Forums: Discussions for entrepreneurs and small business.

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.


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Sage Media :: Full Service Graphic Design Firm    |   Portfolio     |   Blog

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. 

 

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Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

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. 

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Pepper Law Group, LLC
21 E. High Street, Suite D
Somerville, NJ 08876
informationlaw.com
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It does cross borders... I am in Canada, and the customer is in Oregon.

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Sage Media :: Full Service Graphic Design Firm    |   Portfolio     |   Blog

Is there a Better Business Bureau type agency you can file a complaint with? If not, I would start sending past due notices and then take them to small claims court. If they didn`t pay you for the artwork regardless if it was a contract for hire, you now own the usage rights of that artwork. Just be sure you have the contract, proofs, email communications, phone logs, etc.

Good luck.

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????????????

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Our Goal Is Your Success!
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www.AutomaticResidual.com
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Sage Media,

I feel your pain. Business owners go through this every day with chargebacks, and merchant services not backing them up if they do not have third party paperwork to back it up. PayPal is right about the service industry. If you do not have proof, you are out of luck. At this point, I would try to find out what issue was with why this reversal occurred. If he or she did it because they did not have the money, you could setup a payback plan through PayPal under a subscription option.

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 project
3-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.

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Sage Media :: Full Service Graphic Design Firm    |   Portfolio     |   Blog

Sagemedia,

That is bad! I hope this supplier is not the mass amount of your business. I do not understand they would go to these measures to hurt your business.