Scam. Am I responsible for refund when I never received any money?

[BGB2025]

I run a business offering interior and exterior remodeling. I had a woman reach out to me via email to have her roof replaced. It’s not out of the norm for me to pull measurements of a roof and prepare an estimate without meeting the homeowners. Sometimes people have 2nd homes, Air B&B’s, or just know what they want and they decide on their contractor after receiving several quotes. 

I sent the estimate and she signed my contract immediately via docusign. Doesn’t happen often but still nothing out of the normal. She asks how I’d like to process the deposit, I told her cash/check/card(square) .. she said she had no problem doing the credit card, so I sent a payment link and she paid no problem. 

Square immediately flagged the payment and started investigating. I figured well, too good to be true.. well long story short it was a scam. This person used a J Crew Corporate credit card to pay the invoice. But, now I’m getting emails from square asking if I would like to refund them but there’s no balance from that payment. My account balance is actually negative due to the processing fees that were paid on the invoice. 

I never received any money. Never even had a balance to transfer. Am I somehow responsible to now refund the bank this money… 

[Candlestore]

@BGB2025 ;

My best action would be call Square Support.  Their number is at the end of this in my signature line.

Usually if a customer (scam) says it was a fraudulent charge, the charge was already processed and Square would have had the money, then sent you other information asking about the transaction.  This forum is mostly answered by other Square users and not from anyone that can assist you with this kind of answer.  If the Money never entered your account, I am guessing Square held or the other credit card held the money and is more so letting you know you will not be seeing this deposit.  Just call support to verify for yourself.

[BGB2025]

The issue is that Square says I am responsible for issuing a refund. They said that they will use my available balance and considering my available balance is $0 they will have to use my linked bank account for this reimbursement. Even though I never received any payment from the transaction. Which is $14k I would pay out of pocket. 

They also charged my account $481 for the 3.3% fee that was charged to the original transaction. Seems to me Square is okay with scammers taking advantage of small businesses since they ensure that even when there’s fraud, they make their money. 

[Candlestore]

@BGB2025 ;

So basically Square is saying the 14,000 (+/-) was deposited to You, but your saying it never went into your account.  So a Refund is up to the Business , but a Dispute is done by the bank for fraudulent charges.  Since you stated that the money did not go to you, where did it go?  Since Square deposits funds to your Linked bank account that is where it should have gone.   If you go to Square Dashboard > Balance > Then under Location Tap the $ amount > Then View all Transfers > Find the Transfer in Question.  You may have to Select the Date in the upper left to change the date to the date around the transaction.  Then select the Deposit amount or arrow next to it.   This will show you were the money went.... hopefully it is your account.   If not you may have be scammed there too.  

Do you have 2 Form Attentication on your account?  This sends a code to the phone number associated to your Square account for security reason.

So if Square shows that $14,000 went from them to a bank account that was in your account to deposit to, you would be responsible.  With everything on the internet and computers getting faster and faster to break User Ids and Passwords 2 Form Authentication safty measures are essential.  Not sure if they hacked your account then made the $14,000 fraudulent purchase or how this happened.  

Basically since you accepted to take money from the Scammer, you are responsible.  You should have made sure the charge was legitimate before taking payments which is what the lawyers would tell you with any credit card processor.  I know you took this payment online or over the phone which is the Most risky type, since you can not see or verify the customer is who they say they are with a valid ID and address to verify them.

When I first started online sales I would get emails saying they wanted 2 or 3 pallets of my candles and wanted their carrier to pick them up.  When I started pressing for Driver Liscense matching the Ship to Address etc or the Credit card I would get a bunch of excuses.  Then found out later it was a new type of scam.

I am not even sure what to tell you with that amount of money being scammed from you.  Best I can do is help you locate which account that transaction got deposited to you by the above instructions through your Balance.  Then take that information to Police and forward it to Square with the Police report.  I know Square has it setup that any transactions that get disputed come out of the Linked Bank account.  So if it went to a different account tell Square take it from there but I will bet that account has been closed or is a foreign account.