All Forum Posts by: Lew Payne

You have done fine by initiating disputes with your card companies.  The purpose of my example "negotiation" is not about negotiating; it's about uprooting their strong-arm tactics altogether and ending the air of intimidation.  In other words, it's about showing them you're in control of the situation and know the legal avenues you can pursue (at no cost to you - since they do not involve an attorney at this time).  A negotiation like that is almost an ultimatum - it is your way of saying, "here's what's going to happen, which is totally out of your control - so stop playing games with me."

I cannot help you with your FTC complaint due to scope and time requirements, but I have enjoyed helping you with getting your money back.

"Here's my counter-offer... you refund my money to my credit cards in full within three days, and I won't initiate multiple charge-backs against you for the full amount.  Not only will you be unable to stop the bank from debiting your merchant account, you'll also incur charge-back fees and the distinct possibility of being classified as a high risk merchant, thus either placing you on the Visa/MasterCard fines program, or raising your merchant rate and holdback ratio.  If you agree to refund my money, the credit must post to my card within three days."

That's the only negotiation which should take place.

"You may continue to rent the premises on a month-to-month tenancy, subject to a 30 day termination notice.  As I am not an innkeeper by definition of law, I must refuse week-to-week tenancy."

Assuming you have a rental or lease agreement, any time a tenant communicates with you regarding something that potentially modifies the lease, your response should be that, "Per the lease, modifications are invalid unless in writing and signed by both parties.  For your protection and to avoid any misunderstandings, please provide me with a written proposal to review - as soon as possible."  In addition, follow that up with a letter reiterating what you said.

I only text my tenants to inform them of the need for a contractor to enter the premises, or for work that is going to be done outside the premises. The more a tenant resists courtesy notices, the more formal I get in my communication with them - to the point where I'm citing conditions of their contract with each request (e.g., "Pursuant to section 10.3(a) of your rental contract, you are hereby given the required 24 hours notice that remediation of a window leak will commence on the premises by Acme Construction, LLC. Should Acme not be able to access the premises, I will escort them in pursuant to section 10.3(b) of your rental contract. Should you have any questions regarding your contract, feel free to address them in writing."

I recall reading that you were given the wrong location (address) for one of the bootcamps, and that you employed reasonable efforts to mitigate damages (i.e., you immediately called the guy telling him nobody else is there, trying to find out where to go).  His response was that he's a single dad and (in effect) too busy to honor his contractual obligations.

Also, based on your numerous calls and follow-ups, all of which were the result of lack of mentoring and an unclear business plan, you have demonstrated reasonable effort.  The courts do not require extraordinary effort in a contract that is (in essence) rigged against you and designed such that the ordinary person cannot execute its terms.

You have also, no doubt, called or contacted various company representatives during this process... thus giving them both actual and constructive notice of their liability in this matter, none of which resulted in any even attempting to mitigate damages on their part by remediating the situation, much less remediating to your satisfaction.  As a result, it is my non-expert opinion that you have demonstrated reasonable effort.

Based on what you've documented, you can also show cause that the so-called "Mentor Hotline" is unworkable and untenable the way it's manned and operated... and that it is calculated to lead to an undefined (and indefinite) period of prohibition against exercise of the "money back" guarantee; an unreasonable restraint of a consumer's right and an act which clearly violates the implied warranty of merchantability of their service.

As far as what you send your card company - I would not engage in the lengthy letter until such time as the fraud department asks you for a full accounting of the facts.  The initial letter to your card company should be succinct and concise - you're contesting charges, based on the non-delivery of promised services.

You have 180 days in which to file your charge-back request with your card companies, so by filing soon you are well within the allowable time period. In addition, the most you could be held liable for (per your cardholder agreement) is $50, though it is very unlikely any card company wouldn't absorb that cost.

By the way, looking at what I wrote again, I would change one sentence... from:

"This merchant violated the Fair Credit Billing Act by not only misrepresenting their services, but by failing to render said services after collecting my money."

to:

"This merchant violated applicable federal and state laws by not only misrepresenting their services, but by failing to render said services after payment in full."

In the opening salvo to any litigation, you want your claims to be as broad and general as possible, rather than initially limited in scope.

Less is better; meet but do not exceed the reporting requirements to validate your claim... you will only burden the person reading your letter, and possibly confuse them.  The letter to your card company is not an appropriate forum for discussing the merits of your claim.

Sample letter to each individual credit card company:

RE:  Dispute of Charges on XXXX-XXXX-XXXX-XXXX

To Fraud Department:

I hereby dispute the charge of $X,XXX.00 on XX/XX/2015 by [Merchant Name that appears on statement] in full and request that you issue a refund and charge-back.  This merchant violated the Fair Credit Billing Act by not only misrepresenting their services, but by failing to render said services after collecting my money.  I have reason to believe this merchant engages in a widespread pattern of similar behavior, in violation of [VISA or MasterCard - pick appropriate one] merchant guidelines.

Sincerely,

[signature]

[printed name]

There is no reason for you to communicate directly with the company itself; they cannot prevent the charge-back, and will be forced to contact you in an attempt to collect their money once the charge-back hits their bank account.  They may, of course, subject you to collection action but that can be quelled in its tracks by gently reminding them that the FCBA allows for an award of damages plus twice the amount of any finance charges - or higher amounts (unlimited liability) if a pattern or practice of violations is established.  In the same paragraph, you would then also hint of how easy it would be to establish such pattern or practice, after compelling discovery in court of their merchant statement.  In addition, at this point, an attorney would take the case on contingency - and even possibly establish it as class action once the merchant statement is compelled and other customers contacted.

• All properties will be available for purchase

How is there "no pitching of products or services at this event" if properties will be available for purchase?  I venture to speculate that, via one arrangement or another, the operators of this "tour" will receive compensation commensurate with overall sales.

I could be mistaken, however - perhaps you truly are registered as a public 501(c) non-profit with the IRS, and are doing this out of the goodness of your heart.

It depends on what type of syndication you're talking about (public or private), what your purpose and goals are, and what your exit strategy is.  Since you haven't provided insight into these prerequisites, my answer may not be applicable to your situation.

I have a private syndication which my attorney set up for me, after I defined its purpose, goals, and exit strategy. I am one investor of several (among them, my family trust, my ERISA investment LLC, and private family investors), as well as the managing member.

You set up such syndication entities by clearly establishing their purpose and goals, the benefits to investors, the exit strategy, the management strategy, and the processes for handling disputes, change in membership due to estate or bankruptcy of a member, the process for winding-down a series, and the overall exit strategy.  Once you've done that, you confer with an attorney experienced in real estate syndication, and retain him.

I want to stress the importance of Jay's post.  In a performing market, it's human nature to attribute our gains to savvy investing (rather than overall trend) and to  thus over-allocate due to inflated confidence.  However, the true test is when you can churn a profit during a declining market... when the tide is against you.

Even if you're not going to put all your proverbial eggs in one basket, you should refrain from investing (in any asset class) until you've established a viable exit strategy.  Not doing so is the equivalent of commencing a drive without first establishing a destination.  When put in those terms, it is clear why an exit strategy should always precede an investment.

I've heard many former colleagues (prior to my retirement) attempt to justify and rationalize poor decisions in their minds.  Prior to the stock market crash of 2008, I divested my 401(k) of stocks and went into cash.  My colleagues remained, and lost 60% of the value of their retirement accounts - none had made financial education a priority.  What amazed me, though, was how the human mind justifies poor decisions - they were telling themselves, even consoling one another, that their portfolios would recover in 5 or so years.  While this may or may not be true, the concern is the lost opportunity - which can never be regained.  You have a choice of "recovering" from a bad investment, or avoiding it in the first place - and buying performing asset classes during this low.  One strategy loses a substantial amount of money, followed the the opportunity cost of not being able to invest in better performing asset classes until the portfolio recovers; the other strategy avoids major losses and shifts into more opportune asset classes.  Which strategy would you rather employ?

Just as with the stock market, make sure you have viable exit strategies clearly thought out before investing in any property. I not only have a 70% ARV cushion (minimum), I have a fixed rate of return (risk shifting) and a labor component that comes from somewhere else (my flipper). In addition, I have the ability to carry the property while seeking a renter... and the ability to make adequate returns (via rental income) during a deep market cycle.