CREDIT CARD CHARGEBACKS

[NonDBSdealer]

Unfortunately what you are going to face is that the credit card companies are not going to care who you paid as a dealer. The only facts they will look at is that you took their money for the sale and did not follow through to deliver the goods. I do understand your pain. This will all fall back on the dealers. The credit card companies are going to require one thing from you as a dealer, proof of delivery on or before the date contracted of the goods contracted. I went through this before with a non delivering second source for my items. You will be advised to get your funds back from DBS and as you know that will not happen due to the bankrupcy. Chapter 7 is relief of debt, total relief with no responsibility to pay debtors. I am a vendor, I had recently checked with DBS and chose not to sign and I am so glad I did not. You as a dealer will end up on the losing end. I feel for the brides also, very much so. This is a horrible situation, not just one bride but thousands are up in the air on what to do. I am astonished at the unwillingness of the designers to release gowns at wholesale also. If there is documentation of the bride and order and the order was placed and they have their gowns, they should release them for wholesale if the designer did not get paid for them. I am hearing of them selling them for retail pricing, this is disgusting to me. They only charge wholesale so why should they worry about getting anything over that in this situation? On your situation though, you will be the one to take the fall. I predict that it is going to cause many dealers to file bankrupcy themselves and that is sad. Very sad. This is not only a loss of your business, your job, but you are now facing personal financial ruin, my prayers go out to you.

[Paper Trail]

Sadly, you are absolutely right. The credit card company doesn't care what dealers did with the money once they took posession of it. They could have purchased a gown with it, or a night on the town...the only relevant fact is that at one time, it was in the dealer's account. I think the saddest part of this whole story is the way DBS banked the money, then held it before it came due, shifting ALL of the float risk onto the brides and dealers. Especially while DBS knew it was in danger of defaulting on its deliverables.

[lin]

I have heard that if you have chargebacks, the cc processor also charges you additional for the chargeback. Is this true? Trying to decide on a couple of cases if it worth waiting for chargebacks or just issueing credits on the gowns I know I won't be receiving.

[Paper Trail]

Chargeback fees range $20-$30/chargeback, depending on your provider. Check your contract. If you have a high number of chargebacks, it can also throw you into a high-risk category, which can cause your merchant services provider to either temporarily "secure" funds or put you at a higher fee structure. I don't mean to scare you, but I had a provider hold 100% of my funds for three months due to a single (rather large) chargeback. This is not normal, though. Your processor can tell you the details...it all depends on your provider.

[Lori former DBS Dealer]

When a bride/customer paid by credit card through the dealer, the card was swiped or key entered, and total amount of the order charged. The dealer would then write a check to Discount Bridal Service for the FULL AMOUNT of the order. No money was kept from the credit card transaction. The dealer's check covering the credit card transaction was then mailed to DBS with the gown order paperwork.

DBS dealers who processed credit card payments were nothing more than a conduit of the monies. The dealer took the credit card payment in one hand, wrote a corresponding check to DBS, and sent the full payment out the other hand to DBS. NEVER did any DBS dealer keep one penny of the credit card transaction. DBS dealers have copies of cancelled checks showing full payment to DBS for gown orders paid by credit card. The dealers DO HAVE a paper trail to show the customer's payment was passed on, in full, to DBS. The customer's credit card statement, however, shows payment was made to the dealer and that is whom the credit card companies will go after. I am sure the DBS customer does not realize the paper trail and system of transfer of monies involved. Countless dealers like myself are very concerned because the customers think WE have their money if they paid by credit card. The dealers were victims in this too, and advising the customers to contact the credit card companies for a charge back will generate more paperwork for dealers to prove they do not have or never did keep any of the customer's money.

It is customary for credit card companies to charge a merchant 2-4% of the sale. This charge is never charged to the customer but is absorbed by the DBS dealer for the “privilege� of providing credit card services to the customer. Dealers were pressured by DBS into handling the credit card services themselves begining August 2004. Prior to 8/04 credit card charges were handled through DBS. DBS acknowledges the dealers carry no blame for the collapse of DBS. Dealers earned commission on the sale, with the highest level being 10% of the total sale. The dealer had to absorb the credit card transacation fees from their low profit margin commissions.

DBS dealers understand and sympathize with the brides the hardship caused by the collapse of DBS. It should be understood that the dealers have also been victimized by the collapse. The dealers sacrificed a sizable portion of their profits to provide credit card services to their customers only to now have that sacrifice turn around and cost them many times over any profit made by that sale in a credit card chargeback that is the responsibility of DBS, not the dealer.

[JoAnne Schnepp]

There ARE fines that will come to the dealer, and the more chargebacks, the worse it will be. You will get listed as a HIGH RISK and have to pay more to offer merchant account services to your brides too! I am so glad I never used my merchant account for DBS transactions, although the only reason I didn't is because we ran into exactly this type of problem when My husband had a merchant account...over only ONE transaction that the card processor did not like. His account was frozen for months while we appealed it...and he got upset and said he was never going to accept credit cards again. So just be forwarned if you are accepting a lot of charge backs as it could backfire even more on you unfortunately.

[lin]

I actually called my cc processor late yesterday to find out the best way to handle the situation and was told issuing a credit was better than having a chargeback. The credit did not go against your record and the fees were the same as processing a charge. With a chargeback. With a chargeback you could be facing the regular fees + $25-$35 flat fee + interest. Of course this could vary with the processor.

I have decided to just issue credits and be done with it. Sounds like chargebacks can be around to haunt you for a VERY long time.

[NonDBSdealer]

Lin,
That is definitly how you need to go. The company I delt with at one time did this and put a business out of business. There was not a reason for it. There was never a chargeback on that account and all sales were fine. There was an out of country purchase that they said they had to verify then the cc merchant company deicded to hold all funds. This made it impossible to order the merchandise for the customers. The CC company said they did not care and never released the funds. The customers did chargebacks and now the compnay who ended up folding due to this has had to deal with $10,000 worth of bills from the cc merchant, and they never released the funds. These merchant companies will ruin you for no reason sometimes. I wish you luck. Do refunds immediately to save your self. Good luck.