URL: http://www.entrepreneur.com/money/paymentsandcollections/billingandcollections/article63010.html

As the U.S. economy continues to cough, sputter and wheeze, a lot of small businesses are having trouble getting paid, even by their better customers. This week's e-mails focus on two very common situations:

Q: I have an Internet-based business and accept all major credit cards. One of my biggest problems is "chargebacks"--when a purchaser pays by credit card and then cancels the order while the goods are being shipped. If a customer isn't satisfied, I wouldn't mind refunding their money if they would just return the goods. But the customers are stealing the goods and I'm getting in trouble with the credit card companies to boot! Are there any good ways to solve this problem?

A: Merchant concern about online credit card fraud and chargebacks (when a credit card company reverses a transaction at a customer's request) are on the rise. Chargebacks can occur for a variety of legitimate reasons, such as double charging, credit card expiration, mistaken identity (charging Customer A accidentally for a purchase made by Customer B) and bank error. If you get too many chargebacks against you, though, you could lose your merchant account. If you lose your Visa/MasterCard merchant account, you are placed on the Visa/MasterCard Terminated Merchant File (TMF/MATCH list) for several years. All banks and other merchant account providers have access to this list, and if they find you on the list, they won't reissue a merchant account to you.

Sadly, the cards are stacked against merchants and in favor of consumers when it comes to "quality dispute" chargebacks. Under the federal Fair Credit Billing Act, dissatisfied consumers may request a chargeback of any transaction if they notify their bank within 60 days after they have received the credit card statement on which the transaction is recorded. While technically the consumer is required to return the defective goods to the seller and make a good faith effort to resolve the matter directly before resorting to a chargeback, in practice credit card companies lack the staff and other resources necessary to mediate commercial disputes (heck, they simply don't want to get involved, and who can blame them?) and will simply issue the chargeback if the request is made in the proper form.

There are a couple of online resources available to merchants who wish to challenge chargebacks. For a one-time fee of $39, Florida-based Azoos.com Inc. offers programs that teach merchants step by step how to challenge chargebacks, including form letters and other documents, while North Carolina-based MerchantSeek provides free information for merchants on ways to deal with credit card fraud.

Q:I submitted my invoice to a large, Fortune 2000 corporation on March 5th for consulting services rendered during the month of February. They usually pay within 60 days, so when I didn't get paid by May 5th, I inquired. My contact said the company had changed their policy to 75 days, so I waited another 2 weeks. I've inquired every week since then and have always received an e-mail back which said "I'll look into it for you." I e-mailed them again yesterday and was tempted to say something like, "I don't think you want your company to be embarrassed by ending up in small claims court." However, I held my tongue (actually, my computer mouse) and wrote "please give me the names of three people to contact about my February invoice and a deadline when I can expect payment." The next day, I found the check, which had been sent by overnight courier, in my mailbox. I also received an e-mail from the company asking me to start a new assignment.

A:Nice going, kid! There are a few lessons here:

• When bills are overdue, it pays to be persistent--"Squeaky wheels get the grease."

• Be professional. Big companies are not afraid of small claims court proceedings (which never get the publicity they deserve) and will be totally turned off by threats or emotional appeals.

• If the bill is not disputed, ask to speak directly to the person in charge of authorizing payment, and request a specific date on which payment can be expected. Follow up with a letter or e-mail confirming the date agreed upon.

• Bills tend to be paid quickly when the customer needs more work from you, so don't be afraid to remind your deadbeat customer (gently) about upcoming projects they'll need you to work on. If you sense the customer won't need your services again for a while, try to hold back some of your work until final payment is made.

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Cliff Ennico is host of the PBS TV series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on Small Business Television Network. E-mail him at cennico@legalcareer.com. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. Copyright 2003 Clifford R. Ennico. Distributed by Creators Syndicate Inc.