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Can a small business sue customer for fraudulent chargeback?

Denver, CO |

As a small business, can we sue a customer that has received goods in good quality, had services performed that he himself was satisfied with, make payment and then 5 months later perform a chargeback? The chargeback was fraudulent as residential window tint services were performed and product was installed, months later the customer had a product warranty issue and then created a chargeback stating goods were returned and not received in good quality. Product was never returned as window tint can not be returned after installation. Services were already performed and customer was happy. His issue was with the manufacturer warranty, not with our services.Can we sue this customer after such a fraudulent chargeback took place?

Attorney Answers 2

Posted

Short answer yes. Without knowing more of your business and fact pattern, you might be able to assert claims for fraud and civil theft. We would need to look at the correspondence, any complaints, warranty work done and the contracts. I'm surprised the credit card company allowed the charge back at 5 months. Another issue, is if your contract has an attorneys fees and interest clause as that helps you when deciding how to proceed. Sometimes, unfortunately paying for a law firm's letter head gets you repaid. Without an attorneys fees clause or interest clause your cannot collect attorneys fees (usually), and interest is only running at 8% instead of 18%, which is what I usually suggest. It would be worth it to have counsel, review your business, what it is, what you do, how payment works, how orders work, and draft a contract you can use giving you benefit over the plain Jane law. Additionally, depending upon the amount owed, you might decide to file in small claims court, rather than pay an attorney, especially if you cannot collect fees. ($7500 or less). I strongly encourage all business to have counsel that they can go to for little issues to big issues, to prevent this type of thing, or, if and when it happens you might be bale to recover your fees and costs. Same thing with employees. there are a lot of times where I suggest not to adopt an employee manual, again, depending upon your business needs. You should be careful of the statute of limitations, for certain claims, especially if there was not a written contract

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Posted

You might want to consider suing them in Small Claims Court in your County for 'breach of contract'. Good Luck!

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Posted

That's what we were thinking as well. The customers dispute was for approximately $3,000.00 worth of product and services rendered. With that amount would it be reasonable to believe that we would be able to retrieve our money back? Do you believe would it be a waste of time because of small claims court costs and so forth?

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