Legal Question in Business Law in New York

Merchant Services - Legal Ownership
Recently, I started a new corporation. When I applied for a merchant account I could only get one in my personal name because the corporation was brand new and had no credit established. The credit cards payments that we recieve (from our customers) are processed through the merchant account (in my personal name), then the funds are settled into a bank account (in the name of the business). My question is this: If a customer does a chargeback, and the credit card company orders us to give a refund - who is legally respondsible for the funds - me personally or the corporation? Would having the merchant account in the name of the company change anything (even if I had to under-write the account personally)? Thanks in advance for your help.

Asked on 12/29/04, 2:33 pm

Norman Nadel Norman Nadel, Esq.

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Re: Merchant Services - Legal Ownership

You are responsible. However, you can obtain reimbursement from the company.

If you guaranteed the merchant account for the company, you could still be held responsible, as the guarantor.

The only way to protect yourself is to have the company build up capital and then obtain a merchant account.

Answered on 12/29/04, 5:04 pm

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