I received an order for a large sum of money over the internet. We corresponded only via e mail. I ran the credit cards ( 3 ) through and the transaction seemed to be valid. I waited until visa put the money in my account before I used some of this money to order this specialized product that I did not have in stock. I also paid some long overdue bills with the balance. When the day arrived that I was going to ship the product, the customer contacted me and wanted me to send to Nigeria. I then started checking on the name to match the credit card through visa and found that they were fraudulent. I did not ship the products, I do not know who this person is and now visa is taking this large sum of money from my banking account. Since this is a commercial transaction, Am I able to be protected by the " holder in due course " clause? I haven't mentioned this to visa but have been doing some research on my own. Help Help Help. This will jeopordize my business if I have to pay all of this back. I have already lost over 1500.00 in withdrawals and bank charges! Also, unfortunately I am a sole proprietor. The product cannot be returned either.

You got scammed, pure and simple. Cancel all the credit cards and try not to let your greed get the best of you next time. These peole prey on those looking to make 'easy' money. Never, ever, do business with someone you don't know.

Looks like someone fell for a nigeria scam, gave out their credit card info to the scammer who in turn scammed you.

I think you need to read your merchant agreement with Visa. There must be something in there about the responsibility in case of fraud. I think that's what will govern in this case.

Contact your state Consumer Protection agency... and the Attorney General office this is not unusual... their are many scams associated with Nigeria... some have cost mayors of cities to resign in shame... here in Texas there are cases now opened address certain issues concerning Nigeria... ask the office to inter act with each other

The Office of the Attorney General, Consumer Fraud Bureau, 500 Second Street South, Springfield, IL 62706, phone: (218) 782-9011, TDD: ( 217) 785-2771 or 100 Randolph Street West, Chicago, IL 60601, phone: (321) 814-3000, TDD: (312) 814-3374, toll free: 1-800-252-8666.
www.weblocator.com/attorney/il/law/consumer.html
www.ag.state.il.us/
www.sos.state.il.us/
www.sos.state.tx.us/
www.oag.state.tx.us/consumer

1. You said you checked the Visa account and they were valid then you say they were not valid.
2. you spend money before the transaction was finalized - a big sole proprietorship nono

The standard remediation was to return the money and cancel the transaction but you had already spent the money so that's where the weak spot is in this transaction. The money you received is considered in escrow until the product is shipped.

I'm guessing the person who ordered the 'specialized' product and the place it was purchased from (NO return policy?) are in cahoots.

First I didn't say you "fell" for the scam, but you WERE scammed, so your disagreement was inappropriate. Further I tried to help you but suggesting where to look for recourse, but you ignore that fact.

If VISA approved the transaction and delivered the money, then, In my opinion, they have to bear at least some of the responsibility. But that should be spelled out in the merchant agreement.

Costume27-I know your new here but have to tell you that disagreeing with everyone who answers and rating it as such hurts the poster as well as turns people off to answering you.

As to the problem you have, This is an old well documented scam that has been perpetrated all over the world. I was most intrigued by your comment to LUNAGODDESS as to the result of contacting those agencies that they only took report from businesses and am a little confused since you represented yourself as a business to us. My own experience says they not only do they take a report but send you additional information on how to report fraud.

Well, If if this was an old scam it is news to me. ( This if the first chat room I have ever been in. I really don't have the time to seek these kinds of things out) I was told that the product was to be shipped to Daniel Renaldi in Florida with complete name and address. The credit cards went through complete with security numbers from the back of the card.. I waited for the money to hit my account before I spent any of it. After ordering and getting ready to ship it to Florida the customer changes the destination to a valid address in Nigeria. It was also a valid address in Florida , I was even able to contact the person whose name was used. The told me their credit card idenity had been stolen and the Dade County Police were trying to track this guy down.
Are any of you business owners? We merchants need protection from this kind of activity. I am sorry if I offended anyone by posting true statements but you should not be responding unless you are positive as to what you are talking about. I would like to hear from an attorney on line who has dealt with this situation before. Visa told me that I am not alone and small businesses are going out of business because of this type of fraud. I would have been further ahead shipping the product instead of being nosey and discovering it was fraudulent. The person I talked to at 321 841 2000 told me I had no recoruse because I did not know what the name of the business that frauded me. I will try and call again tomorrow to see if I can get further assistance. The visa risk department claims that somebody has to pay and since I cannot identify the buyer it will be me. It appears that this is a common practice for visa. I am sure there is some other MERCHANT that has had the same experience. I am a small business only 4000 costumes in stock of which I have made 30% of them myself. AS for the companies I ordered my product from ( which were costume and bridal stores - retail and wholesale) made it clear that the product could not be returned. This is a common practice in the costume business. I also double checked with them after I found out the transation was fraudulent. NO Go. I have 50 brand new little girls dance hall girl or skating costumes in stock and also 50 bridal or confirmation dresses in stock that I am willing to sell cheap to try and recoup some of my money.

Hi Jo Ellen,

After digesting all the information I can look at this with a better overall view.

Yes I was wrong in my first post and I apologize, I didn't read your post properly.

The nagging issue for me is that if this is a scam I don't see much of a payoff for the Nigerian person. Unless we are missing some information. Did you have to send any money to this person at the beginning at the transaction? Otherwise all I see is him sticking you with a product that you can't return. What's the benefit for him to do that? Especially when you consider that he may not have known that the product was non-returnable and you could have cancelled the order at any time an returned his money.

The advance money you received should have only been used to pay for the ordering of the product that you were reselling. Your profit margin should remains in escrow until the completion of the transaction.

We jump at the bit to call this a scam because Nigeria is involved and that country hosts the largest number of scammers by a long shot. Once again this is weird in that I don't see the payoff for the scammer: he got his money back and that's it. Am I missing anything? (Other than you being stuck with the costume)

Quote:

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Originally Posted by costumes7

Well, If if this was an old scam it is news to me. ( This if the first chat room I have ever been in.

I am sorry if I offended anyone by posting true statements but you should not be responding unless you are positive as to what you are talking about.

The person I talked to at 321 841 2000 told me I had no recoruse because I did not know what what the name of the business that frauded me. ... The visa risk department claims that somebody has to pay and since I cannot identify the buyer it will be me.

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First, yes its an old scam. Use someone's credit info to get product shipped to them, then sell the product.

Second, this is not a chat room, but a bulletin board. Chats are real time where you get instant response. BBs are where you post notes, then come back for replies.

Third, you did offend, but not by posting true statements, but by saying what we said wasn't true (which was not a true stmt on your part). A scam is defined as; "a fraudulent or deceptive act or operation". Can you deny that's what happened to you? What I think got you riled was your thinking we were being critical of you for being scammed. Except for NK's initial response, that was not true of other responses. You were an innocent victim who appears to have done due diligence.

Finally, that brings me to what you can do now. I really find it hard to believe that VISA will leave you hanging on this. If merchants are going to be held responsible for such fraud, then why accept credit cards in the first place? You acted in good faith. You accepted AND verified the CC info. VISA told you it was a good account and even released the money to you. Fraud losses like this are part of the credit card business and factored into their fees.

Again, you NEED to read your Merchant agreement. I'm sure there is something in that agreement that covers this situation. If VISA will not reimburse you, then sue them. The fact that they verfied the card and released the money to you, puts them at blame. I am pretty confident a court (small claims or otherwise) will see it your way.

P.S. Don't be so quick to strike back at people you ask for help.

I'm not an attorney but have been contacted by e-mail quite a few times as have others here by scammers who make promises and even have great web-sites. On of the reasons they are almost always from out of country is they are hard to find and prosecute, and the attorney general of Texas has sent me a lot of info about these scams as I have contacted him every time I get e-mails like this. ScottGem is correct you must take action against Visa to even have a hope of getting your money back. In the future don't spend the money until the transaction is complete to protect yourself against this happening again and lighten up on those who are trying to help. Good Luck.

I did some research here and you don't enter into an agreement directly with VISA but with an issuing bank. So your recourse is against the bank you do your CC business with. I found a typical agreement here:

http://www.busams.com/guide/westamerica.htm

Unfortunately, it seems to state that the merchant is responsible for fraud. What's not clear is what constitutes a settlement of the charge transaction. There is a chargeback provision in case of fraud.

So you need to go back to the bank IMMEDIATELY and discuss this with them.

Another recourse for you would be your business insurance, if you have any. You may be insured against such losses. At the very least, this loss can be written off your taxes.

Scott

I thoroughly checked this with my Visa contract ( the day I realized it was fraud) and they are not liable for this type of transaction. This is the point I am trying to make, It is unfair, not right and I believe there needs to be litigation in the near future to protect merchants from this type of thing.

I could sue and probably win but - that would eat up the 10,000.00 that I received. It just doesn't make good financial sense.

I apologize for jumping at everyone for their answers but now that everyone seems to have read the full story, their tunes have changed. I am the victim here. In the future I will not ever spend profit until the goods have been received by the customer.

One of the first things I checked was my business insurance but there was nothing in my policy that covered this kind of a claim. I also checked with my bank at that time and they are not responsible either. I also let the bank that the credit cards were drawn from know that someone was using their customers cards fraudulently. When I asked them to notify their customers f this fraud their statement was "We don't do that". My banker told me small banks do this type of thing. One of the advantages of using a larger bank for business or personal accounts.

Also, thanks for clarifying the difference between chat room and bulletin board. I stand corrected.

Need Karma

The niegeran person was trying drastically to get me to ship the product before I found out he was acting fraudulantly. According to visa most people do ship the product before they realize it is fraudulent.


And yes, you are missing something. The credit card belonged to one person and was being used by another person. The 1st person was reimbursed their money by visa. The second person wasn't out anything as it was not their card!

Hope that clears it up and thanks for all your input and concern.

JO Ellen

Jo Ellen,
I was surprised when I read the Merchant agreement and it does seem to support what you are saying.

But I have to take exception at your attitude here. The ONLY one who misread your initial post was NK, and he apologized when he realzed his error. No one else, least of all me, has changed their tune. You were scammed. I think you exercised due diligence, and apparently you uncovered the scam. Unfortunately it appears to have been too late.

By the way, if you had told us more about what you had done (Check your Merchant Agreement, talk to your bank and the card processing bank you us, etc.) Our answers might have been different.

One part of your story has changed. Initially you told us you were out $1500, now you refer to $10,000. I'm assuming the whole order was for $10K, but that you had withdrawn $1500, when the bank took back the full $10K. In which case, you can pursue this in small claims court.

Now, I must change my tune slightly. I do not know if you routinely handle such large orders. If you don't, then maybe you didn't exercise enough due diligence. An unusually large order should have gotten much greater investigation. Why would someone place such a large order from a small operator? Usually in the hope that greed will outdo caution. Also, putting $10K on a charge card is a rather unusual transaction from what I know.

In any case, unless you decide to sue, there seems little more you can do to recover. There ARE things that you can do for the future.

1) Contact your elected representatives about legislation protecting small business operators from being stuck for such frauds.
2) Contact your insurance company and see if you can purchase a rider to protect you from such frauds.
3) Never spend received credit card payments until final settlement of the charge. There has to be a time frame after which the processing bank can't chargeback the charge.
4) Establish your own precedures to back check the validity of orders. Maybe see if there are firms that will do such checking for you.

I wish you better luck with customers in the future.

Scott

I am just stepping on toes all over the place. Your input has been excellent and I am glad there has been so much support and assistance.

Visa can enter a chargeback at any time.(I believe it is up to 1 year you have to dispute a charge) I suppose I should wait one month before I spend any visa money but that is very difficult for this business to do. I have neogtiated a re-payment plan with their risk department. This is the only way I can keep the business account open and since I am a sole proprietor I cannot open another business checking account without visa finding out about it and retrieving their money.

I am asking everyone out there who is interested in this case if they know of any merchants that had a similar problem and how they handled it.

Of course I will be re negotiating with Visa and fighting for my rights. That was why I was asking if anyone was well versed in "holder in due course" which is primarily in bank transactions. I may have some recourse or at least a good negotiating tool or argument.

Since I am a costume rental and sales store and do 1/3 of my business in the month of October for the whole year,the most important thing to me right know is to keep my business bank account open as visa will seize all the money in it and also close it if I do not pay this money back. My business runs mainly with credit cards to make sure my costumes come back in good order and on time so I need to be able to take credit cards or I might as well close the doors.
The order was for $ 10,000. Visa took $ 500.00 out to process this order, they then tried to take the total amount of the fraud out at various times when that amount of money was not in the account. I accrued chargeback fees from visa and also nsf fees from my bank totaling about 1000.00. That is where the 1500.00 comes from.

I have had large orders before and am very fortunate to have never had this problem before this time. I certainly will take your suggestions to heart because I don't want anyone else to go through what I have gone through.
I have checked on the insurance rider but it is cost prohibitive ( or maybe not) dependling on how you look at it.

The costumes were sold at a good price for what the customer was supposed to be getting so I don't feel it was greed - it was supposed to be a fair transaction.

You can file a complaint with the Fair Trade Commission but it could take a long time to get any action. I googled-"redress for scams" and got a lot of useful information but it could take a long time to find,prosecute and get your money back, which is the main reason that these scammers operate from foreign countries. But filing with the FTC is a first step. Sorry I wish I had better news as it seems like prevention is the only thing to protect you from these thieves. Consider yourself lucky you didn't ship those costumes, which seems to be the whole target, getting them for free.

Talaniman

Thanks for your work and I will follow up on redress for scams and also let you know how I make out when this is all over.

Jo Ellen

Ok, I'm still unclear here at what happened. Visa credited your account with $9.5K raking $500 for processing fees? Then they took back the balance or tried to, but you had already pulled the money out of that account?

From what I've been able to see from my research its not VISA who is doing this. It's the bank that you deal with. VISA is just a clearing house that manages the process, I don't think they actually handle any money. You deal with a bank that actually process fund transfers. They process the charge which is then sent to the cardholder's issuing bank which transfers the money to your bank who then transfers the money to you.

So any repayment plan should be worked out with your bank.

Another possible is to find an organization of VISA merchants, independent of VISA. I tried a brief check and couldn't find anything.

You might also consider enlisting the press. I'm sure VISA would not like the publicity for treating a merchant like you've been treated.

Nice idea. I will think about the press idea and let you know what happens and what action I have taken.

Jo Ellen