We had a woman sign up for language lessons on a site in January. We have been billing her for 6 months (she gets an email receipt with each month's charge). She called about a week ago to ask what the charge was and when I told her, she said that she forgot about signing up and got really mad. It is very clearly marked during the signup process that they must email or call us when they want to cancel or they will get charged every month.

Just received (AMEX) chargebacks for all 6 months with her claim that the charge was fraudulent. Because of my merchant account agreement through Wells Fargo, I can do nothing to fight this with Amex.

My question is this. She lied to AMEX by saying the transaction was fraudulent and since we provided the services to her, wouldn't this be considered theft? If so, and we are in different states, would I file a police report in her state or in mine? I realize this is not a legal forum, but I am curious if anyone has filed a police report for something like this before.

I would rather get the police involved and make her go through the headaches of that, than worry about trying to sue her.

Originally posted by bjseiler
Because of my merchant account agreement through Wells Fargo, I can do nothing to fight this with Amex.

Huh? :eek:

Merchants have a say in chargebacks as well. You should get a chargeback notification and have the ability to submit documentation. I know our merchant account with AmEx deals directly with AmEx, but I'd still think you'd be able to call AmEx and explain the situation. If you get a statement from AmEx merchant services, there's a number you can call on there. Try calling it.

You should be able to legitimately fight this.

We don't deal directly with Amex. Our merchant account is Wells Fargo Securesource and we have no ability to contest Amex chargebacks. I knew this from one past dealing and I just called to verify this is still the case.

From the chargeback email:

Chargeback Reason: (American Express: FR) Customer claims fraud. Your establishment is on a Full Recourse/Immediate Chargeback agreement with American Express. This agreement states that if a cardholder claims fraudulent usage of the card, even if your establishment obtains an authorization approval code, no inquiry will be sent and we have the right to charge your establishment.

Send the account to a collection agency. Make sure you tack on a chargeback fee and any other fee's that are acceptable under law. (Collection fee's etc...)

No attorney is going to take that case and the police will tell you it's a civil matter.

Aaron

I guess I just don't understand how this is not theft which is a criminal offense. Is stealing services any different than stealing a television from BestBuy? That is a serious question, not sarcasm. Also, her claim of fraud to get the chargeback initiated was a lie (somebody did not steal her card, she bought the service). I would think there is something to that making this criminal.

I would rather see her sweat through a police investigation than get my $210 back. The $210 does not bother me really, it is the principal of her falsing getting a chargeback because she "forgot" about being signed up.

My suggestion is to send her to collections for the maximum amount possible and be done with it. Add in the chargeback fee and/or anything else possible under law.

If she doesn't want to pay her bills, her credit report should reflect that (per collections) and maybe she'll remember the nasty thing that she did to you when she has trouble getting a car loan or a mortgage... or has to pay a much higher interest rate because of it.

I can almost guarantee that the local police will tell you that you need to pursue this on the civil level and won't want to get involved nor would they probably be able to.

Furthermore, you would have a hard time trying to prove a case of fraud. For instance, how can you be -sure- that she didn't have her card get stolen? Its her word against your presumption that she is lying - at least from the likely perspective of the courts.

Don't get me wrong - I fully believe your side of the story, I'm just saying it would be hard if not impossible to pursue this on the criminal level.

We run into the same frustration in the merchant services industry... sometimes ending up with merchants who are clearly fraudulent and create losses - but we are limited in what we can prove or do against them and most of them don't even care about their personal credit.

Frankly, I agree with your assessment that charging back a $210 service that you received is no different than running out of BestBuy with a $210 TV. Unfortunately, the laws and legal processes do not reflect that reality at this time under most circumstances.

Hmm, interesting. You must get very low rates from AmEx to have that statement in your account.

First, I'd review your merchant account. Call AmEx merchant services and see if there's an account you can switch to that will offer you chargeback protection. Even if it has higher rates, it sounds like it's worth it. My AmEx account integrates directly with my regular merchant account and deposits directly into my Wells Fargo business checking account, so I know it's possible.

Second, listen to Aaron. He's exactly right. Send her butt to collections. If nothing else, it will leave a black mark on her credit record (I have a paid collection of just $200 on my credit report and my FICO score dropped by 50 points because of it! It's effective, to say the least.) This will cause her to rethink doing crap like that in the future. Having an AmEx card does not give her the right to walk all over you.

Good luck!

Erica -

With AMEX I get 3.85% discount + $.30/transaction. I don't think that is either great or terrible. Plus I get hit with $39.99/month from WellsFargo for the merchant account fees (that is not good).

You guys give the wise advice, but I will probably take a shot with a police report anyway just to see if I get a response. Deep down, I know I will not get anywhere, but I am a little hard headed when it comes to the principal of things like this so I will try.

I have a decent paper trail that would make it hard for her to say that she did not sign up for the service nor talk with me about it two weeks ago (ip and timestamp at signup that I can track back to her ISP, phone bill showing her calling my 800 number and talking for 5 minutes, copies of two places on the web site where it says she will get billed monthly until she cancels, etc.). Maybe I just want to see if she has the guts to lie to the police about it :-)

Can you tell me what collections company would deal with a $210 charge?

Sorry to change the subject of this thread, but what needs to be done to send a customer to collections? Would I need to establish an account with a collection agency?

I've had similar experiences such as this which were just written off as a loss and i'm sure it will happen again in the future so i'd like to be prepared.

Try calling a few local collection agencies. I know some require you to establish an account with them before pursuing, but some do it on case to case basis.

Once AMEX finds out and recatagorizes you as being on a Full Recourse/Immediate Chargeback agreement with American Express, you have no recourse. We dealt directly with AMEX on this. Online services fall under this. It took AMEX three years to find this about us and change us. Maybe they have not realized it yet for you Erica.

One benefit is they do not charge a $15 or $25 chargeback fee like Visa/MC. The negative is that they force you to deal directly with the client. We simply use a collection agency. At the very least it forces them to spend more time on it. We have tons of templated letters and reply letters so that it takes us a few seconds to submit collection disputes, etc...

I wish every host/ISP was forceful with collections and not so quick to write off. It creates bad habits in customers to think chargeback's or simply closing cards will stop service. I can not begin to count the number of times I heard from customers "I can't believe you submitted $40 to collections. Didn't it cost you half that to submit?". Well, close. But the submission was a matter of principal more then anything else.

There is not enough information on this.. with the chargebacks I have fought and lost I just cut my losses at that point. Sending the account to a collection agency never really crossed my mind until reading this thread. I can think of one or two times where I would have submitted to collections just on the principle that someone was trying to get something for nothing on my bill.

They do not charge a $15 or $25 chargeback fee huh? Man, you must have a really good deal with AMEX......

This is directly from the chargeback email.

This email is being sent to notify you of an American Express Chargeback that we received from one of your customers. Your DDA Account will be debited , for the amount of the Chargeback received, along with a $15.00 Chargeback Processing Fee.

We deal direct with AMEX. Maybe that is Wells Fargo hitting you, not AMEX. Check your Terms with them.

I don't think we've ever had an AMEX chargeback, but now that I'm reading about this Immediate Chargeback deal with AMEX, I'm wondering if it's worth the risk on large dollar amount accounts. After all, what prevents a $2,000/mo customer from loosing his shirt and deciding to chargeback 6 mo's worth of service? If we are on immediate chargeback, we just lost $12,000 in one shot.

Jay Suds -

It can and does happen. I was talking with a guy who sells mortgage leads and somebody once charged back 6 months worth of leads for a total of $35,000. The customer never complained once in those six month and then just hit him with a chargeback for everything. He was in the process of trying to figure out how to find the guy so he can sue when I talked to him.

One thing to keep in mind is that Amex's policies and chargeback handling fees & procedures are set by Amex - not by your merchant processor.

So whether it is Wells Fargo or another merchant provider, Amex is still going to handle and process that transaction and/or chargeback in the same manner.

Originally posted by bjseiler
I would rather see her sweat through a police investigation than get my $210 back. The $210 does not bother me really, it is the principal of her falsing getting a chargeback because she "forgot" about being signed up. Well, if you want to get your $210 back, reporting it to the police isn't the answer. The police aren't a collection agency -- if they don't just tell you that it's a civil matter (which is most likely) the only thing they could do is to make an arrest. Of course, then you could later make an agreement with the woman in which she pays, and you then tell the police you no longer want to prosecute.

BUT -- this is exactly why the police will tell you it's a civil matter. They've got better things to do than to be the "muscle" in what's properly a dispute for small claims court -- which is where you should pursue it.

JayC - You didn't understand my comments. I don't care about the money. It is the principle of stealing services from somebody and getting away with it. That is my point in all of this.

Originally posted by bjseiler
JayC - You didn't understand my comments. I don't care about the money. It is the principle of stealing services from somebody and getting away with it. That is my point in all of this. Well you're right, I completely took your comments the wrong way. For some reason I read that first sentence as "I want to get my $210 back," and then throught the next sentence was completely contradicting it.

Sorry, long day -- time to get away from the computer screen. Good luck, anyway.

Originally posted by cdgcommerce
One thing to keep in mind is that Amex's policies and chargeback handling fees & procedures are set by Amex - not by your merchant processor.

So whether it is Wells Fargo or another merchant provider, Amex is still going to handle and process that transaction and/or chargeback in the same manner.

I know this is your field, but I do not think this is 100% true. AMEX sets how they 'handle' the chargebacks, but they do not set the chargeback fees. Case in point. Us. We do not pay chargeback fees for AMEX CBs. We too use Wells Fargo. But we run our AMEX account direct, not through Wells (even though the transactions go through Nova).

When we were with CSI, the visa and MC chargeback fees were more the the $15.00 Wells Fargo charges. So I guess my point is that each merchant provider sets their own rates or add on top of Visa's/MC/Amexs charges. Is this true or not?

I'd say your best bets to resolve this would be to A) hand the account over to a collection agency as has been previously stated, or B) take the user to small claims court. It depends on your jurisdiction, but in many cases you can take a customer to small claims court in YOUR area, and they are expected to show up or else you win by default. Getting them to pay a judgement in this case may be difficult though. I'd say go to your local courthouse and ask what the procedure would be, it's worth a shot and any police officer would probably tell you to do this.

Some departments in my area will file charges for bad checks and theft of services. I would imagine they would also file charges for fraudulant chargebacks. You need really good proof for them to take a case such as a signature, contact information, drivers license number, phone number, etc. It would never hurt to contact you local department.

Check fraud and chargebacks, disputes, etc are totally diffrent ball games. Sending the chargebacks to collections it the most appropriate course of action. I've yet to come across a decent agency, but if I had to pick one I would say go with Transworld.

To clarify some questions on this:

I know this is your field, but I do not think this is 100% true. AMEX sets how they 'handle' the chargebacks, but they do not set the chargeback fees. Case in point. Us. We do not pay chargeback fees for AMEX CBs. We too use Wells Fargo. But we run our AMEX account direct, not through Wells (even though the transactions go through Nova).

When we were with CSI, the visa and MC chargeback fees were more the the $15.00 Wells Fargo charges. So I guess my point is that each merchant provider sets their own rates or add on top of Visa's/MC/Amexs charges. Is this true or not?


American Express, by default... does not have ANY chargeback fee at all. So that is why you are not paying any CB fee on Amex.

In fact, the only time that Amex will consider adding in a chargeback fee is if you exceed a 3% chargeback ratio with them based on volume.

If that happens, Amex does reserves the right to add a chargeback fee but this is not automatic and instead done on a case by case basis.

In such an instance, Amex sends out a letter and usually tries to call as well to notify you of their decision in this regard. But the vast majority of Amex merchants never have a chargeback fee and never run into the above situation.

Any chargeback fee listed on your merchant account would be strictly for VISA/MC transactions - and those fees do indeed vary from one acquirer to another. My guess is that this is likely the fee that you are referring to.

In addition, the pricing for Amex is standardized based upon the industry type, annual volume and average ticket size. This information is initially estimated by the merchant when signing up for Amex but then after the first full year of processing, Amex reviews the actual numbers to re-adjust their fees if needed.

By default, most Amex merchants are placed on a $5/month "flat fee" program which allows up to $5,000 in Amex sales per year without % rate fee. If you exceed that, the $5/mo. goes away and you are reverted to the discount rate program which can range from 4.1% or lower --- again, all based on the specifics of the account.

If you have an existing Amex merchant account # and are paying less, more than likely it is because a review was done on your account after you developed some processing and you have a more favorable rate as a result.

Lastly, one useful item of note --- if anyone wants to accept Amex but doesn't want to do the flat fee program and instead go right onto the discount rate program, this can be done if you call Amex directly.

Usually this will only benefit a merchant if they don't think they will process very many Amex sales at all. Because even if they do just over $125/month in Amex sales, the $5 flat fee program is the better deal.

Please let me know if that helps to clarify a bit further regarding Amex sales processing / chargebacks, etc.

Record all your conversations with ur customers, when they sign up call them and verify, be sure to have the recorder on! this is how you can protect urself, that way when a person says it was fraudulent show the audio to the police and let them decide, and if it was he/she than u are totaly protected, but you must tell them they are being recorded...

Thats what im going to do, to protect myself....

One very nice option that allows you to capture a voice print along with doing the BIN/IP/GEO scrubbing -plus- the voice verification call for the phone number is Fraudgate.com.

Originally posted by WII-Aaron
Send the account to a collection agency. Make sure you tack on a chargeback fee and any other fee's that are acceptable under law. (Collection fee's etc...)

No attorney is going to take that case and the police will tell you it's a civil matter.

Aaron


Aaron has the right idea, just be done with it after that. Was there a lot of money lost through these chargebacks?

Hell - screw collections 1st....

File a small claims in your own county local court, and have the papers served by certified mail. She will have to answer the summons in your jurisdiction; not hers. More than likely she will ignore it and you will win by default for no show. Just make sure you have all your paperwork to show the judge. Then you have something to give the collection agency - a court decision in your favor that this deadbeat owns you the $$.

PLUS - it goes on her credit record TWICE - once for the court filing/default judgement - 2nd for the collection agency.....

Been there - done that!

Tony

Originally posted by TheWiseOne
Sorry to change the subject of this thread, but what needs to be done to send a customer to collections? Would I need to establish an account with a collection agency?

I've had similar experiences such as this which were just written off as a loss and i'm sure it will happen again in the future so i'd like to be prepared.

What you experienced what is known as a 'friendly chargeback' and yes, it's very ironic because it's in no way friendly. Unfortunately, while it is in some context wrong, there is little anyone will do about it. Although, what most people fail to realize is that a chargeback is not the end of the story. If a person has ordered something from you and then decides not to pay for what ever reason and you can prove that they ordered it, I would consider that an account not paid and send it to collections. There are several collection agencies online. Feel free to ask and I will provide a list. Most work on a no fee basis unless some monies are collected. If you are sure that this is the right person, you will have a pretty good chance of getting your money back. It's a pain and a hassle but this would be your best option at this point.