Predatory Customer Threatening Small E-Commerce Business With Legal Action

[FiguringThingsOut]

Hi guys this is a detailed situation regarding a small e-commerce business and a predatory customer, we hope you’ll read this and let us know your thoughts. At the end we have some questions regarding the situation and advice/thoughts would be appreciated.

We had a customer who started placing lots of orders in our online store, sometimes 5+ orders per week. 80 to 90% of the orders we shipped them, they would send damage complaints after they were delivered, despite being just one state away and no matter how well we packed the orders. Eventually, they started making PayPal disputes against us, despite the fact that they were still placing orders. After this we decided to ban this customer from our online store and refund all of their orders, then they filed dozens of disputes with PayPal and made a complaint with the BBB against us.

We are a private business and it states in our terms of service that we reserve the right to refuse business to anyone. Despite breaking our terms of service multiple times, after about a month of their first banning this customer created a new account on our website using his apparent wife’s name (except using her maiden name) then repeated the same pattern of placing dozens of orders and damage complaints for almost every single order they placed. Our team knew they were just doing this to get concessions from us, so we started taking photos of all of the items in their packages before sending and getting plenty of shipping insurance for each shipment. After that their damage complaints mostly stopped, but not their predatory behavior.

On multiple occasions they tried to extort money out of our business by trying to confuse our team with various gift cards that they used, asking for “cash” refunds on orders where gift cards were used, or demanding refunds in higher amounts than they actually spent. We made a critical mistake in that we decided to keep doing business with this customer for a few years, but we removed gift cards from our websites and started narrowing down their abilities to con us.

Recently our team decided that it was time to get rid of them a 2nd time due to them breaking numerous clauses in our publicly listed terms of service (listed visibly on the front page of our website and in checkout). We offer preorders for many products, and they had over 50 outstanding preorders for over $10,000+ spent in their account prior to us banning them. Now we are in the process of refunding their various preorders, but are doing it carefully because so many of their preorders used gift cards and we have to dig through a web of transactions to figure out where each gift card originated.

Our plan is to fully refund all of their preorders over the next 90 days. Some of their preorders/gift cards were based on custom arrangements with the business owner communicated via e-mail, so those custom arrangements might be trickier to refund properly, but we plan on doing so. No contracts were signed for these custom arrangements communicated via e-mail.

Finally, we get to our questions regarding this situation and any advice/thoughts you can share are appreciated:

Question 1: since we are in the midst of refunding all of their preorders over the next 90 days, do they have any real ability to litigate or take some kind of legal action? By the time they even get us in court, all of their preorders should be refunded.

Question 2: if they do decide to pursue legal action, what advice can you provide given the details of the situation listed above? We plan on making an archive of all of their damage complaints, all of their attempts at extortion and other deceits to present to a judge if necessary.

Question 3: we are a very small e-commerce business with a limited amount of funds. Are there any attorneys or legal resources that you can recommend for our circumstances detailed above?

Thank you to everyone who reads and replies.

 

[Zigner]

What US state?

A1: I agree - by the time anything actually got to court, you would likely have already refund all the money.
A2: "Plan on making..." Don't "plan", just do it.
A3: This is not a referral site.

 

[adjusterjack]

I agree with Zigner about your options.

In addition, I'd be calling the authorities where these people live in case there is a possibility of prosecution.

Also consider filing a lawsuit against them for the damage they are doing to your business and reputation. Consult an attorney in the city where they live as that's more likely where you would have to file.

 

[FiguringThingsOut]

Thank you both for the replies.

@Zigner I am hesitant to specify the states where this is taking place for fear that this post could be discovered by interested parties, but perhaps I'm just being paranoid? You're right, we're just gonna do it in terms of creating a full archive of all of our communications and transactions with this customer. We plan on having a well-organized file with a record of each and every order, exactly how he paid and all communications pertaining to each order.

@adjusterjack this individual is demanding that we refund him in "cash via PayPal" for all of his gift cards, even the gift cards that he did not directly pay for that were free bonuses, special deals or custom arrangements. Isn't this some type of attempted fraud or extortion? Here's an illuminating example that we actually dealt with today: in Order 1 he bought a $500 gift card then used $400 of that $500 gift card in our store on unfulfilled preorders, so today we refunded the $400 he spent to the gift card, then refunded $400 USD through the original gift card order to his credit card.

In Order 2 this individual communicated with us via e-mail which we have record of and requested that the remaining $100 from his gift card be applied as a partial refund to his credit card through Order 2. We (unfortunately) agreed and applied a partial refund of $100 to his credit card through Order 2 which reflected the remaining balance on his gift card from Order 1, then we disabled said gift card so that he could not use the remaining $100 balance on it. Now he is demanding that we also refund the remaining $100 from his original gift card order (Order 1), even though we issued him a partial refund to his credit card in Order 2 and there's written communication between him and our team acknowledging that the $100 partial refund to his credit card was reflective of the remainder on the gift card.

Gift cards are one of the core pillars of his scams and going through his dozens of orders where they are used is like untangling a web of transactions. His intent is clearly to defraud us out of additional funds by using gift cards in confusing ways. In the situation detailed above, surely a judge/court would side with us after seeing this individual's e-mail to us making the request to use the remaining $100 on his gift card from Order 1 as a partial refund on Order 2?

This individual is threatening to take us to small claims court if we do not refund all of his orders by start of Wednesday. He knows this is nearly impossible unless we do nothing but work on his refunds for 20 hours each day due to the tangled webs of transactions in each order he made. This is truly a stressful situation.

I agree with Zigner about your options.

In addition, I'd be calling the authorities where these people live in case there is a possibility of prosecution.

Also consider filing a lawsuit against them for the damage they are doing to your business and reputation. Consult an attorney in the city where they live as that's more likely where you would have to file.

 

[adjusterjack]

There's another option here.

Don't give him squat. Deny all his claims. Let him sue if he wants to.

People like that rely on fear to get what they want.

Put up a wall and he might cave.

Or, you cave, and make yourself ripe for more scams.

 

[Litigator22]

There's another option here.

Don't give him squat. Deny all his claims. Let him sue if he wants to.

People like that rely on fear to get what they want.

Put up a wall and he might cave.

Or, you cave, and make yourself ripe for more scams.

Yes, but you avoid the question of which is nobler, to cave or not to cave?

 

[adjusterjack]

Aye, whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune or to take arms against a sea of troubles and by opposing end them.

That's for OP to decide.

 

[zddoodah]

1. Yes. Anyone can sue anyone for anything. The ability to sue is different from the ability to win.

2. Retain legal counsel.

3. No. Message boards like this don't do referrals.

Random unsolicited business advice: I'm not sure what your business is or what you're selling or how much an average order is, but if someone is placing dozens of orders in a short period of time, and assuming that's not typical for your business, it seems like it would be a smart thing to reach out to that person before fulfilling the orders to ensure you're doing business with someone who is legit.

 

[Litigator22]

Aye, whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune or to take arms against a sea of troubles and by opposing end them.

That's for OP to decide.

Aye, whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune or to take arms against a sea of troubles and by opposing end them.

That's for OP to decide.

Such cryptic dispatches bring to mind a Will Rogers quote about then President Calvin Coolidge.

" He didn't say much and when he did he didn't say much."
______________
It has been reported that Coolidge spent more time sleeping/napping in the WH than any of his predecessors. Just how that bit of insider info was gathered I couldn't say. Anyhow, that was long before trumpty dumpty's excuse for working - curtesy of Fox News' non fake news.

Just funnin'. Have a good one!

 

[Bali Hai Again]

Such cryptic dispatches bring to mind a Will Rogers quote about then President Calvin Coolidge.

" He didn't say much and when he did he didn't say much."
______________
It has been reported that Coolidge spent more time sleeping/napping in the WH than any of his predecessors. Just how that bit of insider info was gathered I couldn't say. Anyhow, that was long before trumpty dumpty's excuse for working - curtesy of Fox News' non fake news.

Just funnin'. Have a good one!

Reply to bolded,
No different than Sleepy Joe. Trumpty Dumpty provided the longest bull run in stock market history. Now Sleepy Joe has gutted that in more ways than one, trying to force us to pay for someone else’s voluntary student loan for one instance.

The only positive thing Sleepy Joe has done is test positive for COVID.

Just funnin’. Keep your money in cash until this nightmare is over.

 

[LdiJ]

Reply to bolded,
No different than Sleepy Joe. Trumpty Dumpty provided the longest bull run in stock market history. Now Sleepy Joe has gutted that in more ways than one, trying to force us to pay for someone else’s voluntary student loan for one instance.

The only positive thing Sleepy Joe has done is test positive for COVID.

Just funnin’. Keep your money in cash until this nightmare is over.

Sorry but no president can take the credit or the blame for the economy in their first term, particularly the first half of their first term. The economy changes slower than that. Anything that happens in a president's first term is a legacy from the previous administration for the most part. The economy had already begun serious improvement in the later part of Obama's last term, Trump just inherited that.

 

[Zigner]

Folks, this is not the appropriate place for this discussion.

 

[Bali Hai Again]

Folks, this is not the appropriate place for this discussion.

I know Zig. Couldn’t contain my passion. I apologize.

 

[adjusterjack]

Such cryptic dispatches bring to mind a Will Rogers quote about then President Calvin Coolidge.

" He didn't say much and when he did he didn't say much."

That's why Coolidge was known as Silent Cal.

 

[FiguringThingsOut]

@adjusterjack throughout this week we have issued the person in question around $6,000 in refunds and have maybe $1,000 to $1,500 more to issue them, then 99.9% of their unfulfilled merchandise/unused gift cards will be refunded. While it hurts financially right now, the absurd discounts and bonuses that he was able to somehow get from us would have costed us more in the long run than the refunds we are issuing him. I didn't want us to give this guy any ammunition to sue us. The final refunds will be sent tomorrow, then we'll be sending him records of every single order he ever placed, transaction records... everything... and giving him some time to look it over and respond in case he happens to find some gift card hidden away in his web of transactions that we forgot to refund. After we give him ample time to respond, we're blocking him and we're done with it.

His pattern of excessive damage complaints with our company and at least 2 of our peers (they told us via e-mail he was pulling the same stuff with them, at least 1 would likely be willing to sign a sworn affidavit confirming), after his repeated transactions with us using one name but paying with another, after his constant demands for "cash" refunds for gift cards he never paid for... we surely have enough to prove criminal wrongdoing on his part. He's malicious and clearly gets some sick joy out of this, but I don't think he's stupid: he probably realizes that we have enough against him to make a counter-claim.

I find it unlikely that he'll just ride off into the sunset after the refund and review processes are complete. He's most likely going to try again and/or throw a fit by filing complaints about us on various 3rd party websites. If he goes too far we might consider legal action against him.

This individual has been an absolute nightmare for our team and has been rude, difficult and suspicious/fraudulent. We expect him to come back a 3rd time and try again, and this time we're prepared by looking daily for any suspicious new accounts, or customers using the same address/similar names, or customers repeating similar patterns as this guy. If he does try again, our hope is that if we keep banning and stopping him quickly that he'll eventually give up. If he doesn't, we have discussed pursuing legal charges against him.

I'm not sure what he could sue us for if we've refunded 99.9% of his unfulfilled merchandise and we've been totally polite and professional the entire time (unlike him), but he's malicious enough where he might try something. We've discussed this case with our small business attorney who gave us great advice and information, and if it comes down to it we are prepared to pursue charges against him which might be the only way to deter him from doing stuff like this to other companies in the future.

There's another option here.

Don't give him squat. Deny all his claims. Let him sue if he wants to.

People like that rely on fear to get what they want.

Put up a wall and he might cave.

Or, you cave, and make yourself ripe for more scams.