generous in free revisions, overtime and add-ons... but moreso in the general lack of protection we have as business owners against customer theft and fraud.Any thoughts or advice would be most welcome.


  • MNGrillGuyMNGrillGuy subscriber Posts: 2 Member
    I`d try make their life a living helll until it is resolved.  Emails, phone calls etc.  Let um know you are not going away. 
  • pepperlegalpepperlegal subscriber Posts: 2 Member
    Depending upon where the ex-customer is located, and the amount in question, a demand letter accompanied by a cease and desist may be your best option. 
  • sagemediasagemedia subscriber Posts: 5
    It does cross borders... I am in Canada, and the customer is in Oregon.
  • stonesledgestonesledge subscriber Posts: 608 Silver Level Member
    I am so sorry that you had that happen. I would send a cease and desist order. How many other projects do you have for them? You may want to cut your losses and stop working for them.
    That is unfortunate, they must like the work you did if they are using it????????????
  • MerchantServicesMerchantServices subscriber Posts: 4
    Hello sagemedia,
    I suggest that you obtain your own merchant account, instead of using paypal. Since you are in Canada you should use www.optimalpayments.com</A>
    When you have your own merchant account, the processor will listen to both parties (consumer & merchant), look at the evidence and then decide who is in the right. According to your evidence, if  you would have had your own merchant account you would not have lost your money.
    I would love to process your transactions for you but my company doesn`t provide services for businesses outside of the U.S.A.
    It`s always best to have your own merchant account instead of using a company like paypal. 
  • sagemediasagemedia subscriber Posts: 5
    Thanks for your responses.To Stonesledge... yes they liked the work fine. In fact my inbox is filled with glowing compliments throughout the design process for all of the work we did for them. Their problem is more a reflection of them than us (see below)To Dennis, thank you but we do already have merchant accounts. In this case, the client chose to opt for PayPal which we offer(ed) as an alternative.To Raisecapital02, the issues with this client are complex. About 60% through the third project, they terminated the contract because of a combination of things: 1-the deadline was being pushed back due to their incessant post-approval change requests (which we were doing for free)2-they took issue with me hiring an "Arab" to work on their project3-they post-tracked our trade supplier, looked up our at-cost rates, and now think we charged them too much for printing on the second project (though they were fine with the rates when we quoted them and told them to shop around before proceeding)Though I never stated nor gave the impression that I was, they for some reason assumed I was a big company that supplied all these things in-house. They knew upfront that I contracted a programmer to work on their project... but they became enraged when they learned he lives in Egypt.After an email filled with hateful epithets and derogatory language, and a phone call at my private home number (which I have no idea how they obtained), it is evident that they would not be interested in paying me back. In fact, they have somehow ALSO bullied my trade print supplier into suspending my account, and are doing all they can to make my life difficult.
  • VerveX3VerveX3 subscriber Posts: 0
    A thought only, as I am not a lawyer.In the future, use the implicit acceptance language found on many software products and web services providing for implicit acceptance upon some discretionary action i.e. use of the materials submitted.The language should state clearly that right to use or own the intellectual property, designs, drawings or other materials submitted is conveyed only upon full and unconditional implicit acceptance of the liability for amounts due your company including timely and full payment of your charges pursuant to whatever agreements were previously reached - hopefully papered, and that if they do not agree, they are required to reject and return the work submitted and seek remedy under the terms and conditions of your contract. Furthermore, include a "cure" clause in your contract affording you the reasonable opportunity to redress any claims made in writing within 30 days, without prejudice otherwise to your right to payment provided you cure whatever defect or other contractual obligation that may be alleged and that such warranty does not  relieve them of their obligation either by deferral, setback or offset.Word it however you like - some of our clients like it formal, some conversational, but always put it in writing and make sure it is signed off on before work begins, and the special acceptance language is conveyed with delivery.I have used this approach very effectively.As to the current matter, look up the statutes in your state for what constitutes fraud - it is very narrowly defined in most instances since fraud is a crime, not a tort (torts are governed by common-law and are the subject of civil suit).Last but not least, the first lesson in international finance is the risk associated with pursuing remedies on foreign soil. It is helpful to clarify jurisdiction or negotiate progress payments subject to Letters of Credit issued in favor of your client should you fail to perform. All complex, but noteworthy.Good luck!
  • MerchantServicesMerchantServices subscriber Posts: 4
    Do some research on your bad customer and you may find they have a reputation for burning companies. Maybe you can get together with the other companies they`ve burnt and sue them.
    I`m glad that you have a merchant account. Since you now know Pay pal won`t back you up against charge backs maybe you shouldn`t accept paypal anymore.
    Your customer might have chosen paypal as an option to pay you just so they could burn you.
    I`ve seen this before with consumers using AMEX. They know AMEX sides with the card holder 99.9% of the time so they buy something on AMEX and charge it back to the merchant to keep from paying for it. That is why many of my customers and other businesses around the U.S.A. refuse to accept AMEX or paypal.
    God bless you on your future business endeavors.
  • NuevolutionNuevolution subscriber Posts: 30 Bronze Level Member
    Man... I feel your pain... I had a similar situation when I started the business. As a matter a fact it was my third sale and I designed and created business cards for a beauty salon called Escape Salon, they had 8 employers and after going through the trouble of designing and printing the cards she put a stop payment to the check 10 days later (its legal) after I had charged her, and basically spent the money on funding my small business. What amazed me the most was, when I was trying to close the deal she started giving me a sermon about how I should obey gods word, blah, blah blah.. and if I didn`t I would never grow spiritually and blah blah blah..So after being $500.00 bucks short, I decided to contact the Los Angeles Check fraud division. I am not sure if you have something similar where you live. Or what you can do is contact the States Fraud Check Division where your customer is and they will resolve the issue for you. Another thing you can do is Sign up to Duns and Bradstreet and use their collection service. What you can do is trash their Business Credit Score. Im pretty sure they are going to depend on some sord of credit in the near future. and it will show up on D&B as a "Company is Having Monetary hardship" on their Business Credit Profile. Or get a lawyer and have them pay all your fee`s if you win the case. What you need to do is make a contract that the customer signs and Stop Using Paypal to conduct your business. Use something like world pay or Make them send you a Wire transfer or Money order. MY SLOGAN TO PAYMENTS NOW ARE " I DON`T CARE IF YOU`RE A NUN, NO PAYMENT NO SERVICE" OH AND DON`T TRUST THE PREACHER, TRUST WHAT YOUR WALLET TELLS YOU"
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