Here are the option I see
Ask for proof the merchant is being charge $5K:
- If proof exist:
- Then pay what is being asked for and consider himself lucky that he does not have felony conviction on his record
- Do not pay and wait for the police to show up at the door and the Judge to order restitution and probation/jail time
- If no proof exist:
- Settle the $1K debt and tell the Merchant if he says anything you will turn him in for blackmail and both can go on your marry ways and thank the merchant for not turning his ass in. Also hope the merchant does not turn his ass into the CC company, since they may still press charges.
- Pay the $1K debt and go get a lawyer and turn yourself in and see if you can work a deal to go after the merchant for blackmail and failure to report a crime. They may be more interest in this and let CC thief off with a warning.
Obviously it may not play out this way, since you can never control what another person may or may not do, but there are definite ways he can lessen the total impact. If he does nothing he can pretty much be certain the merchant will turn him in to either the CC company or the police or both. In all cases he is going to be out at least the $1K and possible more.
As someone else pointed out the merchant maybe trying to avoid a bigger issue himself you never know but try to get someone to pay $6k for an obvious $1K debt may indicate he no on the up and up himself.