Unusual situation with chargeback cancellation

[KevinD]

Hi, I have an unusual situation. I swiped a chip enabled card some time back (rarely happens, but bluetooth reader had connectivity issues that day). The cardholder disputed the transaction a few days later because she didn't recognize the charge. I immediately lost the dispute due to emv liability shift and the money was withdrawn from my account. I contacted the customer who recognized her error and she provided me with a dispute reversal letter from her bank. I tried, but was unable to upload it to square because the dispute was closed. I contacted square and submitted it by email. They said they could not reverse it since it was closed and the money had been returned to the customer. The customer has not received the funds and her bank (Wells Fargo) says the dispute has been reversed and they verify that neither they, nor the customer has received the funds back. They say it is closed on their end as well because the customer reversed the dispute. This transaction occurred 5 months ago. The customer and I have done 3 way calls with Visa, Wells Fargo, Square and my receiving bank. All parties deny having the funds or having any responsibility for determining where they ended up. The Visa flow chart defining the rules for this situation clearly state that I am to provide the reversal letter to square. Problem is square will not accept it because the dispute is closed on their end. At this point, we just want to know who hold the funds and how to get them either to me or to the cardholder. I am at a total loss on this one.

[TheRealChipA]

Hi @KevinD.  This one definitely goes into the book of “truth is often stranger than fiction”  Wow.  From what I read in your narrative above, it seems that you have done everything by the book.  As often happens with laws and regulations, you seem to be in a catch-22.  Of course, it will be impossible for you, alone, to figure out “where” your money is right now.  A couple of thoughts, after (of course) the usual disclaimer that I am not an attorney, but only a fellow seller, albeit one with 40+ years of business experience.

First, you need to weigh the amount in dispute vs. the cost of escalating this into the legal system. Then, if you decide that it is worth it (either financially or purely for the principle of the thing) to move forward, depending on your state you have two options — small claims court or a civil action.  Who you would sue is a question mark, and one that can only be answered by a competent attorney.  Depending on the physical evidence you have, you could be suing anyone from the customer’s bank up to and including Square/Block, but you’ll probably be suing all of them.  This would set in motion events that would compel everyone in the “food chain” to prove to the court’s satisfaction that your money was no longer in their control.

Keep in mind, as you make your decision, that small claims courts are less expensive, but that in some states (like mine) small claims courts require all business structures except sole proprietorships to be represented by counsel.  That might wipe out the usual financial benefit of a small claim.

Again, only a competent attorney can give you good advice here, if you decide not to just write this off completely.  In any case, I wish you well.

[KevinD]

Thanks Chip. Yep, $208. Im not so concerned with the money, at this point, I'm just more curious than anything. You would think there would be a good, easily accessible paper trail with a financial transaction. Not necessarily so. It been an education 

[TheRealChipA]

You’re welcome.  And I get where you are coming from, trust me.  This is one reason why I wish customers weren’t so quick to dispute charges without evidence, and why I wish their card-issuing banks weren’t so quick to just take their word for fraudulent charges.  I’ve never seen a case where we, the sellers, didn’t get left holding the bag.  I do find it rather odd that Square can’t reopen a case when they know that funds have supposedly been released further down the food chain.  I, too, think that Square should take the reversal letter and do something about it.  But, no doubt, I’m missing something here.  I’m like you here.