Legal Question in Business Law in New York

internet business and charge backs,when are they legal

I work at an online internet information exchange network.I am self contracting.Members contact me for information,and pay by the minute.The service provides the domain,and is the entity that takes the credit card from the consumer.They charge me a percentage as well as the consumer,on a per call basis.

After working with this company for one year,without notice,they took a sum of money from my paycheck,saying it was a chargeback from a fraudulent member.

It was not for calls made from the previous month,but supposedly many months back.

Is it legal to ''chargeback'' me at all?

Is it legal to charge me after all ready compensating me so many months ago?

Isnt it the responsibilty of the service to bear the fraud risk as they are the ones accepting the credit cards?

Thanks,I am very worried about future activity of this nature.


Asked on 8/20/02, 11:10 am

3 Answers from Attorneys
John Friedman Law Office of John K. Friedman

Re: internet business and charge backs,when are they legal

The answer to your questions will be found in the contract between you and the service provider: it should lay out which party bears the risk of the fraud. If, however, the contract is silent on the subject, you should not be the risk-bearing party but an examination of relevant caselaw would be necessary to give a definitive answer if it is silent on this matter.

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Answered on 8/20/02, 11:16 am
Norman Nadel Norman Nadel, Esq.

Re: internet business and charge backs,when are they legal

It is not clear how you get paid.

If the member pays the fee and the compensation you receive is what is left over after the charges imposed by the service, then if the fee is not collected from the member (due to fraud or whatever) it looks like you are out of pocket.

If, on the other hand you are given compensation based on calls, etc. then you should be paid even if the fee is not collected.

It all depends on who assumed the risk of non-payment by a member; you or the service.

Do you have an agreement that covers this issue?

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Answered on 8/20/02, 11:22 am
Tom Turnbull tomturnbull.com

Re: internet business and charge backs,when are they legal

Agree with other 2 responses. This situation will be primarily governed by your contract. If contract is silent, you would look to case law.

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Answered on 8/20/02, 12:26 pm


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