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      07-19-2012, 02:02 AM   #1
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CC Fraud: Trying to Help a Friend out

Here's the story,

My STUPID friend decided to try to pay a merchant for automotive services with a fraudulent card. The merchant called the issuing bank and long story short the card was stolen.

Now, the merchant says because he took a transaction that was knowingly fraudulent, he was " fined " $5000 and is now holding my friend on the line for the $5000 he had to pay PLUS the cost of what he had to fix to begin with.

The merchant gave him three options:

1. He'll report to the police that he tried to pay with a stolen credit card if my friend doesn't:

- Come up with the $5000 + the cost of the original labor
- sign over the title of his car to the merchant

Everything i read online doesn't point to a merchant possible being charged such a huge fine for not taking the payment physically and taking it online. Is this BS? Mind you, this is the state of New Jersey. Even though my friend did some dumb stuff, he moreso deserves to go to jail but not to get jerked by a merchant taking advantage of a situation & trying to blackmail . Any comments or thoughts on this?
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Last edited by Focus; 07-19-2012 at 02:57 AM.
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      07-19-2012, 02:47 AM   #2
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Quote:
Originally Posted by Focus View Post
Here's the story,

My STUPID friend decided to try to pay a merchant for automotive services with a fraudulent card. The merchant called the issuing bank and long story short the card was stolen.

Now, the merchant says because he took a transaction that was knowingly fraudulent, he was " fined " $5000 and is now holding my friend on the line for the $5000 he had to pay PLUS the cost of what he had to fix to begin with.

The merchant gave him three options:

1. He'll report to the police that he tried to pay with a stolen credit card if my friend doesn't:

- Come up with the $5000 + the cost of the original labor
- sign over the title of his car to the merchant

Everything i read online doesn't point to a merchant possible being charged such a huge fine for not taking the payment physically and taking it online. Is this BS? Mind you, this is the state of New Jersey. Even though my friend did some dumb stuff, he doesn't deserve to get jerked. Any comments or thoughts on this?
Your friend should go to jail. That is all I have to say about it.
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      07-19-2012, 02:56 AM   #3
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Quote:
Originally Posted by kpt6 View Post
Your friend should go to jail. That is all I have to say about it.
I agree, and that is why at first i wasn't going to even help him out. But this merchant should also go to jail for blackmailing. At this point, i feel the fair thing is he just pay the man what he owes and they part ways.
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      07-19-2012, 03:00 AM   #4
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Its not the merchants fault at all he actually did the right thing to verify the payments. With that amount 5g's i would of done the same thing and try to verify the payment is received. Your friend should be lucky he is not in jail.
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      07-19-2012, 03:14 AM   #5
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Sounds like extortion to me. That is a federal crime.
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      07-19-2012, 03:23 AM   #6
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Quote:
Originally Posted by ronushi View Post
Its not the merchants fault at all he actually did the right thing to verify the payments. With that amount 5g's i would of done the same thing and try to verify the payment is received. Your friend should be lucky he is not in jail.
The amount of the work done to the vehicle was $1,000. The merchant is saying that he was assessed a fine of $5000 and now wants to hold my friend liable to pay it. the problem is, it sounds fishy. He was all too cool about it ( not like this merchant ) and started discussing what he's going to do to the vehicle.

Quote:
Originally Posted by Inspired View Post
Sounds like extortion to me. That is a federal crime.
That's what i'm figuring, I actually found this while searching google:

Quote:
Chargeback fee
The chargeback is the largest risk that is presented to banks and providers. This is not to be confused with a refund, which is simply a merchant refunding a transaction. In the Visa, Discover, and Mastercard rules, the merchant's processing bank is 100% responsible for all the transactions that the merchant performs. This can leave the provider open to millions of dollars of potential losses if the merchant operates in an illegal or risky manner and generates many chargebacks. The providers pass this cost on to the merchant, but if the merchant is fraudulent or simply does not have the money, the provider must pay all the costs to make the card holder whole. The chargeback risk is the largest part taken into consideration during the contract application and underwriting process. Some banks are much more stringent than others when assessing a merchant's chargeback risk.
If a merchant encounters a chargeback they may be assessed a fee by their acquiring bank. A potential chargeback is presented on behalf of the card holder's bank to the merchant's credit card processing bank. A reason code is established by the card issuer to properly identify the type of potential chargeback based on the card holder's complaint. The most common complaint is that the card holder can not remember the transaction. Usually, these potential chargebacks are corrected when the merchant's processing bank sends over more details about the transaction. Some providers charge a fee for this service, known as a "Retrieval Request". A chargeback can also be related to a fraud or similar dispute that the card holder is claiming to the merchant. This fee can be charged by some providers whether the chargeback is successful or not and is not dependent on the amount of the chargeback.
Currently both Visa and Mastercard require all merchants to maintain no more than 1% of dollar volume processed to be chargebacks. If the percentage goes above, there are fines starting at $5000 $25,000 to the merchant's processing bank and ultimately passed on to the merchant.
In all cases, a chargeback will cost the merchant the chargeback fee, typically $15$30, plus the cost of the transaction and the amount processed.
* Cliffnotes: Unless the merchant processes fraudulent transactions all the time, the most he was charged ( if anything ) is $30 chargeback fee.

Sounds like extortion. Going to have my friend call a lawyer in the Morning.
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      07-19-2012, 03:29 AM   #7
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Extortion for sure. Your friend is wrong, and should probably go to jail anyway, but is not responsible for a fine anywhere near that amount, until the court charges him a punishment anyway.
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      07-19-2012, 03:36 AM   #8
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Quote:
Originally Posted by Bimmer84 View Post
Extortion for sure. Your friend is wrong, and should probably go to jail anyway, but is not responsible for a fine anywhere near that amount, until the court charges him a punishment anyway.
+1 to this.

Also, I know this is an internet forum and all... and I don't like to judge people, but if I knew my friend was using a stolen credit card, I probably wouldn't be friends with them. On the other hand, it's not something to completely end a long friendship over, but if I were that close to the person anyways, I would definitely confront them and feel comfortable doing so.
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      07-19-2012, 03:39 AM   #9
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Quote:
Originally Posted by SaMaster14 View Post
+1 to this.

Also, I know this is an internet forum and all... and I don't like to judge people, but if I knew my friend was using a stolen credit card, I probably wouldn't be friends with them. On the other hand, it's not something to completely end a long friendship over, but if I were that close to the person anyways, I would definitely confront them and feel comfortable doing so.
I'm what you would call a hard friend to have. I live by the book, and try to give my friends great advice to get them forward in their lives in a positive manner. So believe me when i say that as a friend, i told him that i would report him to the police myself if I even think he's going to do something like this again in order to protect him from himself. He's lucky i didn't report him this time, that's just the type of person i am.
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      07-19-2012, 03:43 AM   #10
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Quote:
Originally Posted by Focus View Post
I'm what you would call a hard friend to have. I live by the book, and try to give my friends great advice to get them forward in their lives in a positive manner. So believe me when i say that as a friend, i told him that i would report him to the police myself if I even think he's going to do something like this again in order to protect him from himself. He's lucky i didn't report him this time, that's just the type of person i am.
I would probably do the same. As I said, if something like this happened with a close friend, I would confront them before ending a friendship or turning them in. Especially since I am attending university and a lot of kids are really struggling for money. Hurting someone else is normally not the intention, especially when it comes to young adults ignorant in the ways of the real world.

Good luck with finding a solution though.
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      07-19-2012, 03:45 AM   #11
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Quote:
Originally Posted by SaMaster14 View Post
I would probably do the same. As I said, if something like this happened with a close friend, I would confront them before ending a friendship or turning them in. Especially since I am attending university and a lot of kids are really struggling for money. Hurting someone else is normally not the intention, especially when it comes to young adults ignorant in the ways of the real world.

Good luck with finding a solution though.
I fully agree. I actually told him after this situation is over with we are going to have to part ways. Now granted, apparently the card he used was a form a business, that still doesn't make it right.

I definitely couldn't put a finger on what crime the merchant was committing but it is extortion.
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      07-19-2012, 07:11 AM   #12
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Speaking as a merchant...your friend is being extorted!!!

So...to whom do criminals complain when they are the victim of a crime as a result of their own criminal act??
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      07-19-2012, 07:51 AM   #13
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Quote:
Originally Posted by Focus View Post
Now, the merchant says because he took a transaction that was knowingly fraudulent,
Did the merchant know the credit card was stolen?
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      07-19-2012, 08:03 AM   #14
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Lol @ being friends with someone who steals credit cards. Your friend is a piece of shit and deserves to go to prison. The owner is giving your scumbag friend a way to not go to prison by paying $5k for his freedom. If I was the owner, I would have had your thieving friend arrested, repossesed his car for failure to pay, and laughed. I think better justice for this would be a baseball bat across the face for your scumbag friend. Also speaks volumes of you having friends like this.
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      07-19-2012, 08:04 AM   #15
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Quote:
Originally Posted by ABQ325i View Post
Did the merchant know the credit card was stolen?
Put me down for this answer also - that sentence confused me.
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      07-19-2012, 08:22 AM   #16
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Well I think that when you use your card somewhere they are actually supposed to check your ID and make sure the card is in your name. Then when you sign, they are also supposed to match signatures I think. But a lot of times cashiers are just going through the motions, let people swipe and sign the pad or paper and move on to the next person in line.

So technically, the merchant allowed the bad transaction to occur by not following the correct verification process when the card was presented. I have no idea what the legal repercussions of that failed verification are, but that is my guess as to why the merchant is in trouble.
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      07-19-2012, 08:31 AM   #17
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I do believe that merchants can be held responsible for processing a stolen card. Besides the fact CC will not reimburse them for the transaction costs they are other things that can happen especially for face to face transactions. Over the internet that is a different story. If the Merchant is claim they are hit with a $5000 fine from the CC company to keep his ability to process CC orders there should be documents to back that up. Have your friend ask for proof, if proof exist then he has to decide what he will do.

Just so you know the Mechant does not have to press charges if he does not want to, the CC company can and probably will. So your friend is pretty much stuck between a rock and jail at this point. But before he pays if that is what he wants to do before going to jail, ask for proof of the $5k.
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      07-19-2012, 10:01 AM   #18
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I'm confused on a few points. You say the merchant called the bank to verify the card. If he did that the bank would have said it was invalid and he never should have run the transaction. To me that would be like when you go to a store and you swipe the card and it gets declined so you need to pay some other way. Did the merchant know it was bad and still run it anyways? That $5,000 fine is for merchants who are colluding with someone that is using a stolen card, which doesn't seem like this situation at all.

I would agree with Maestro on making the merchant show proof. If he doesn't your friend is in a pretty shitty position. Either pay everything or get in trouble with the law. If he has the money (which I'm guessing based off his attempt to use a stolen card he doesn't) it might be best just to pay and move on.

If the merchant is trying to extort your friend and I were in his situation I would contact a lawyer, find out what potential jail time/fines I could face if it got reported to the police. To be honest, I'd man up and accept the consequences of what I did by going to the police telling them the full story, knowing that I'm opening myself up to criminal charges, and have them assist in the extortion attempt by the merchant.
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      07-19-2012, 10:31 AM   #19
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I would cut that friend out of my life...
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      07-19-2012, 10:35 AM   #20
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And now the whole thing is on the internet, ripe for a potential discovery request.
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      07-19-2012, 11:41 AM   #21
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Wow shame on your retarded ass friend but that is funny about the merchant trying to get a freebie. I would call him back, record the phone call and have him explain in detail why he is extorting me. Then i would show up at his shop and flip the script
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      07-19-2012, 12:35 PM   #22
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I'd man up and pay the man. It's his own doing and deserves some sort of lesson/punishment.

Depending on the laws of your state, credit card fraud can be charged as a state or federal crime. That's a whole lot different than a misdemeanor and I would rather have a clean record than anything....
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