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Lucy, Esq.
Lucy, Esq., Lawyer
Category: Consumer Protection Law
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Experience:  Lawyer
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After a salesman for a custom-made suit company called me about

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After a salesman for a custom-made suit company called me about a dozen times, I finally met with him in my office about 6 months ago. After meeting with him, I ordered two custom made suits as well as a few shirts, and the total cost was $5,269.56. I paid them a 1/2 deposit of $2,639.13 (by credit card) at the time I placed the order.

After placing the order, they contacted me by email and and told me that my order would be ready in ~ 2 months and that once it was, they would meet with me and I could try on the custom-made clothing.

About 4 weeks after I had placed my order, my employment ended, and I contacted the clothing company by email to cancel the order. The salesperson called me shortly after she received the email and tried to talk me out of cancelling, but I emailed her again the following day and reiterated my cancellation. As I explained, I no longer was in need of the suits b/c I was no longer employed in the same job, which required me to wear a suit every day.

The rep answered that this was a "legal matter," and referred me to someone else within their company. That individual refused to cancel the order and insisted I accept the clothing when it was ready. He also refused to refund any part of my initial 1/2 deposit. I informed him that if he was unwilling to offer any solution, then I would have no choice but to take up the matter with AmEx, to which he responded "you can make that mistake if you want." I heard nothing more from them, and I was never informed that the clothing was available for delivery.

A few weeks after this email exchange, I initiated a dispute of the charge with AmEx, and after several months, they contacted me and requested that I show them documentation that I had cancelled my order. I provided them a copy of my email to the clothing company, and after they received it, they informed me that they were issuing me a full refund of the $2,639 (my initial deposit) and that the merchant would be given 30 days to dispute the refund. When that 30 day period ended a few days ago, AmEx informed me that my dispute was resolved and the refund was permanent.

About the same time that AmEx informed me that the refund was permanent, I received an email from a collections attorney on behalf of the clothing manufacturer in which the attorney sought to recover the full $5,269.56. The email stated that the firm had "been advised by our client that your account is past due. Under the circumstances, we have been authorized to take legal action against you and we are prepared to do so. However, in order to avoid the expense of litigation, we are extending you an opportunity to amicably resolve the matter."

The email further informed me (as required by consumer protection laws), that unless "you notify this office within thirty (30) days after receipt of this letter that you dispute the validity of this debt, or any portion of it, the debt will be assumed to be valid."

AmEx clearly believed that I was not obligated to pay for an order that I had cancelled, and it seems that the clothing company should take up the matter with AmEx. I also checked the clothing company's website, and the cancellation policy makes no mention of this situation. Rather, the cancellation policy reads as follows:

"For a customer to cancel a custom order or out-of-stock order, a cancellation notice must be given by the customer in the manner set forth herein. Notice must be given to either the Sales Professional who places the order or the Customer Service Department in Franklin, Tennessee by the end of routine working hours on the business day next following the day the order is placed by the Sales Professional.

This procedure is necessary to allow the company a reasonable opportunity to stop production and shipment of the ordered merchandise. In the case of custom-made clothing that is made specifically for the customer, the piece oftentimes will be put into work and fabric cut within 24 hours of payment approval and order entry. In no event can the company accept responsibility for ordered merchandise made available for delivery to the customer that becomes unacceptable to the customer due to the customer's own neglect or unforeseen circumstances caused by the customer."

I do not have a copy of the document I signed when I authorized the charge to my AmEx on the day I placed the order, but I can tell you that no person ever explained their cancellation policy to me at the time I placed the order or when I cancelled the order.

I am a NYC resident, so NY law presumably applies. I would like to know my rights to dispute this debt, particularly given the fact that I received no clothing and I AmEx issued me a refund for the charge.

Thanks.
Submitted: 6 months ago.
Category: Consumer Protection Law
Expert:  Lucy, Esq. replied 6 months ago.
Hi,

My name is XXXXX XXXXX X'd be happy to answer your questions today. I'm sorry to hear that this happened.

American Express unfortunately does not have the ability to determine who has a legal right to funds. They have customer dispute procedures that they have enacted in compliance with corporate regulations, relevant consumer laws, and their desire to maintain a good working relationship with their customers. None of that, however, is a legal adjudication of whether funds are owed - and none of it is legally binding on the merchant. Yes, they could have disputed the charge back with American Express within 30 days. However, they are not legally required to do that, and likely chose not to, since that would only get them half the money. The fact that they referred the entire debt to collections rather than disputing it with AmEx does not mean that they forfeit their right to the money.

The default position in the law is that a contract is final when it is signed, and there is no right to cancel unless there is a written policy or agreement that says otherwise Custom orders usually cannot be canceled, because they are made to one person's specifications and therefore cannot be sold to anyone else. For that reason, a person who has clothing custom-made is almost never able to cancel the sale and request a refund. Federal law does give a consumer a three-day right to cancel a sale made in a place other than the merchant's place of business, but you did not seek to cancel within three days. It's true that you had a very good reason for canceling, but that is not legally relevant - in the eyes of the law, it's not considered fair that the company would be out $5,000 because you changed jobs, which is 100% outside their control.

You are legally entitled to the suits. I realize that you don't want them, but you are entitled to them. If they sue you for the debt, you can ask them to provide them to you. You can also contact the company in order to protect your credit and see if they will provide the suits if you pay for them. You would the have the option to either wear them or try to sell them to someone else to reduce your losses. If they sold the suits to someone else, then the amount that you owe should be reduced by what they got reselling the suits. However, the fact that they did not provide the suits after you refused to pay and requested a charge back unfortunately would not relieve you of liability on the debt. If they sue you for the debt, they will win.

I apologize that this was probably not the Answer you were hoping to receive. However, it would be unfair to you and unprofessional of me were I to provide you with anything less than truthful and honest information. I hope you understand.

Good luck.
Customer: replied 6 months ago.

I think all they have a right to ask for is liquidated damages. They are a large company and they order lots of custom made suits. I'm sure the clothes can be re-cut for another order, and I suspect they did that.


 


Do I not have a right to request what was done with the suits and what the cost to them was of cancelling the order? I've worked in sales and I'm sure that a large amount of the charge was paid to the sales person...


 


They have also offered to "settle the claim," and I presume that they were more than happy to accept the deposit (1/2 of the price) and not deliver the suits until AmEx charged them back the deposit. Given that situation, I am highly confident that they would settle this matter for no more than the $2,639 deposit, which I'm sure is far more than I should pay them, given their damages are likely much smaller than that.


 


What are your thoughts?


 


To be clear, even if I'm on the hook for the full $5K (and I'm clearly not), I will sooner pay the entire amount than accept the suits.

Expert:  Lucy, Esq. replied 6 months ago.
I apologize for the delay - the fire alarm went off, so I had to go stand outside.

I thought that was the case, but I wanted to mention that you could ask for the suits if you had any use for them.

Legally, when a person breaches a contract, the other side is expected to mitigate his damages by trying to reduce the amount he's out. That could mean cutting the suit down and reusing it for someone else. You can ask for evidence regarding what happened to the suit, or ask the judge to reduce the amount you have to pay. For example, you could be ordered to pay only the company's profit, not the full cost of the suit, since they still have materials that they might be able to reuse.

Most collection agencies buy debts for pennies on the dollar, so it's not unusual for them to be willing to settle for half the debt (or even sometimes less) to avoid the time and expense of going to trial.
Customer: replied 6 months ago.

Thanks. One last question. If I settle this dispute w/ the attorney (I've been to his website and he gets a piece of what's collected...I don't think they sold the debt to anyone, and I'm not sure who would buy it anyway), will this prevent anything being reported to the consumer reporting agencies? I have great credit and I know nothing has been reported to the credit agencies, but I want to make sure that if I reach a settlement with this guy, that nothing will show up about that. Really appreciate your help.

Expert:  Lucy, Esq. replied 6 months ago.
If they didn't report the debt as past due, a settlement shouldn't affect your credit (and, really, it would be the past due report that caused the problem). If you wound up in court, a judgment would show up on your credit.
Lucy, Esq., Lawyer
Satisfied Customers: 18815
Experience: Lawyer
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