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Updated by 11.24.2023

Fraud Case Study: Handling a Dishonest Client

Fraud Case Study


Do you know how to prevent an unethical client from getting away with lying, cheating, and stealing from your company? In this case study, the hard lessons a service provider learned following a failed chargeback dispute can help you avoid the same unfortunate consequences.

Deceptive Situation

Doug’s independent financial advisory practice was waning while larger branded corporations offering comparable services were growing. So he hired Kate to punch up his promotional efforts. She wrote news releases, marketing copy, blogs, and phone scripts to help Doug’s personal touch attract new clients. Liking the work Kate spent two days creating, he paid by credit card. Then he requested trade show materials. To meet his tight deadline, she abandoned her plans and wrote for four more hours. But the issuer declined Doug’s second charged payment.

When Kate informed him by email, his reply prioritized reimbursing her. Yet several excuses followed. Initially, his wife couldn’t find an alternate credit card they hadn’t maxed out already. Next, she shredded the newest card accidentally. A replacement would arrive in 10 days. Later on, Doug mentioned financial difficulties. He asked Kate to accept his balance in trade. Not needing his services, she suggested a $100-per-month payment plan instead. But Doug didn’t respond to her email offer or acknowledge her follow-up voicemail messages.

After six weeks, Kate’s merchant account received Doug’s chargeback complaint over his first transaction. He based his fraud claim on not participating in or authorizing that purchase. She emailed him about what must be an error. Once again, he didn’t respond. So Kate supplied her merchant service provider with proof of all correspondence to and from Doug including his promise to pay her plus her original and edited copy with his approvals. Her bank remedied the mistake by reversing the chargeback.

Unfortunately, Doug reacted by telling his issuer another lie. Claiming he never authorized the expenditure, he maintained he wasn’t a party in the disputed transaction. Because fraud laws side with consumers, even when they’re at fault, his bank overturned her issuer’s chargeback reversal. All communications had been via phone and email, so Kate couldn’t produce a signed contract and receipt of delivered work. In spite of her correspondence and creative records, she lost the case. Doug gained her time and talent for free. Later, Kate noticed he’d used her stolen copy.

Enlightening Hindsight

In retrospect, Kate detected warning signs of Doug’s disreputable deeds. His business slowdown caused financial setbacks. He’d claimed Jack, his former partner, had left to pursue a different venture. But when Kate contacted him, Jack cited being uncomfortable with Doug’s unethical business practices. He’d distributed falsified information on how their firm could make or save clients’ money. Then Kate realized she’d facilitated his misleading and fabricated publicity unknowingly.

Avoidance Tactics

Chargeback fraud consequences might include issuers terminating credit cards, so opening another account becomes almost impossible.

Policies that would have helped Kate avoid her dispute can guide your dealings with similar clients:

  1. Set up advanced payment or retainer plans except for large, established corporations with reliable 30- or 60-day remittance policies after invoicing.
  2. Before working with prospective clients in financial struggles like sales slumps, explain your services’ costs and require payments before racking up any time.
  3. Ensure that all clients sign contracts containing pricing, authorize you to supply specific services at predetermined costs or hourly rates, and accept that you won’t issue refunds for any finished work.
  4. Choose a reputable payment provider. E-Complish specializes in customized vested solutions that fix merchant processing problems. Our transaction fees mean we don’t make money until our flexible and secure platforms complete your customers’ payments. Check out E-Complish’s case studies to find out how our innovative systems have helped other businesses.
  5. Stipulate that clients must acknowledge receipt of work they obtain by all methods including in person and by email, fax, and mail.
  6. Make sure deceitful clients aren’t involving you in disseminating false claims or misinformation.
  7. If you have solid evidence and are willing to invest time and money in fighting fraud cases, file small claims lawsuits for large dollar amounts.
  8. Inform relevant agencies including professional certification boards or associations about fraudulent allegations. For instance, file bar association complaints when dishonest clients are lawyers. Also, report misconduct to appropriate police departments.

Contact us today to learn more!

Amber Capece
Amber Capece
Amber comes to E-Complish with 12 years of experience in the Hospitality Industry. We are sure you are wondering how…