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Fraudulent Chargebacks - TODAY I START FIGHTING BACK

Discussion in 'Legal Issues' started by iknowalittlebit, Nov 12, 2009.

  1. #1
    Over the last year, I have lost almost $10,000 to fraudulent chargebacks. I deal in a niche where most of my customers are senior citizens. While most seniors are very nice people, there are a few that feel that they can do anything they please.
    SEMrush
    I received two chargebacks today on our PayPal account. The first one was for $300 and the second for $998. Both of these customers signed for the merchandise and filed the chargeback the next day.

    I spoke with the $998 thief on the telephone. He said that he was thinking of returning the merchandise, so he called his credit card company and they suggested he file a chargeback. I asked him if he got his money back, he said yes. I asked him if he still has the merchandise, he said yes. I asked him if he felt there was anything wrong with this picture, he said no. He went on to tell me that he wanted to try out the merchandise and then decide whether or not to send it back. I explained to him that this was theft and he said that his credit card company said it was completely acceptable. I threatened to file a criminal complaint and he laughed.

    Similar scenarios keep occurring again and again. I have spoken to others that deal with older people and they said that it is the same thing for them. This caused me to lose my merchant account last year and be placed on the TMF blacklist. I am no longer able to get a merchant account. Third party processors are the only choice I have now. Either that or take on a partner, change the name of the business and keep my name off of everything. This is entirely unfair.

    In an unrelated situation, a customer ordered merchandise and later called saying that she wanted to return it. I gave her a return authorization number and she said that it will be sent shortly. I reminded her to insure the goods, as we are not responsible for loss or damages that occur during shipping. This is also stated on our terms that she agreed to when she placed the order online. Two weeks later the package arrived totally destroyed, as if it had been submerged in water. It was stamped by the US Postal Service "Damaged while en route" or something to that effect.

    I called her and told her that she needs to file a claim with the post office and that we are returning the unopened package to her. She said that she did not want to spend the extra $2 for the insurance, so she didn't get the insurance.

    I took photos of the package and sent it back. We are unable to get our money back from damaged electronics, so we do not accept returns that were damaged while en route.

    This customer filed a chargeback and got her money back. We challenged the chargeback by submitting the photos and we eventually won the dispute. She then filed a complaint with her state's attorney general's office. We submitted the photos and were told that they were closing the case because they sided with us.

    On Tuesday I got a knock on my door. There were two guys in white polo shirts with guns. Through the window they showed badges and said they were from my state's attorney general's office. They came in and wanted information about this transaction. I gave them the pictures and all documentation. They took it and said that they will file the report with the "attorneys upstairs" and they will decide whether to indite me or not.

    That's it. I am no longer taking these peoples' BS lying down. I swore an arrest warrant out for the guy that stole the $998 from me today with his local police department. I am going to go back and do the same for all of the fraudulent chargebacks that have occurred in the last year that we were unable to recoup our money from.

    I may spend the next month filling out paperwork, but it will be well worth it.

    It is so easy to file a chargeback and commit fraud. You can go to a mechanic and have him fix your car, then file a chargeback simply by calling the 800 number on the back of your credit card. The money will be back in your account within a day or two. There is no investigation, they just take the money from the mechanic and give it back to you. If the mechanic disputes the chargeback it is ultimately up to the customer's credit card company that decides whether the chargeback stands or not... the same company that facilitated in the theft to begin with. Tell me why the credit card companies are not accomplises to these crimes?
     
    Last edited by a moderator: Feb 3, 2015
    iknowalittlebit, Nov 12, 2009 IP
    BuySomeBitcoins likes this.
    SEMrush
  2. Law-Dude

    Law-Dude Active Member

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    #2
    You usually agree to certain arbitration terms with the company when you agree to become a merchant. Their right to do a chargeback is based on a prior contractual agreement with you on how to solve transaction disputes, and not an out-of-the-blue decision to steal money from you. The best people to go after are those who submit false reports to the card company in order to get unjustified chargebacks.
     
    Law-Dude, Nov 12, 2009 IP
  3. iknowalittlebit

    iknowalittlebit Peon

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    #3
    Maybe in a perfect world what you wrote may be true, but the reality is that all it takes is a telephone call saying "I don't like what I received" or "I'm concerned that if I send this back I will not get a refund".
     
    iknowalittlebit, Nov 12, 2009 IP
  4. Law-Dude

    Law-Dude Active Member

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    #4
    Sorry, for clarity, I mean the company doesn't take money out of the blue, not the customer. That's my answer to your question as to why the card companies wouldn't be accomplices to the frauds committed by the scammers. The company has the right to use its discretion in doing chargebacks because you agreed to that arbitration process when you signed up as a merchant.
     
    Law-Dude, Nov 12, 2009 IP
  5. iknowalittlebit

    iknowalittlebit Peon

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    #5
    Ok, I see what you are saying... but don't you think it is a bit too easy to have a chargeback initiated? And try fighting one. The judge and jury is the same company that decided to take your money in the first place. Nine out of ten times they will side with the person that is paying them 22% in interest each month.
     
    iknowalittlebit, Nov 12, 2009 IP
  6. HowDoYou

    HowDoYou Active Member

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    #6
    Tell them to send the money in cash via fedex. lol

    I've had similar problems with paypal charge backs selling software. There really is not much you can do about it.
     
    HowDoYou, Nov 12, 2009 IP
  7. iknowalittlebit

    iknowalittlebit Peon

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    #7
    Maybe there's not much you can do when selling a downloadable product like yours, but we sell tangible goods. Our customers have to sign for the products from the post office. We can do something about and starting today, we will. We are going to file a criminal complaint against anybody that defrauds us. The guy who stole $998 from me today is the first that will face my wrath. I'm fighting back from now on!
     
    iknowalittlebit, Nov 12, 2009 IP
  8. Stroh

    Stroh Notable Member

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    #8
    I know the way around that, submit screenshots under the option that says I have shipped the item blah blah blah.

    Post snaps of your billing software, and anything the client says to you. Won't be a win win every time but it'll be a 50/50 shot of winning.
     
    Stroh, Nov 12, 2009 IP
  9. Nonny

    Nonny Notable Member

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    #9
    What does your attorney say about your strategy? If you don't have an attorney, I think you really should hire one, because you don't want to inadvertently get yourself into trouble or harm your own case. If you piss off the attorney general and/or the cops, they may not give you the benefit of the doubt or strongly pursue your claims.

    (Also an attorney can tell you what paperwork you need, recommend a PI if necessary, etc.)
     
    Nonny, Nov 13, 2009 IP
  10. iknowalittlebit

    iknowalittlebit Peon

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    #10
    @Nonny
    We have spoken with an attorney and he agrees that fraudulent chargebacks should be pursued aggressively. As for the AG's "investigation", we have provided them with the necessary paperwork and proof that the complaints against us were handled properly. Unfortunately, we are in a niche that deals with older people and more and more senior citizen groups are giving bad advice to their peers. They are telling them that filing chargebacks are acceptable methods of returning merchandise and circumventing restock fees. This is bad advice and acting on bad advice does not absolve you from actions that are illegal.

    UPDATE: The $998 thief was visited by a detective. The detective pointed out what he had done wrong and went over the proper procedure for returning merchandise. The thief told the detective that he had sent the merchandise back by writing "return to sender" on the unopened package. Yesterday, we received the warranty card in the mail that was filled out by him... impossible if the package was sent back unopened. We have yet to receive the merchandise back.

    The problem is that if we file criminal charges, then we must appear to testify. The detective told us that he would not want to arrest the criminal and tie up the court if we had no intention of flying to PA and testifying against him.

    Update on the $300 thief: She signed for the package on November 7th and filed a chargeback on November 11th. The merchandise was not returned and she has made no contact with us. We will be filing a police report on Monday.

    I wish that everybody in the mail order business would follow suit and file charges against everybdy that fraudulently files a chargeback.
     
    Last edited by a moderator: Feb 3, 2015
    iknowalittlebit, Nov 14, 2009 IP
  11. Law-Dude

    Law-Dude Active Member

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    #11
    If you don't want to fly to Pennsylvania, but you have the warranty card signed by him, you should fax it to the detective. The detective can then ask the scammer if he lied about having sent it back unopened, and when he confesses that he did not actually send it back, the detective should be able to charge him with obstruction of justice or whatever Pennsylvania's equivalent is without requiring your attendance.

    I hope you're also considering filing a civil suit with punitive damages attached for fraud. Perhaps you can recover some of the costs of your flight to Pennsylvania by doing so? Call a lawyer local to the scammer to find out what it might cost to take him to civil court.
     
    Law-Dude, Nov 14, 2009 IP
  12. iknowalittlebit

    iknowalittlebit Peon

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    #12
    Good advice, Law Dude.

    $998 thief called to tell me that he has revoked the chargeback. PayPal, however, says that the chargeback has not been revoked. Over the weekend, PayPal froze our account. They said that because it was such a high dollar chargeback they wanted to investigate. We have been unable to access our money for three days now. We are also unable to process telephone orders using our virtual terminal. This $998 thief has ended up costing us much much more.
     
    iknowalittlebit, Nov 16, 2009 IP
  13. Jeccles

    Jeccles Peon

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    #13
    This is the exact reason that I refuse to use PayPal and discourage others from using them too.
     
    Jeccles, Nov 16, 2009 IP
  14. Pixelrage

    Pixelrage Peon

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    #14
    Wow, this is ridiculous...sounds like a total nightmare. Is this a dropshipping business?
     
    Pixelrage, Nov 16, 2009 IP
  15. iknowalittlebit

    iknowalittlebit Peon

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    #15
    No, we have a manufacturer that makes our products and we send them. It is a healthcare item. Looks like PayPal will be unfrozen within the hour. Now all of the other fires to put out.... sigh
     
    iknowalittlebit, Nov 16, 2009 IP
  16. steve1040

    steve1040 Active Member

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    #16
    Why can't you sue these people in small claims court as well as filing police report?

    Try this it worked for me
    When you get a judgement - Send them a small cashier's check or moneyorder for 5.00
    1. Have the teller make the check from some generic name "Customer Rebate" "Customer Refund"
    (Best to use a local bank or credit union)
    2. Make sure none of your info is on the cashier's check
    3. On the memo type "Rebate" or "Refund"
    4. Wait a couple of weeks - Check to see if the item has been paid and get a copy of the back of the paid check.
    5. Since the amount is so small - The person will most likely have deposited it into their bank account
    6. Congrads- You now have everything you need to garnish their account and I didn't know it when I did it but you could collect for charges to get your money. $5 + garnishment court cost
     
    steve1040, Nov 28, 2009 IP
  17. masrawyz

    masrawyz Guest

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    #17
    We also get quite a lot of fraudulent orders, which we catch in time or our billing system automatically blocks. I will be watching this thread from time to time to see how it goes. Good luck!
     
    masrawyz, Nov 28, 2009 IP
  18. Toilet Monster

    Toilet Monster Member

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    #18
    You have their addresses.. send a debt collector.

    You have the evidence, tracking codes etc.
     
    Toilet Monster, Nov 29, 2009 IP
  19. allstarmobi

    allstarmobi Peon

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    #19
    The best people to go after are those who submit false reports to the card company in order to get unjustified chargebacks.
     
    allstarmobi, Nov 29, 2009 IP
  20. iknowalittlebit

    iknowalittlebit Peon

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    #20
    You are right about that. The only problem is that most credit card companies no longer require a written/signed complaint. They simply call the number on the back of their card and tell them any sob story. Often times they tell you that they didn't even ask for a chargeback and the CC company just made the call themselves. Then it is your word against theirs.
     
    iknowalittlebit, Nov 30, 2009 IP