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Credit Card fraud and how it slammed us this weekend. Need ideas for resolution.

We had a client write 2 $1000 bad checks recently. We called it to his attention and he ask if we take credit cards, for which we do through PayPal.

He paid $2185 on his AMEX a few weeks ago. Saturday morning I got an email from PayPal stating the funds have been recalled because the client contacted AMEX and said the charges not authorized to be made.

PayPal has frozen our account for which we use to accept online payment for products and services as well as charged another credit card the $2185 overage.

This client has not only bilked us out of the service, but has shut down our PayPal related cashflow.

We're in trouble, deep, for his fraudulent actions.

Any ideas how to clean this mess up?
Thanks in advance,
Mark

6 Responses

  • Mar 08, 2010

    Julie Rains

    I'd approach each of the problems you mentioned separately (though resolution of one will help resolution of the others): 1) figure out how to get paid for invoices due now (require cashier's checks for example); 2) contact PayPal and AmEx to tell your side of the story, hopefully with documentation of authorization or copies of returned checks -- your bank may have those if you don't; btw from other stories I've heard of similar situations, accounts get frozen first, questions are asked later; 3) contact your attorney to deal with the client.

  • Mar 08, 2010

    Chief Client Repellant & Idea Munger

    Thanks for the heads up Julie.

    The client has contacted AMEX but "forgot" to get a confirmation number. We're contacting PayPal & Amex today to tell our side of the story and hope this goes away quickly.

  • Mar 09, 2010

    President

    The first decision you have to make is how valuable such a client is to your business. If you feel you can't afford to lose this client, then working with the client, Amex and PayPal is the best solution. However, with 2 attempts to avoid paying now in hand, this is likely a client that will be a constant problem and is best let go.

    That being said, there are several other steps that you can take. If you have the checks that bounced or can get copies from your bank, file charges through your local district attorney or whatever agency handles bad checks. This costs you nothing and the threat of criminal prosecution can often jar loose your money.

    You also have the right to re-present the billings to Amex and have the customer charged again.

    Check your business insurance to see if this potential loss might be covered. If you appear to be getting nowhere, contact a collection agency. It will cost you nothing up front but they can be successful in getting your money.

  • Mar 09, 2010

    Chief Client Repellant & Idea Munger

    Thanks for the reply Gail.

    This is an ugly situation turned pretty-- sorta. The client contact me on another totally unrelated matter yesterday and he acted as if he was completely clueless about the chargeback. When I brought it to his attention he couldn't get off the phone quick enough to go and call AMEX to explain the mistake. He even contacted me four times yesterday to see if the situation had been cleared up satisfactorily.

    I'm now waiting on AMEX to work with PayPal in order to clear up the confusion.

    It will all work out, but this is one time my anger got in the way of direct communications. Once I talked it out and found it was a mistake, all worked out. He's still not an "Ideal Client", but I can work with him and we'll both be better off by working together.

    On another note-- in five years, I've yet to find a collection agency that could do its job. Suggestions?

  • Mar 23, 2010

    President

    Mark,

    I am glad things are working out.

    I've been fortunate in not having to go to a collection agency but I have not heard any reports about success. However, using one that will report that a bill for a client is in collections to the appropriate credit reporting agencies can often have the impact of getting your money. Most businesses don't want something like that on their credit reports.

What do you think?

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