Predatory Customer Threatening Small E-Commerce Business With Legal Action

[testingguy]

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.

[atticus]

You use a $ symbol: is your business in the US? I ask as this is a United Kingdom law forum.

[testingguy]

You use a $ symbol: is your business in the US? I ask as this is a United Kingdom law forum.

My apologies, I did not realize that this is a UK based forum. If you could humor me anyways, I would like to share a bit about this situation: This former customer 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.

[atticus]

Having humoured you, I will advise you to seek advice in your state.

[islandgirl]

Whatever the difference in laws I would expect the person requesting repayment would have to untangle everything in order to lay it out in a way the court could understand to justify their claim. If it really is that complicated they may not be able to do this and may be bluffing about their court claim..but you never know! As above we cannot offer any useful advice and we hope you find a similar forum which will help you. We hope that just setting the problem down in words has been a way of relieving the stress of the situation and good luck