'"Don't make me angry. You wouldn't like me when I'm angry.'... 'Dammit, we made him angry'", a tale of customer service

[JohnT]

Well, it happened again.

(Oh, about the guy who trashed the house - he eventually paid $3,000 for damages and I dropped the charges. Just like I told him would happen.)

OK, so my wife (Inna) and I have a bookkeeping business. We get contacted by a potential client and since we started a Google Ads campaign, didn’t think much of it.

Long story short: We got scammed out of $5,000. The scammer used a little-known loophole in ACH transactions which allowed him to cancel his payment after we refunded him.

We did the disputation thing for a day or three - contacted Intuit (we use Quickbooks Merchant Account) and Wells Fargo (our bank), logged complaints, talked to seemingly-supportive-but-not-very-helpful CSR agents, gathered documentation, etc. The usual shit.

Then this past Sunday, I decided to use the U-Haul approach (and my GOD do I have an update about THAT!). I put together a list of the top Intuit executives, from their CEO Sasan Goodzari to Kerry McLean (General Counsel), and about 12 people in between. I then wrote the following email, personalizing it for each executive:

Subject: Fraudsters are specifically targeting Intuit (Quickbook Merchant Account) clients. Here’s how.

Body:

My wife and I run a small bookkeeping business in San Antonio, TX. We exclusively work in QuickBooks Online (and Quickbooks Merchant) as we believe it provides the optimal solution for our business plan, and our client’s needs. We have been doing this for 3 years, and until recently, have had nothing but positive experiences with the Quickbooks program, staff, or practices. We truly appreciate Intuit and its suite of offerings.

Recently, we were defrauded out of $5,000.

There is an exploit in the Intuit payment processing system which fraudsters are using at a cost of your customers which easily is in the hundreds of thousands, if not millions of dollars annually.

What happened to us and our online business was simple, embarrassing, and repeatable:

1. New client reached out. Needed bookkeeping and training services, paid $5,000 in advance after signing our engagement letter, paying this via the invoice sent in Quickbooks.
2. Within a couple of days, a re-scope of the work was requested. Client was due a refund of $2,500.
3. We told the client that we will wait until the funds are deposited into our Wells Fargo account before refunding him.
4. When the funds were deposited, and our QB Merchant Account said “funded”, we refunded the $2,500 via PayPal. We could not effect this refund through QB Merchant Accounts, so this is why we decided to use PayPal.
5. The client decided to cancel the project. We refunded another $2,000 via PayPal, with $500 being kept by us for the cost of services rendered.
6. Yesterday, a dispute was placed on the transaction, and the “funded” $5,000 was withdrawn from our Wells Fargo account by Intuit.

So now the fraudster has $4,500 of our money, plus the $5,000 he originally “paid” us through the ACH system.

The fraudster was able to do this because of our lack of knowledge of how Intuit processes ACH’s: He understood (in a way we did not) that the word “funded” in QB Merchant represented a loan between Intuit and our company and did not mean that the money was pulled from his account and placed into ours.

Because of this, he knew that he would be able to pull back his money after it was “funded” as long as he did so within the 5-day clearing window, meaning that he had a four-day window by which to con us.

In the end, the fault is ours, that is true.

However, it was not made clear in the TOS that BookkeeperSA was entering into a loan agreement when deciding to accept ACH transactions. Had we known this, our actions would have been decidedly different.

I’m writing to you, Mr. Goodarzi, as the leader of the executive team, so that you can be informed of this exploit and perhaps direct resources to informing your small business clients just how the ACH process works. Because I can guarantee you that this guy specifically targets Intuit clients, we’re not the first, we will not be the last, nor is he the only one.

Regardless, we have decided to take our processing business elsewhere, which is quite tragic as our business is based on our ability to use Quickbooks Online. We are not happy with the fact that we somehow entered a loan agreement and that ACH transactions have this loophole… and because of this, we (and not the fraudster) owe Intuit $5,000 (resulting in our merchant’s account being closed while this dispute is pending).

Our Intuit Case # is 1234567890123. If you could please direct this email to the person in your organization responsible for handling these matters, that would be truly appreciated.

Thank you for taking your time in reading this email.

Signed, etc…

I sent this on 12:46pm this past Sunday. He responded at 12:55pm, directing me to members of the Office of the President (OOP). I received my first call around 3pm from one of his assistants, and today, after a discussion with James Barrese of the OOP, the situation is resolved, Intuit is writing off the $5,000, and our merchant account will be reinstated in 2 days.

And yes, I have already received email confirmation on this.

Lessons:

1. Go to the top. This was a $5,000 decision, I want to talk to the person to whom $5,000 isn’t really worth their time, someone who says “it’s worth $5,000 just to get this off my plate.”
2. Make it their problem (“You have a problem with fraudsters”), not your problem (“We really want the $5,000 back!”)
3. Tone, tone, tone. Keep it professional, remove the heat.