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CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10244
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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My son is in a situation which makes me feel uncomfortable.On

Customer Question

My son is in a situation which makes me feel uncomfortable.On social media he began to purchase auravedic products to help with insomnia. He made several purchases over a year and he always received the goods in a timely manner and the product worked for him .He built up a relationship with the provider whose uncle evidently owns the pharmaceutical company in india. From here the provider asked my son if he would like to earn money by processing payments on his square which he uses for his own buissness. My son agreed and has processed 3000 pounds worth of transactions .He has not been asked to wire the money to india yet. I asked why IF the indian pharmaceutical company is bona fide- why they don't process their own payments and the response was that customers don't like an indian company to process payments because they are skeptical.
Is it illegal to process payments for another company.What if there are chargebacks? who is responsible.What is the remedies being purchased cause harm to the patients who buy them...would my son be seen as an accomplice.What are the tax implications on the 25% my son gets to earn for processing the payment?
Submitted: 2 years ago.
Category: Business Law
Expert:  CalAttorney2 replied 2 years ago.
This is not necessarily illegal, but your son is placing himself at a great deal of risk in this situation.As you note, he is going to be liable for any chargebacks from his customers (he is going to be bound by the terms of his agreement with the charge company (square) for any disputes with customers). He is also responsible for ensuring that sales and use tax is paid (this can get very complicated with internet sales as the rules change depending on the state that the product is sold in).The percentage that he is earning is earned income and should be declared as such.The general impression I get is that this business is being run largely "under the table" and the hope is that this goes undetected - it may remain that way and if so it will probably remain artificially profitable, but if not, your son is going to potentially find himself liable for a fair amount of debt.