Looking for Guidance on Disputes

[rreptiles]

The title of this thread has been edited by a Square Moderator from the original: "Has anyone had luck with Square's terrible dispute policy?"

My company does trade shows often. My part-time employee made a sale to someone who is now disputing it. Square gave me a 1.5 notice that they are taking the funds back. This caused my business account to go into the hole and now there is an overdraft fee. When I speak to agents, I just get their policy regurgitated back to me over and over. I know it is up to the bank of our customer, but the fact that Square does not have the back of its customers is alarming. My company pays hundreds, and sometimes thousands, of dollars in fees to Square each trade show. And the fact that I am the one suffering with the loss of money really makes me question how much longer I can stay with Square.

My product is gone, the money has been taken, and now I have a $36 overdraft fee. Square seems to not care. There is no loyalty. And I am the one who is being wronged in this situation.

Has anyone had luck overturning this? What if their bank doesn't accept my evidence? Will I get my overdraft fee back?

[TheRealChipA · Accepted solution]

Hey @rreptiles.  First, I’m very sorry to hear about this.  However, you would have had the same experience with disputes whether you are with Square, or Clover, or Toast, or even with your bank handling your merchant account.  The contracts that Square and others have that allow them to “resell” card processing services require them to only be a middle man when disputes arise.  They collect the information and pass it on.  But they are not allowed to participate in the dispute process otherwise.  Also, they are required to abide by the decision of the card issuing bank.  All of us are very aware that card issuing banks only care about their customers and that they almost always make decisions in their favor unless they have compelling reason to do otherwise.

There is no such thing as appealing a dispute that went against you.  The card issuing bank’s decision is final, and this is in accordance with federal and state laws on the books right now.  Your only avenue for appeal is to hire an attorney and take this to court, OR to take it to small claims court if it can be handled there.  Just be aware that some state — like mine (Kentucky) — also require that a licensed attorney handle small claims cases for LLCs and other businesses.  Again, it’s the law.  However, at this point your only option to recoup your money and possibly your bank and legal fees is to take it to the judicial system.

Of course you have options, but none of them are the best.  You can require signatures everywhere for card transactions.  You can require that customers provide their state-issued ID for you to scan and store for all card transactions.  You can even have contracts.  None of this is perfect, either, but if you are getting a lot of fraud like this it might be your only option, other than just accepting cash.  This is one of the reasons many businesses don’t take cards at all.

You didn’t ask for it, but I’ll make one more suggestion.  I’ve always put back a small part of my sales to help with situations like this.  Thankfully in my business there are rare disputes, and most of those surround gift cards.  But having that nest egg just in case helps a lot.