Client from hiding from Paying

How to collect the money from a client in US

[agbenny]

Hi,
Recently a client of us in US(CA), is hiding totally from the final payments for a project we did.

He was very happy and satisfied with the work, and we have got his appreciations in every email he sent. He accepted to pay the final dues and sent a promising mail on that.

We have his address, Emails, Phone nos. We tried all the ways to reach him for payments.

As we are from India, a very small company, we are not in a position to seek any leagal help in US, we also do not know the ways to collect the payments.

There are two things we would like to do:
1. Finding the possibilities to get the payments. We tried with another client to make phone calls to him. We came to now that the hiding person was nervous, and answered and will pay in a week, as he has got some credit card problems. But we know its a lie, as its been 2 months since this happened. Now he seems to be changed his number.

2. How to alert others in India or anywhere who works for him? We want to protect others from him and to stop this story continuing. Is there any websites where we can post info about him and his business practices?

We know that many around the world are suffering like this. Is there any online community who works for such issues?

The pitiable thing is we delivered all the work to him, and now he has changed his FTP passwords too.

Any support /advices?

We didn't make a formal contracts or agreements, but we have all the Emails with us and huge history of MSN chat Logs.

Thanking you all,

Regards,
Benny

[JohnKelly]

Sorry to hear of your troubles. You made a couple of critical mistakes:

1) There was no contract

2) You gave deliverables to client without receiving final payment (this should be stipulated in the contract).

One possibility is that you send one last letter to the client (Overnight/registered letter), saying that if payment is not received within 30 days that you will file a 1099C with the Internal Revenue Service (IRS). The IRS is the U.S. tax collection goevrnment agency. The 1099C will cause the IRS to register the amount the client still owes you as income, which the client then must report. Since most U.S. citizens have at least a small fear of the IRS, this could work.

I'm not sure what bearing this will have on you as an Indian firm, but it's worth a try.

To learn more about how this works, read
[creativelatitude.com...]

(also read "Bill's Answer").

[diamondgrl]

You may not have had a formal contract but other oral and written agreements are legally enforceable. Obviously it helps to have more formality and specificity.

Also, do not require payment before your deliverables. That is a sure way never to get business. As a business owner, I would not pay you if you demanded payment before delivering.

How much money are we talking about? And is this an established company? It might affect your options.

Also, you might want to try using online services like elance that allow you to have some method of "getting back" at non-paying clients.

[CanadianChris]

This is a lowball technique but it is a good way to track somebody down - hire a skiptracer.

A skiptracer is essentially a detective that acts as a form of bounty hunter. You give them all the information on the person that you have, and they will find them.

Some skiptracers will even make the lives of the people you are looking for very very difficult (I've seen skiptracers get credit cards and bank accounts closed!) They are just incredible people that really know how to handle stuff like this.

[agbenny]

Thanks John Kelly: We will try your methods.

We didn’t make a contract, It’s a big mistake we done.

The reason we gave the deliverables was, Client paid a 50% advance, he trusted on us, we were doing this project with him for the first reason. So we took risk as he did first and delivered all he trusted that he will pay.

We spend about 2 months with no work, just chatting, Quoting and writing. We expected volume of work even, and alas, we are big losers now. It’s around $1500; This could be a small claim there, it’s huge in India, around 3 guys’ salary for a month.

In fact we have 3 such hiding clients in US. We are very cautious after this costly learning.

Thanks,
Benny

[diamondgrl]

Agbenny,

I asked about the amount of money and whether it's an established company first to see if it's worth you pursuing and secondly to see if there were other avenues of recourse.

Established companies or ones trying to get established have their reputation to protect. If it became known that they don't pay their bills, that could be damaging. I've had some luck posting complaints on PlanetFeedback. There are other such sites out there. You can also file a complaint, perhaps, with the local Better Business Bureau or possibly take other action.

But about the contract, yes, contracts are always helpful. But in your case, that wouldn't necessarily have helped. You already had a contract. Sure, it was informal but any written and oral agreements are still contracts - yes with more ambiguity and wiggle room and without clearly defined jurisdiction and consequences etc, but still contracts nonetheless.

The real question is what you can do to enforce your informal contract and frankly, at $1500 you recognize properly that you are in a difficult spot because to hire a lawyer here in the US would immediately chew up that amount of money and more. And probably the jerk over here recognizes that. So formal contract or not, you are stuck either way.

So that's why you might have a little more luck trying a more informal approach of applying public pressure.

[diamondgrl]

And one more point: One take-home lesson here might be to do business only with people who you have some reason to believe are respectable and will pay. That can be awfully hard to determine but you can ask questions.

[devitnow]

I agree that the mistake was to turn over the project before payment.

What I do is develop the project on my own server. When it's done and the client is satisfied I get paid, then and only then transfer the site to its final home.

Also, go through all formal and polite measure to get your money. If it's a dead-end, then consider this... Is this a website that will attract your client's customers. If you want to get mean and evil, build another site and use his company name to attract his business and use the site to trash the guy and tell everyone how he owes you money and doesn't pay his bills. Use his name, use his address, use everything about this guy to shame him into paying. This is a really rotten slanderous thing to do, but if he thinks he can screw you because you're Indian, then screw him back. If anything you'll feel better doing it :-)

I'm sorry for your troubles, I'm American, but I have been to India twice and I know how much $1,500 means to the average worker.

Good luck.

[agbenny]

I thank you all for your kind words.
I just have another issue here. When you say American I need to say here that we had such issues with 4 people so far. Except one all are non Americans, (Belongs to a same Ethnic).
Is this could also be a reason, as they violate American Law? This could be an irrelevant, But we stopped dealing with such enquires from such people.

As more outsourcing work is coming from USA, mainly to India, Can't there be an association/legal protection for both sides, some sort of verification system which could be cost effective and authenticate?

Thanks a lot
Benny

[steve40]

benny sorry about your problems
here is a slightly different take on this

I have looked at using indian subcontractors for work but as i could not feel confidence in the process i still use USA based staff for work

Possibly you need to look at this as a business opportunity
Currenlty large multi nationals have no problem subbing out work to indian suppliers but this is due to having sufficient resources to fully check suppliers with people travelling to india and vetting

Maybe you need to look at setting up a business where some form of bond is required between both participents and a rating system for the work done
Only for usa - india in the beginning and a standard contract

there is a saying that every cloud has a silver lining maybe this is yours
steve

[walkman]

"This is a lowball technique but it is a good way to track somebody down - hire a skiptracer."

maybe if you're talking about $200,000 and have a chance of collecting something. We're talking small amount.