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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 90504
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Fairly long story (arent they all?), but the short version

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Fairly long story (aren't they all?), but the short version is; A new of ours agreed to a fee for service agreement--I run a nanny employment business--a sort of temporary staffing firm. This family paid an initial fee--clearly delineated non-refundable upon an event, which occurred. They then fired us (allowable according to the agreement), but demanded their non-refundable initial fee back. We refused, carefully explained why and they charged us back (Mastercard, of course). We use Intuit Merchant services. They gave us instructions on disputing the charge-back and we did. Just received notice today that they want to arbitrate--which ups the stakes by $500 (the original charge-back was $395). The response is *very* fishy; includes altered documents (provable), forged signatures, outright lies (provable), ad-homonym attacks, etc. OTOH, the agreement boilerplate, required by my Franchisor, is clear in intent but contains at least one ambiguously written clause, when taken by the letter. I'm no lawyer (though I have written hundreds of contracts in another field), but I can certainly see the loophole he is seeking to exploit. No help from Franchisor, of course. FWIW, I'm in California, the Franchisor in Minnesota. Franchises in 26 states, but a single agreement, "suitable" for all.

My main question is; do I even stand a chance? I'm a small business, have everything I own invested in it (California C-Corp. We did $1.5M in 2012 for about $50k net profit and another $30k exec salary). $395 is 10 days mortgage on my home or 3 weeks groceries for my family. The complainant is wealthy (~$1M - $10M net worth) I'm advised by other small business owners that chargebacks *always* go in favor of the consumer, even though, legally, I am the accused; he the accuser.

I feel righteous, cheated and mainly, angry. Common sense says let it go and move on, but dammit, I'm right and he is wrong--and his lies and forgeries alone should win this for me. Thanks for any advice, and I'm happy to share with you as much of the paperwork as you like.
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

If you can prove fraud and forgery, then you can indeed stand a chance in succeeding on the case. The thing you have to evaluate is whether or not it is worth the $500 to recover $395 and then add in the time it will involve taking to arbitrate.

One thing for you to consider for Mr. Money Bags client is filing a criminal complaint for forgery if he forged a contract having legal meaning, since forgery is a criminal offense and can be a felony or misdemeanor in CA. You can contact the DA with your proof of the forgery and see if they will pursue a criminal case.

If they will not pursue it as a criminal case and you have this evidence, then you should win at arbitration, but only you can decide the economic value to you to fight in arbitration.




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Customer: replied 1 year ago.

Sorry for the delay; I had to go out of town.

 

The original contract is not fraudulent, it's the chargeback response that is fraudulent. I strongly suspect the response was written by the customer's husband, who signed her name to it. Technically fraud; and also filled with factual errors--and "heartstrings" pleadings, first person, in his wife's name. In addition, they've included a page of the original contract, with margin notes whited-out which hurt their case, and different margin notes inserted, which help their case. I have both of course, and he (she?) was ham-handed enough that the whiteout is clearly discernable.

 

What I'd like to do is to insist that my merchant account people (Intuit--I use Quick Books) immediately throw the case out and find for me on the basis of the fraud--I don't believe I need to either risk $500 or make an additional case--he/she are clearly lying, in doctoring the paperwork. I'm pretty sure that, even in California, fraudulent evidentiary documents trump contractual hair-splitting? ;-)

 

I thought I'd also threaten to take the thing to the DA if they won't concede, though I have no idea whether that has any juice with whomever may arbitrate this. The customer appears ready to duke it out--has already authorized his $500 additional.

 

I have to be realistic, though. May I ask you straight, am I shoveling sand uphill, in even trying to overcome a consumer over merchant bias? I've been in business a number of years, have processed several millions of dollars through credit card merchant accounts and have *never* had a chargeback. Am I just letting emotion overcome prudence here?

Customer: replied 1 year ago.

Sorry for the delay; I had to go out of town.


 


The original contract is not fraudulent, it's the chargeback response that is fraudulent. I strongly suspect the response was written by the customer's husband, who signed her name to it. Technically fraud; and also filled with factual errors--and "heartstrings" pleadings, first person, in his wife's name. In addition, they've included a page of the original contract, with margin notes whited-out which hurt their case, and different margin notes inserted, which help their case. I have both of course, and he (she?) was ham-handed enough that the whiteout is clearly discernable.


 


What I'd like to do is to insist that my merchant account people (Intuit--I use Quick Books) immediately throw the case out and find for me on the basis of the fraud--I don't believe I need to either risk $500 or make an additional case--he/she are clearly lying, in doctoring the paperwork. I'm pretty sure that, even in California, fraudulent evidentiary documents trump contractual hair-splitting? ;-)


 


I thought I'd also threaten to take the thing to the DA if they won't concede, though I have no idea whether that has any juice with whomever may arbitrate this. The customer appears ready to duke it out--has already authorized his $500 additional.


 


I have to be realistic, though. May I ask you straight, am I shoveling sand uphill, in even trying to overcome a consumer over merchant bias? I've been in business a number of years, have processed several millions of dollars through credit card merchant accounts and have *never* had a chargeback. Am I just letting emotion overcome prudence here?

Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your response. I apologize for the delay as well, as I was out of town on a client matter and was not able to access the internet.

I was referring to the documents he had being fraud, not your original contract. Yes, if he has committed fraud and/or forgery, you can go to the DA. You can also proceed to consider the arbitration and present your proof to the arbitrator. Fraudulent evidence would indeed not overcome your contract, but you bear the burden of proving the fraud and if you can do so then the arbitrator should rule in your favor.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 90504
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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