If someone tried to (and thinks they did) pay me and I screwed up, do they still owe me?

November 18, 2008 10:52 AM

Oops. I didn't cash some checks / capture credit card charges. Uhhh, as far back as 6 months ago. Do they still owe me the money?

I run (badly) a small business. When someone charges an order, our online merchant service authorizes their credit card for the amount, but it is not actually "captured." It is just held by putting a "hold" for that amount.

Now it is against the rules of the merchant service for us to capture before we process to ship (this makes sense to me). The problem is that we only ship occasionally since we have a tiny volume and our warehouse is an hour away. This is in our terms, so it is not a surprise to our customers. But sometimes, the Credit Card companies will RELEASE the hold against the authorization in the time it takes me to get stuff out. So when I go to capture, it is declined.

I just found out that I have about $3000 of outstanding balances where the customer THINKS they've paid (they assume that when they punch in their CC# that it is "charged"), but I've just found that their holds were released so we never "captured" the money.

So it is pretty much my fault for not capturing during the 30 days of the hold. And they received their stuff months and months ago. What is the legality of writing them and saying, "You still owe us money?" If they are belligerent, and I have a right to the money, what is the legality of trying to reauthorize their cards (I have the card info from when they placed the order).

I keep thinking about that old ad from the '70s where the guy in the igloo gets a fan, and the USPS says, "If you receive something you didn't order, you don't have to pay for it!" I'm generalizing that to my situation. I'm worried that since it is my fault that I didn't collect, that I no longer have a right to charge them for something from 6 months ago. They did everything right (due diligence or whatever), and I was the slacker.

tl;dr: Analogy: If I find a check I didn't cash from someone that was written a year ago, and the account has been closed, am I still owed the money?

posted by dirtypants to Work & Money (9 answers total)

The question of whether you can charge their credit cards again without authorization should be directed to your credit card processor.

I am not a lawyer, and this is not legal advice, but if someone orders a good and accepts it, then they owe you payment. Even if you didn't cash the check and they closed the account; even if you didn't yet charge their card. To allow them to keep the goods without paying would be a form of Unjust Enrichment.

You may not be able to charge their cards without their permission at this point, but you definitely have the right to collect under the contract you made.
posted by JakeWalker at 11:06 AM on November 18, 2008

In situations like this in the past, I have had very good luck with simply contacting the member customer and saying "Hey, there was an error and your credit card was never charged. I would like to charge you on xx/xx (date) (at least 30 days in the future). Please contact me if this poses as problem and we will find another way for you to get payment to us."

Also, yeah, check with your card processor.
posted by anastasiav at 11:18 AM on November 18, 2008 [1 favorite]

They definitely owe you the money, but I think you want to be careful about how you collect. I think people will be understanding if you say "We made a bookkeeping error and your card was never charged.", but they'll be pretty pissed if you just go ahead and charge it. Consider changing merchant services too.
posted by electroboy at 11:38 AM on November 18, 2008

Yeah, you *definitely* need to clarify to the customers that you're charging them or there WILL be angry phone calls. Most people will be just fine, I think, especially if it was on a credit card. But people's financial situations change and you may have to be sensitive to that fact.
posted by disillusioned at 11:48 AM on November 18, 2008

When an unexpected charge just shows up without warning, people are going to be upset or suspicious. They owe you the money, but TELL them you are going to charge them and then offer a discount for their trouble/your error (5-10%).
posted by ml98tu at 12:08 PM on November 18, 2008 [1 favorite]

You know you didn't already bill them, but they may have no idea. It's a lot easier to catch unauthorized charges during checkbook balancing than missed charges. So when you do get around to billing them, they're likely to think it's a double billing, and will do a chargeback. So you need to get their agreement first.
posted by smackfu at 12:24 PM on November 18, 2008

IME (in-my-experience as a consumer) the "authorization" is good for up to 12 months - this was confirmed with Visa over the phone when I called to find out why something I though I had paid for was being charged at such a late date.

Going back through my statements/records, it turned out that indeed the merchant did not actually charge me in the month the purchase was made.

So - while I technically owed the money, the merchant's lack of standard business practices adversely impacted me at a later date. I would have appreciated a call from the merchant first (this was alot of money), so I could re-plan MY monthly budget. Next time I am in the market for appliances - there is NO WAY I would ever buy from that merchant again...
posted by jkaczor at 12:31 PM on November 18, 2008

I would contact the customers -- mail is fine, but give out a phone/e-mail -- and ask them how they would like to handle it. I think a discount is smart, and you might even throw in some kind of coupon so they don't feel so burned. That is, if repeat business is any part of your market.

I would also take this time to seriously review your "ship occasionally" schedule, not to mention the warehouse being an hour away. What is this exercise costing you? Is it offset by these economies?
posted by dhartung at 2:15 PM on November 18, 2008

Response by poster: dhartung: This is not a profit making business. It is maintained by a trust. We sell items that we have made that are unique, and we are only in business because the founder wanted it to continue on for the people who count on these products. And they do. They are very important to many people.

We largely sell products that are uniquely useful and prosthetic for people with certain kinds of disabilities. We don't make money. The warehouse is the same one it has been since the 60s because it is owned and our inventory is very heavy. And the ship occasionally is because we may not get 5 orders in a month. Since I only barely pay myself, it isn't worth gas to drive in.
posted by dirtypants at 7:08 PM on November 18, 2008