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Ecommerce Forum

credit card processor not releasing money.help
because of 1 chargeback

 4:49 pm on Mar 2, 2006 (gmt 0)

They currently owe us SEVERAL thousand dollars and will not release anything (not even with a reserve) because of 1 chargeback (.00125 cb rate).

This is the first time we are dealing with a merchant like this. What legal rights do we have with collecting money.

Two weeks ago, they told us they were'nt releasing any more money because they wanted to see if we could 'survive on our own funds'.

We have fully complied with all requests they have made and they won't send us anything.

We have them on tape yesterday saying we would get paid today and still nothing. We call and we get the rude response we are holding your money untill your cb rate declines (can't get much lower if you ask me).

The only reason there is even 1 chargeback is because the guy who used to do our shipping screwed up some orders.

We NEED our money! Can we sue them?

any attorneys familiar with things like this?




 5:06 pm on Mar 2, 2006 (gmt 0)

Have you had any luck trying to talk to a supervisor or higher at the company? The reps you talk to may just be quoting company policy because they have no authority to do anything.

Even though it's a hassle, I would definitely look into switching to a new processor.

We had a similar problem a few months after we first started accepting cards- they suddenly imposed a reserve that equalled close to 100% of our monthly volume at the time because of one chargeback- due to customer error, just like yours.

We dumped them and started using someone else. However, we actually ended up going back to them several months later (suddenly cancelled by our new processor because they revised their TOS to exclude travel companies and no one else would work with travel companies at the time).

EDIT- Sorry, forgot to answer the other parts of your post. Their TOS probably covers what they are doing. But go through it again carefully to make sure they are within their rights to do what they are doing.

If not, then I would definitely point it out to them and hint at a legal remedy.


 6:54 pm on Mar 2, 2006 (gmt 0)

"they told us they weren't releasing any more money because they wanted to see if we could 'survive on our own funds'."

Simply absurd. Those are your own funds.

As for suing them, that's not an option for many reasons. Where is this company located? Don't think you can go after funds in the Grand Caymens, as an example, to satisfy a judgment.

Do let them know you have plenty of money (implying hiring a lawyer is something you could do.)


 3:02 am on Mar 3, 2006 (gmt 0)

In my experience merchant banks shouldn't hold anything for more than a couple weeks. But then again, I've got 12k that has been held since last spring.

I'd switch processors pronto. The best thing I did was move to a big bank where I have my opperating accounts. I get a couple chargebacks a month and I've never had a problem with them. My previous merchant bank always had a fit when I got a chargeback. And honestly it's not worth my time dealing with a $25 chargeback and a $20 fee. Needless to say they didn't like that answer. But using a bank where you have your accounts gives you the ability to walk in and talk to the manager about your merchant account and have them make a call for you. Things get done faster when a manager is making the call with you to the processing dept. than if you're on your own calling an out of state merchant bank.

Automan Empire

 3:32 am on Mar 3, 2006 (gmt 0)

Two weeks ago, they told us they were'nt releasing any more money because they wanted to see if we could 'survive on our own funds'.

Is this a merchant bank or a loan shark? That has to be one of the more audacious statements I have heard! What basis would they have for doing this? Do you have this statement in writing, or recorded? Is this the official position of the company, or a flippant answer by a mere phone-answerer who just threw that out?

This sounds like grounds to find another processor posthaste, and to report the company to the appropriate Attorney General!


 4:21 am on Mar 3, 2006 (gmt 0)


So tell us something about this processor. To start, where are they located? Are you still running cards thru them? (I hope not)


 12:08 pm on Mar 3, 2006 (gmt 0)

Yeah, I want to know who they are so I can avoid them. They sound like some guy working out of his garage.


 9:42 pm on Mar 5, 2006 (gmt 0)

[snip] TOS #12 [webmasterworld.com] [/snip]

They are the most unprofessional and untrustworthy business I have EVER dealt with in any business. They have no urgency in helping us and treat us as if we are a bother.

Our calls are usually responeded to with "I'm busy and I'll call you back", although it takes them over 24 hours to return a call (always).

They promised us many times that we would get our money (or at least some of it) if we do this and that. We always comply within minutes and days later they have more requests for things we had never previously heard about.

We offered them to keep a 20% rolling reserve (which is higher than the industry standard) and they continue to give us the run around.

We were supposed to get a payment on wed and what do you know they weren't able to make it till late fri (we won't see it till monday if we're lucky) and its only for 40% of what we're owed (there holding 60%!)

avoid these guys like the plague. we are switching merchants asap, but being a new company it doesnt happen overnight.

does anyone have any suggestions as to a good high risk merchant (preferably in the states) with decent business practices? we are looking for several.

[edited by: minnapple at 11:48 pm (utc) on Mar. 5, 2006]


 11:52 pm on Mar 5, 2006 (gmt 0)

because my post was edited:

they are in the u.s.


 4:04 pm on Mar 6, 2006 (gmt 0)

It is amazing that these people are still in business and I find it more amazing that we cannot warn other business owners about these scam artists on a forum.

[edited by: lorax at 10:22 pm (utc) on Mar. 7, 2006]
[edit reason] removed email quote [/edit]


 5:16 pm on Mar 6, 2006 (gmt 0)

Why don't you contact Mastercard, Visa and Amex directly about this?


 5:53 pm on Mar 6, 2006 (gmt 0)

" Why don't you contact Mastercard, Visa and Amex directly about this?"

-we're working on it!


 8:11 pm on Mar 6, 2006 (gmt 0)

MC/VISA/AMEX have more to lose than you if scammy processors start scaring away commerce sites. I'd think they'd be all over this. If it's really a fraud, they surely have heard about it from other retailers.

Does this company really have a presence in Georgia or is that just a mail drop?

Do the CC firms offer any protection if processors abscond with funds? (probably not but maybe they should)


 9:48 pm on Mar 6, 2006 (gmt 0)

according to whois for their site and all the info they have provided that is the correct city and state of operation.

i don't know if they are out right stealing people's money, but it seems to me that they are earning interest on it. that is why all the hurdles to get any money.


 1:55 am on Mar 7, 2006 (gmt 0)

Contact the Georgia Attorney General. Run a D&B on them. Look their address up in a reverse directory.
Look up the corp with the GA secretary of state. Contact the local BBB. Are they in their local white and yellow pages?

By all means Google them to find other dissatisfied merchants. Use phrases such as
"+scam" "+stole" "+sucks" "+fraud" in your search. There are several complaint sites online.

Have you thought of visiting them in person?


 1:48 pm on Mar 7, 2006 (gmt 0)

'but it seems to me that they are earning interest on it.'

Well, if it is the acquiring bank itself, than they most probabaly are.

If it is just a processing company, they aren't. Merchants tend to forget that processing companies have accounts with acquirers. If acquirers hold their money, for one reason or the other, the processing company is absolutely not earning any interest on this money. All they can do is wait for the acquirer to release the funds.

However, you mentioned your CB ratio is 0,125%, which is no reason to hold the money. I think you have miscalculated that as the CB ratio is determined every month, not during the whole processing period.

The allowed ratio for Mastercard is 1%/month with a maximum of 15 chargebacks, for Visa even 2%/month and a maximum of 100 chargebacks, so this is not a legit reason.

So, in short, you should calculate your CB ratio for the month wherein the CB was issued. If the ratio for that month is too high, they will probably release the money once your CB ratio is back to normal again for the next month. That is the only reason I can think of...


 7:42 pm on Mar 7, 2006 (gmt 0)

This is not an uncommon story. Yours is very minor at a few grand. We have had over 150k held for months by Paypal. We have had the BoA hold back 10's of thousands somewhat randomly for weeks (even though they have a 75k bond). We have been fed every story in the book and given every promise imaginable.

The banks run the show... You just have to have a cushion, whether it be cash in the bank, a line of credit, or the ability to run up your personal CC's to 30-40k to cover payroll for a month or two.

The bank is worried that you have no float and can't 'survive on our own funds' -- Sounds like they are right. They worry that you may run up 10, 20, 50k or more in sales then have some financial troubles where you don't ship goods, leaving a SCHWACK of chargebacks hitting them a month later and you are long gone. Their concerns are very legitimate.

Risk management... The banks run the show here. He with all the money makes all the rules. The more you squirm and threaten to sue, the more likely they would rather you found a new processor.

Being self employed is a stressful game.


 9:04 pm on Mar 7, 2006 (gmt 0)

The life expectancy of an OTCBB company is months from my very long experince with them. I'm with the banks, in that situation.


 10:12 pm on Mar 7, 2006 (gmt 0)

Well, who are they?


 5:57 pm on Mar 8, 2006 (gmt 0)

I never said a figure, but since you asked it is in excess of $50k. The funds they are holding is our money and they have repeatedly not fulfilled their promise to pay us. Since this thread started they have released approx 20% of what they owe us (2 settlements in 45 days and now we are waiting again).

Redoing the cb calc according to each month:
feb: 678 orders (55k) and 1 chargeback ($56) = .0014 cb rate.
march: 202 orders no chargebacks.

a 20% reserve should be plenty as our sales are only increasing (and we had to pull ppc's for now).

they told us this morning that they are not holding any more of our funds, but still no settlement today.


 8:19 pm on Mar 9, 2006 (gmt 0)

just got off the phone with these jokers and the story changes once again.

now they are holding a 25k deposit and 20% reserve.

at no point did they ever mention a security deposit. they said because our volume is 'higher than anticipated'. we are heading to the attorneys office.

i'll post more when i have it.


 1:01 am on Mar 10, 2006 (gmt 0)

Is your volume higher than what you indicated it would be when you signed up for the account?

Sounds like you've gotten quite a bit of runaround, but I don't think its uncommon for processors to get very nervous in high risk industries when volume is more than what was expected.


 1:28 am on Mar 10, 2006 (gmt 0)

we have done a lot more than we anticipated and that is where the problem comes, but their constant beating around the bush and last minute policy changes are unacceptable.


 4:47 pm on Mar 16, 2006 (gmt 0)

we have done a lot more than we anticipated

Whoa! You neglected to mention this VERY important detail in the begining. This changes the situation significantly. Just how much is "a lot" more? 10%? 20%? 50%? 100%?

When you signed up with them, they approved you based on the processing level you told them. They (presumably) approved you for that amount based on your credit, any prior processing history, company financials, etc.

Now you suddenly jump above that and have a chargeback on top of it. It's suddenly a whole new situation, for which then did NOT previously approve. That sends up a huge red flag. Especially if you didn't talk to them ahead of time when you saw your processing going higher than expected.

Go back and look at the contract to see what it stipulates they can do if *YOU* do not abide by the terms of service they setup (processing limits, etc.).


 5:34 pm on Mar 16, 2006 (gmt 0)

How long have you been processing with them?


 10:36 pm on Mar 18, 2006 (gmt 0)

the contract is there to protect them not us, so they are doing so aggresively.

our credit is fine, its just that we are a relatively new company and the relationship is new. i understand protecting yourself, but we have bent over backwards to do everything they've asked.

they've finally settled on a security deposit and 20% reserve.

the industry we are in is considered high risk, but with over 1200 orders and 100k in sales 1 chargeback of $85 should not be an issue.

our return policy is VERY lenient (even the guy at the BBB says so).

pm me if you know of a cc merch who can help.
we have a couple in the works, but need to find more.

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