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  1. #1

    WHMCS does not confirm with business ethics and laws in Europe

    This was posted on WHMCS.com but it has been removed.
    If you use software then verify if the supplier has any background or experience as a business. Certainly in cases were your own business is depending on it.

    Verify with your own legal counsel, government TAX office about this matter and inform MATT that he must resolve this issue.



    Proforma invoice to confirm with business ethics and laws
    Hi all,

    I just noticed that proforma invoices implemented in WHMCS are violating European laws.

    If your country has laws that prevent invoices to be altered in the past, containing not the issued date but a date in the past then this is of real concern to you.

    First a small explanation:

    Proforma invoice is a document that shows an intention to sell some goods against a certain price.
    After the sale really has taken place a commercial invoice is supplied.

    In business proforma invoices are used to prevent paying sales tax (TVA/VAT/BTW) to government in cases that the sale has not taken place or not received payment. In Europe (and most other countries) you have pay each period all tax that you have formally have invoiced, despite if you have received payment or not. To request the paid tax back you have to proof that you have done everything to collect the amount on the invoice. (hired debt collection agency or have court bankruptcy document etc..).

    Because of our business and fake orders you can choice to use proforma invoices, and commercial invoices are only issued when payment is received, to prevent having to pay tax over sales that you might not get paid over and have to spend time and money to correct afterwards.

    If you use: Sales Tax Liability reports in combination with proforma invoices then you are violating European laws on alteration of a document, forging of a document and antedate an invoice.

    At thsi moment the SALES TAX LIABILITY reports does the following:

    When a cllient orders he gets a proforma invoice with a date XX-XX-XXXX if the invoice is paid next year (or next sales tax period) he gets a formal invoice with the date XX-XX-XXXX this means that you are creating a formal document today with a date in the past, which is illegal in most countries in the world. (if you know a country where this is legal let me know!).

    For example:
    John Doe has overdue a proforma invoice on 1-4-2010 after sending him reminder and debt collector agency he pays on 2-2-2011. WHMCS set invoice paid and emails a commercial invoice.

    This commercial voice has on it:
    Invoice Date: 01/03/2010
    Due Date: 01/03/2010

    While it was paid 2-2-2011 & the formal invoice was created on that date and the invoice number was issued on that date.
    Also your invoice number will not be succeeding when sorted on date. This is one of the basic check an accountant will do to see if he has all invoices.

    When you use the Sales Tax Liability in Report for the the period 1-1-2011 to 1-4-2011 it will also give you this invoice.

    Sales tax does not follow payment date but commercial invoice date and the only way to prevent paying sales tax before receiving payment is using proforma invoices.

    The current situation is illegal and a crime in at least all European countries. And if you want to put your competition our of office just call the hotline for economical or tax crimes.

    Another issue is that fact that customer can change their details. When they do this the details on issues (pro) forma invoices are also changed.

    In Europe companies are obligated to keep their administration and communication available for atleast 10 years. An official document issued may not contain a date in the past, but must have the date of issuing and may not be altered afterwards.

    If these two issues are resolved WHMCS can be used for running a business, until then it is violating laws. (unless you are not using whmcs for invoicing.)
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  2. #2
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    May I suggest you take a different approaching at putting this feature request to WHMCS... Rather than sensetaionalise the issue across forums with the subjects of illegality and ethics why not just put the issue into a bug report with them?

    Also, you seem to mention how the software encourages illegal practice in Europe but from reading your post I'm guessing you're not in the UK? I can say for sure that several things in your post are incorrect according to UK law and regs so you may wish to check the laws and regulations for the whole of Europe and it's tax regions before speaking for them.

    I'm not saying there isn't an issue as we had to do a few tweaks to our WHMCS system in order to comply 100% with VAT regs (related to showing vat numbers, vat breakdowns, etc) but I think you'd get further with WHMCS if you put it to them directly.
    Chief brew-maker at several hosting brands since 2002.

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  3. #3
    Quote Originally Posted by Jim_UK View Post
    May I suggest you take a different approaching at putting this feature request to WHMCS.
    Matt just suspend 2 of our owned License.
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  4. #4
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    Yes, Matt suspended your licenses because you said you were initiating legal action. Any clients who threaten legal actions have their services suspended until the matter is resolved.

    As for your original post, no company would leave a post making false claims about them breaking laws, committing crimes, not follow ethics, etc... on their forum. If you had grounds sure, but you've already been pointed towards our EU VAT Addon which provides the proforma invoicing, sequential paid invoice numbers & reissueing of invoices with the current date upon payment which you're looking for.

    As Jim suggested, you've gone about this in completely the wrong way today. Threatening legal action, saying you'll sue us, etc... unless we do what you want immediately is not the way to go about things. So you can continue to make threats and bad mouth us on every forum you can find, or you can cut the bs and start acting professionally and then might actually get somewhere. I notice you've signed up here under a new name to hide your identity so I don't hold out much hope.
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  5. #5
    Quote Originally Posted by WHMCS-Matt View Post
    Yes, Matt suspended your licenses because you said you were initiating legal action. Any clients who threaten legal actions have their services suspended until the matter is resolved.

    As for your original post, no company would leave a post making false claims about them breaking laws, committing crimes, not follow ethics, etc... on their forum. If you had grounds sure, but you've already been pointed towards our EU VAT Addon which provides the proforma invoicing, sequential paid invoice numbers & reissueing of invoices with the current date upon payment which you're looking for.

    As Jim suggested, you've gone about this in completely the wrong way today. Threatening legal action, saying you'll sue us, etc... unless we do what you want immediately is not the way to go about things. So you can continue to make threats and bad mouth us on every forum you can find, or you can cut the bs and start acting professionally and then might actually get somewhere. I notice you've signed up here under a new name to hide your identity so I don't hold out much hope.
    Read the article. It is not about EU VAT.

    It is about the fact that official documents are are altered and/or issued by the system with bad date. That is a criminal act in most countries in the world.

    And any one with WHMCS can see this for themselves.

    1) Create a proforma invoice. For this example change the date to last year. Set invoice paid and see another document will be created with the date of last year. This is illegal. (for test purposes use amount lesser then 0,01 to prevent liability)

    2) Go to report function and use Sales Tax report function.
    Select this year and you notice that the test invoice with "fake" invoice date of last year is showing up.

    3) Change customer information and open up an old invoice and you will see that the invoice has been altered.


    Meanwhile you are blocking the access to our owned license with as result that customer can not contact us and we are not able to use our business administration.

    If you read the topic of this posting and read your posting than you have just confirmed the business ethics part.

    Anyway, we have only notified about liability, not informing you that we are going to take legal action, as you probably do not know before you can take any legal action you need to inform the other party of their wrongdoing and give them a change to resolve it.

    About the suspending license part we provide you a hour.
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  6. #6
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    Someone want to sum up what the OP is trying to say? His post is all over the place and doesn't make much sense.
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  7. #7
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    You realize if WHMCS removes this ability, people that want to do it will just end up editing it in mysql.
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  8. #8
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    Quote Originally Posted by quantumphysics View Post
    You realize if WHMCS removes this ability, people that want to do it will just end up editing it in mysql.
    I don't think the point is that people are intentionally wanting to violate the law. I think what the OP is trying to say is that the way WHMCS currently does it causes people to, potentially unknowingly, violate the law.

    Now I say this having know notion of what the laws are or are not in this situation, and I would leave something like this to my accountant.

    I have had issues where somebody ordered a service, and then paid that invoice a month later and never actually received the service in the month that the invoice was credited (i.e. they paid for a month they didn't get to use) so I could see how this could be ... complicated. Illegal? I don't know.

    Could it use some work? Sure... But going from how WHMCS handles it now to a new method would be a *LOT* of work. If it's legally required however, I don't see that there would be any choice.

    I guess we'll have to see if this actually goes to court.
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  9. #9
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    Quote Originally Posted by WHMCS-Matt View Post
    Yes, Matt suspended your licenses
    Which Matt would that be?
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  10. #10
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    You can only really complain about WHMCS if they claim that their software complies with all the relevant legislation and requirements for every country. I'm pretty certain they don't.

    WHMCS is designed for an international audience. I know the rules in most continental European countries are pretty strict (I'm pretty certain in at least one country invoices have to be sent using digitally signed PDFs - just to make things difficult), but other places maybe not so. What is illegal in one country is possibly entirely acceptable in another.

    The fact is if software like WHMCS doesn't claim to meet every requirement in every country. It's really up to each individual business to examine their options and note what requirements they need to meet (as indeed this can vary based on the size of your business too) and then what changes might be required to make you compliant.

    Rather than sensationalising this, perhaps putting your concerns in a polite, professional and reasoned manner will better achieve what you want - whatever changes need to be made for compliance in your country.
    Alasdair
    Long time ex-host, ex-billing software owner/developer/support staff. Recent lurker.
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  11. #11
    Quote Originally Posted by anon-e-mouse View Post
    Which Matt would that be?
    Matthew Pugh the founder WHMCS.

    2 different companies with both owned licenses are frustrated because of this.

    We are not letting us being blackmailed by anyone. We will see how Police in the UK is going this specific issue.
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  12. #12
    Quote Originally Posted by tickedon View Post
    You can only really complain about WHMCS if they claim that their software complies with all the relevant legislation and requirements for every country. I'm pretty certain they don't.
    It is not a complaint. It is something we just found out and we have notified supplier about.

    Not expecting that supplier hasn't any clue about business ethics and law in regard to changing issued documents and ordinary tax laws. As posted, anyone is responsible for his own business, and no one (should) on purpose be violating any law.

    It is not something the supplier can decline without investigating it.

    If you know that you competitor is violating laws then you can call a hotline (in most countries). If you know that at this moment your competitor is using WHMCS then the change that he is violating multiple laws is very big.

    Despite this is you see something wrong which can affect you or your business are you going to ignore it?

    The combination of the reaction in advance and at the end after posting it here blackmailing us by suspending "OWNED license" and only restoring them IF we "promise" not to take any legal action.

    With that said we have never announced legal action, we only have informed our supplier about liability.

    And anyone who has worked with debt collection (or started lawsuits) knows that you must first inform the other party specific, before you can do anything. This doesn't mean that you are going to that.

    If someone makes a mistake and you inform him that he is liable, then you should assume that he will think it over and not start to blackmail 2 companies, which is clearly a criminal act.
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  13. #13
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    Quote Originally Posted by stupidIam View Post
    Matthew Pugh the founder WHMCS.
    Anon-e-mouse was more referring to WHMCS-Matt referring to himself in third person, as though it wasn't Matt making the post. Sharing of WHT accounts is, after all, against the rules.
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  14. #14
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    Quote Originally Posted by stupidIam View Post
    If someone makes a mistake and you inform him that he is liable, then you should assume that he will think it over and not start to blackmail 2 companies, which is clearly a criminal act.
    That's really the question - is WHMCS really liable? I'd argue probably not, unless they've said something to you to the effect that their software is designed to fully comply with your countries local laws.
    Alasdair
    Long time ex-host, ex-billing software owner/developer/support staff. Recent lurker.
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  15. #15
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    Quote Originally Posted by WHMCS-Matt View Post
    Yes, Matt suspended your licenses because you said you were initiating legal action. Any clients who threaten legal actions have their services suspended until the matter is resolved.
    Regardless of what is going on, you cannot do that. You should immediately undo that and get this rectified, because this is just about the worst thing you could possibly do.
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  16. #16
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    Hello "stupidIam",

    I do not intend to defend Matt and WHMCS, despite that their software is working great for us. Let me just tell you that when you posting claims like the one in the original thread, you must not be ignorant on the matter. There is no such thing like "EU VAT law". There is not even a single VAT rate in European Union. Each EU country has its own tax regulations and they are sometimes quite different. There is only a EU VAT Directive 2006/112/EC (http://eur-lex.europa.eu/LexUriServ/...110101:EN:HTML).

    I should also say that WHMCS might be or might not be used for a primary accounting system. This is something that anyone should consult with a CPA.
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  17. #17
    Hi all,

    Been very busy.

    First of all it has nothing to do with VAT (sales tax) law of Europe.

    Just google on "Criminal Penalties for Altering Documents"

    Or visit:
    http://codes.lp.findlaw.com/uscode/18/I/25

    Not being a legal councillor, but it is most likely that also in the USA you may not alter an already issued formal document.

    As you see (and can try yourself) there are two cases in which WHMCS at this moment is violating laws in many countries.


    1) If proforma is being paid and invoice is issued with the date in the past. (while that document has his own unique number)

    2) If you today alter customer information, ALL invoices in the system are reissued with same invoice number.

    Someone wrote that if you are not doing this on purpose then may be you can not be held liable. This is not completely true:

    first of all most countries have in the constitutions that any one should obey and know the laws.

    Second of all entrepreneurs have an obligation to seek which laws/regulation their business have to comply with.

    Third of all at this moment the information is public and the vendor is informed. (Just imagine if this was a zeroday exploit in WHMCS, while this has a legal larger impact for any customer)

    It would be hard to decline responsibility and hide behind the product, or the fact that you have not noticed or wasn't aware about this happening.

    It would cost anyone just one phone call (or visit to google) to check if their current situation is creating legal issues.

    Besides this, what if you send a email to any support department (Paypal, Microsoft or whatever) you inform them about something, they decline, then you inform them that they are liable if they do not investigate and because of your expression yourself (writing a ticket or posting about it on a forum) they suspend your account/software/whatever, and pressure you to withdraw your expression about liability.

    If you have seen some news the last few months, then you should notice that there are daily people dying just to get some freedom of speech, and some rights. And from that perspective it is ridiculous that Matthew Pugh decides that without reviewing or informing about an issue with specialist(which we advised him) has suspended two "Owned License Not Branded".

    Just imagine that tomorrow your windows, linux server doesn't work because of something like this? Or Cpanel/Directadmin suspending license...

    Besides this what is the meaning of "Owned License Not Branded"?

    Another issue which we have informed him, we purchased from him in person and not from the company with limited responsibility, who didn't exist in that time.

    It is a shame and that is everything that is going to be published.
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  18. #18
    If he lives in the UK and it does not violate his laws, he cannot be liable for your laws. If it doesn't violate UK Laws, you have no reason to threaten legal action. He isn't responsible for every law. Too many laws exist in this world.
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  19. #19
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    It would seem to me a case of the complaintant not performing due diligance before purchasing the product. If he had then he would have known it would not do the job, and now he is embarresed and pi$$ed off.

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  20. #20
    Quote Originally Posted by M Bacon View Post
    If he lives in the UK and it does not violate his laws, he cannot be liable for your laws. If it doesn't violate UK Laws, you have no reason to threaten legal action. He isn't responsible for every law. Too many laws exist in this world.
    We haven't threaten with legal actions. Before you can take any legal action you have to inform/notify the other party of their wrongdoing.

    About UK law:
    UK The Value Added Tax Regulations 1995
    (c)the date of the issue of the document,
    (e)the name and address of the person to whom the goods or services are supplied, (at the date when document was issued.)
    http://www.legislation.gov.uk/uksi/1...lation/14/made

    Theft Act 1968 False accounting.
    (2)For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.
    http://www.legislation.gov.uk/ukpga/1968/60/section/17

    Theft Act 1968 on blackmail
    http://www.legislation.gov.uk/ukpga/1968/60/section/21

    Forgery and Counterfeiting Act 1981
    http://www.legislation.gov.uk/ukpga/1981/45

    Etc..etc... most countries in the world outside Europe has these kind of laws, because an issued document can't be revoked or altered afterwards or date changed etc... (I find it weird that this is not common knowledge, if you sell something you need to know your rights and obligations)

    Also our licenses for:
    WHMCS Mobile Edition = deleted
    Android = not working
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  21. #21
    Didn't he suspend your whmcs owned licenses because he said you threatened legal action?
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  22. #22
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    They seriously suspended your owned license because of a discussion you (with a potential courtcase) are having?

    That's total blackmailing in every existing law! It's an illigal action.

    I know for one I will be looking at other options for billing. I really don't want to be partners with companies who act like that.

    Shame on you, Matt.
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  23. #23
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    Okay sir; after reading this fighting back and forth about this matter I have to say that you should honestly just stop. Plus is this really the place to be doing this? This forum is for asking questions and posting things about software for hosting companies not posting slander about WHMCS's development and business practices. If you have problem with the way the company conducts its business consult their owner or legal consul or if you feel that badly about this consult your attorney.

    "Just google on "Criminal Penalties for Altering Documents"

    Or visit:
    http://codes.lp.findlaw.com/uscode/18/I/25

    Not being a legal councillor, but it is most likely that also in the USA you may not alter an already issued formal document.

    As you see (and can try yourself) there are two cases in which WHMCS at this moment is violating laws in many countries."

    Understand this for a moment; WHMCS sends emails to customers with a PDF version of the invoice that is not altered as soon as the invoice goes out; only if the customer changes their information does the invoice change at all and thus all copies afterword change; just like if your accounting department were to print an invoice and realize they made an error then reprint the item. This occurs before the invoice is do and on the due date.
    In addition as has already been explained WHMCS is NOT AT ALL designed for any ONE SPECIFIC COUNTRY... it is used INTERNATIONALLY. As such it may not follow laws for a specific region or country; as a result is NOT their responsibility to conform to those laws; it is YOURS as the BUSINESS OWNER no one else's.

    "Someone wrote that if you are not doing this on purpose then may be you can not be held liable. This is not completely true:first of all most countries have in the constitutions that any one should obey and know the laws. Second of all entrepreneurs have an obligation to seek which laws/regulation their business have to comply with.Third of all at this moment the information is public and the vendor is informed. (Just imagine if this was a zeroday exploit in WHMCS, while this has a legal larger impact for any customer)It would be hard to decline responsibility and hide behind the product, or the fact that you have not noticed or wasn't aware about this happening."

    Refer to what I stated above please. If WHMCS is violating the laws your YOUR Country it is not their responsibility to fix it because the software is used internationally and such not all jurisdictions follow that same exact law. As a result unless they are breaking the laws in the country their servers and corporate office are located they have no legal reason to assist you with the laws of YOUR country; you are paying them to provide you the software you use AS IS without warranty or liability... thus its your problem... not there's.

    "Besides this, what if you send a email to any support department (Paypal, Microsoft or whatever) you inform them about something, they decline, then you inform them that they are liable if they do not investigate and because of your expression yourself (writing a ticket or posting about it on a forum) they suspend your account/software/whatever, and pressure you to withdraw your expression about liability.

    If you have seen some news the last few months, then you should notice that there are daily people dying just to get some freedom of speech, and some rights. And from that perspective it is ridiculous that Matthew Pugh decides that without reviewing or informing about an issue with specialist(which we advised him) has suspended two "Owned License Not Branded"."

    What you are doing is slander; they could take legal action against you for doing this becuase you are making them look bad when they are not actually breaking the law where their servers and offices are. That is all that matters; example I run a streaming website is a country that has no DMCA compliance laws thus even though streaming that content might break the law somewhere else does that apply to me right now; no it does not becuase where the servers are it does NOT apply. This is not about freedom of speech this is just about you complaining that they suspended your license becuase you damaged their reputation with slanderous remarks. At this point I am going to be reporting this post and sending a link to this to WHMCS. I am sure they already know this is here but what you are doing; if this were me I would have sued you by now for committing an act of slander in civil court and I would have won.
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  24. #24
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    Quote Originally Posted by Pr0jects View Post
    They seriously suspended your owned license because of a discussion you (with a potential courtcase) are having?

    That's total blackmailing in every existing law! It's an illigal action.
    It is not blackmail, and is not an illegal action.

    To the OP:

    If whmcs (or any other software), does not work the way you think it should, then do not use it.

    WHMCS is not an accounting system. It is a billing, support, order system. You should be using an accounting system for your accounts.

    Coming here whining because the software does not do things the way you want, trying to insinuate that it is breaking the law because it does not do things the way you think it should, just makes you look petty and stupid.

    At the end of the day, if your not happy with the way whmcs works, then choose a different solution, or build your own. Trying to "bully" someone in to changing their software is not the way to go about it.
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  25. #25
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    The UK government are thieving scoundrels, and don't deserve any income from Tax/VAT.

    This issue is nothing todo with WHMCS, they're just a provider.

    OP: You went the wrong way with this, if people choose to use WHMCS, then they accept that it may or may not be fitting with the countries regulations. It's upto the business, not the software provider.

    Because of rules etc I'll leave it there, but I don't have a very high opinion of the OP right now, at all.
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