Help! Customer Stopped Payment On Cake They Already Ate!
Business By Buttercream_warrior Updated 2 Oct 2012 , 11:54pm by cycakes
I have yet to have anything like this happen to my cake business, but have had experience dealing with this in my past life. So imma give you what you should do.
They wrote a check to you for a product they received. They stopped payment on the check after getting the product. It doesn't matter if they decided they didn't like the cake after the fact - or whatever BS reason they think they may have for stopping payment on product they have already gotten - it's theft. The law is very clear (and I imagine it's the same in most states) - It is up to you, the business, to issue refunds if it is your policy to do so - it's NOT up to the customer to just give themselves a refund whenever they feel like it. The only evidence you need of the transaction is a copy of the check that was stopped. A signed invoice would also be good or other proof of delivery, but I don't think it's completely necessary. Heck, the date of the check may be all you need for proof if the date of the check matches the date of delivery. I mean, do you sign something at the grocery store that you received your groceries or do you just hand them a check? If you stop payment on the check, do they get testimonials on how good the groceries were from facebook to prove that you got groceries and that they should get paid for them? No! Really, all that matters is that you delivered a product, they wrote you a check, then put a stop on it.
You may never get paid - but you can make their lives a lot more difficult and feel a little better that they didn't just "get away with it". You need to do a few things:
Send an invoice to the them for the full value of the cake plus a returned check charge (maximum allowed in your state), and send it *certified mail with return receipt*. Demand cash or a certified bank check. Do not accept another personal check. Give them 15 days from the date of the letter to pay. Also put on the invoice that failure to pay means you will turn the account over to collections and report the negative account to all three credit reporting agencies. Also let them know you will be filing a report with your DA's office for prosecution of the misdemeanor. Google your state's bounced check policy and use that language exact.
Assuming they don't pay:
File a report with your local DA office to report the stop payment. This will not mean you get paid, but this will prosecute them for the misdemeanor and put it on their criminal record. This will effect things like their ability to get certain jobs and possibly effect their ability to write checks in the future.
Call a collection agency and find out what they need to take over the account ASAP. They will start sending the proper bills and start tacking on a ton of fees.
If the collection agency doesn't offer to do it (but they probably will), contact all three credit reporting agencies and file a negative account with them. This is surprisingly easy to do - you literally just send them a letter. All you need is the person's name and their mailing address. You should be able to get everything you need off the check. This will effect the person's ability to get credit, may raise the rates of credit cards they already have, and may even go as far as to prevent them from renting property. It drops the person's credit score and shows a derogatory that will remain for (I think) 10 years. If they want to buy a house, they will have to pay you before they can get the derog removed.
Let the collection agency take it to small claims on your behalf once they exhaust their collection abilities. At that point a $400 cake will probably be a $2000 cake after interest and penalties. Once judgement has been rendered (in your favor, almost 100% guaranteed) it will also knock their credit further down.
Threatening to do all these things is sometimes enough to get people to pay you. But the only way you improve the chances of getting paid is by doing all of it - every single step. And it sounds like a lot, but you could probably bang out all these steps faster then it took me to type out this post 
Good luck!
Apparently many counties do have separate depts within the DA that handle bad checks with no minimum amount. I'm still not sure what the success rate is or if there is a backlog, but it's definitely worth a shot, since if it works you get 100% of the funds (private collection agencies will take a significant cut).
In California, bad check restitution programs require a photo ID to have been recorded at the time of the transaction, and give the customer 10 days to respond (at least in Santa Clara and Orange counties).
http://orangecountyda.com/home/index.asp?page=79
If your county does not have one of these bad check divisions then chances are a bad check for a relatively small amount will be a low priority.
In terms of you "gathering evidence" you mentioned seeing positive comments about the cake on her facebook page. Take screenshots of that page and save them and do it frequently if the comments continue to increase. She can delete those comments if she chooses to do so and you won't have any proof that the guest loved the cake, contrary to what your customer has told you. Good luck with this.
Something must be in the water these days, because a couple weeks ago I had a client complain about a cake that had nothing wrong with it. I gave them a refund for various reasons (they are the harassing type and they weren't going to give up until I gave them something back, also complained to the venue about a bunch of stuff to get refunds too), and as soon as that check cleared they contested the credit card charge for the balance payment, so they're basically trying to get more money back than they paid me. I contacted the bride and she said that her mother pulled the complaint, but in the meantime the payment was pulled back and it's sitting in limbo while they figure it out. Clients are getting bolder and more dishonest.
Always give refunds in the same form that you received the payment. Credit card payment = credit card refund.
They paid via square and you can't do a partial refund that way, only full ones.
They paid via square and you can't do a partial refund that way, only full ones.
You can do a full refund then a new charge for the amount of the order minus the refunded amount.
They paid via square and you can't do a partial refund that way, only full ones.
You can do a full refund then a new charge for the amount of the order minus the refunded amount.
Not if you don't have the credit card number, and the clients are a couple of hags who aren't cooperating. Some people are just like that, it's why there's a "bad debt" category in the first place 
So sorry this happened to you, but as other people have noted this is fraud, she took the cake and wrote you a check with the intention of stopping payment afterwards.
I have a friend who this happened at her business ( was a gift shop, not a bakery) her first step was a visit to the local PA's office, ( whatever department you would go to for a bounced check) they will be able to tell you the exact steps you need to take. for her the first step was a certified letter with a copy of her purchase receipt and a copy of the stop payment ticket from the bank. After 14 days when the lady had not responded, she took her copies to the PA's offcie, they sent a notice to her, stating she had X number of days to pay or a warrant would be issued.
Taking the lady to smalls claim will probablly not do a lot of good, this is out and out fraud, and PAs take it very seriously.
Good luck!!
Even if she takes them to small claims court (and I definitely would), and they don't pay, you still have recourse to have their wages garnished for the amount. Anything you do will not be in vain...just do whatever you have to do to make this right. People should NOT be allowed to get away with this. It's theft, out and out theft.
I have just been reading through this thread. I was wondering how you have gotten on with getting your money owing to you?
I was wondering which road you took to clear this up.
Have learned so much from reading about baker's issues with non-payment.
Also learned that FromScratchSF is serious...don't make her mad.
Saved you advise, about the steps to take, From Scratch. Thanks so much for passing it on.
mommachris
Y'all... this is why Texas is GREAT! The District Attorney handles it all! It is theft by check. The DA sends the letter, the DA adds a fine, and the DA gets your money to you.... No? They issue a warrant and throw the deadbeat's butt in jail until they pay it! Amazing how most people come up with the cash then... 
All states should do it that way!!!! As a California native, and transplant to Texas I can really appreciate the Texas "no bullsh*t" way of handling deadbeats. That is why we can still write personal checks here in Texas, and have them accepted.
Of course, as always, cash up front- or no cake, is much simpler.
Hope that deadbeat is in jail.... even at my (taxpayer) expense. 
Yeah, what happened? I have a friend who had a PayPal chargeback recently and it pisses me off.
...aaaand that's why I use Google Wallet. If a chargeback is filed they don't just take the money back from you like Paypal does - you send them proof of shipping (or proof that the item was received) and you keep the money.
http://support.google.com/checkout/sell/bin/answer.py?hl=en&answer=42863
It's great. I have never had a transaction not pass and be covered under their verification system, and I've only had one person claim a chargeback - I emailed in the invoice I have each and every customer sign at delivery and the claim was resolved the next day - no money taken from my account.
I never use Paypal!
I was wondering which road you took to clear this up.
Have learned so much from reading about baker's issues with non-payment.
Also learned that FromScratchSF is serious...don't make her mad.
Saved you advise, about the steps to take, From Scratch. Thanks so much for passing it on.
mommachris
LOL, I just happen to know credit and financial stuff that a lot of people don't know from my past life as a miserable desk jockey in charge of mind-blowingly large sums of money that didn't belong to me.
Makes me think everyone should be dealing in "cash only". Geez. Not realistic...I know.
I just wanted to pop on & add - I used to work at a credit union and our branch manager once told me a check could come back on your account as late as 30 from deposit. It all depends on it's route through the system.
I don't know ALL the in's and out's...I do know this lady had tons of experience & it made me think twice about accepting payments & timelines, etc.
I just wanted to pop on & add - I used to work at a credit union and our branch manager once told me a check could come back on your account as late as 30 from deposit. It all depends on it's route through the system.
Since the Check 21 Act took effect in 2004 clearing times have been much faster, it allows banks to route checks using digital images instead of shipping the actual check.
This law also allows you to deposit checks remotely just by taking a picture of the check with your phone, many banks now offer this service.
All Check 21 does is make electronic processing possible and saves the banks from having to physically route paper checks all over the place - and also gets them off the hook from mailing your cancelled check originals back to you - Check 21 has nothing to do with the check writer's ability to claim fraud on the check the bank processed electronically. EvMarie is correct. If your bank account is compromised and someone wrote a fraudulent check on your account, the bank can still put a stop on it and you get your money back - and the merchant that cashed the check is SOL - even if it was discovered as long as 30 days after it was cashed.
This is why paper checks are not accepted in many MANY types of transactions, especially ones where time or a date is a factor. You have to get a cashier's check, although those too can be forged (but it's much harder), money orders (although those can still have a stop put on them - it's just WAY harder to do), or a wire transfer, which is 100% guaranteed under the Federal Reserve.
If your bank account is compromised and someone wrote a fraudulent check on your account, the bank can still put a stop on it and you get your money back - and the merchant that cashed the check is SOL - even if it was discovered as long as 30 days after it was cashed.
If someone writes fradulent checks from another person's account I would think that the stolen money could be recovered much farther out than 30 days after the transaction, that is completely different from bouncing a check. My comment on Check 21 was about check clearing times, not identity theft. If you are worried about identity theft then no transaction is safe, not even wire transfers.
And if someone does steal another person's checking account they would likely be purchasing durable goods for resale, not cake.
Even if she takes them to small claims court (and I definitely would), and they don't pay, you still have recourse to have their wages garnished for the amount. Anything you do will not be in vain...just do whatever you have to do to make this right. People should NOT be allowed to get away with this. It's theft, out and out theft.
It's not easy to garnish someone's wages. The Federal government can do it if it is owed taxes or you owe child support. Otherwise you would have to find the person's work info and pursue it yourself and many states have garnishment laws where you won't see a dime.
Better to threaten them with theft charges via the prosecutor and get a speedy settlement. Tell them once they pay you they are free to sue you if they want, but they will lose anyway, especially when you have proof as to their fraud.
I used to work in banking so I'm aware of check21 and it's implications. I believe the supervisor lady I spoke with was referring to the longest possibility in "return time". She lead me to believe this wasn't a crazy notion. So, it caused me to think a bit more cautiously about payment....is all.
Jason - I get your point about the shorter time frame. Check21 does allow the money to be processed electronically in an instant. Like when you go to a store, they run your check...the register prints on it and you get it right back. I do believe check processing through this particular credit union is still not as current as that. They still collect piles of paper checks that were deposited on all their days' members' accounts. They get totalled and bundled and sent on to a BANK. This bank then goes through their own processes. The bank probably is in time with the current technology & honestly I am not aware how check21 factors in after they have left the bank...but I do know...that check21 no longer allows for that lag time some people used to count on for "floating". In general, the time is shorter for clearing. BUTTTT, in trying to be 100% thorough in not getting stuck....there are situations where the return time is much longer than 2 weeks. Given that I have a dark cloud that has followed me for a few years now....I will be happy to lean a little more conservatively and ask for cash for final payments if the time frame is narrowing.
I can do that - I'm just a small set up. My customers don't mind. In a bigger super busy set up - I get how that may cause a larger volume of issues to deal with.
It just confirms the idea...to me at least...that you NEED to have ample cushion time when accepting a check. It should be super easy for a customer to request a bank check for guaranteed funds instead of their own personal check. Or, at the very least know which local banks cash the checks drawn on them with no hassle. So, you can make a determination if the money can be recovered asap. There's a bank in town here who won't cash checks drawn on them to non customers. So - you have to go through the waiting game.
I guess these unfortunate situations will happen one way or another. No matter how hard we try to safeguard against them. 100% guaranteed to NEVER get stuck I guess doesn't exist. Shoot....I'm leaning toward cash only! lol.
I realize "cash only" wouldn't be most convenient in some instances...but in last minute situations I always ask nicely for it. And, haven't had any crazy talkin' customers...
WOW! Some really great advice. Ya'll have already said everything I was thinking while reading: 1) Never accept a check less than 30 days before event ( I mean for anything over $150). Sure you can do up to 7, but my policy is 30. 2) It ABSOLUTELY is THEFT! File a criminal fraud report. 3) Print out all the wonderful FB comments about your great cake!
The only different suggestion I have is a debatable one. You mentioned FB. Personally, I would write on her wall. "I've tried several times to contact you regarding the stop payment for the payment of your cake. Please call me so we can work together to find an amicable solution." Yes, she can delete it from her wall.
I would also comment on the comments "I'm so glad to hear you enjoyed the cake! When the payment was canceled, I was worried something had gone horribly wrong."
Might be a line you don't want to cross but sure would embarrass her in front of her friends!
In the county where I live in NYS, you could absolutely take them to small claims court, add on the court costs & a clause for judgment fees. Once you receive a judgment, you can take it to a local attorney or any attorney who does collections work. They can freeze their bank accounts and garnish their wages!
I have a gf who would go to a debtors address in her mom soccer van and follow them to work. Call the attorney and let them know where to send the wage garnishment. It's not as hard as it sounds! you can also file any judgments against real property in the clerk's office where their property is located. Researching real property at the county clerk's office isn't difficult and it is of "public records". filing a lien on vehicles, equipment, atv's, snowmobiles through the dmv gets a little more difficult, but can absolutely be done! How do you think banks file a lien on your title when you take out a loan??? Most finance and insurance managers at auto dealers know how this is done! Go out and make a new friend today, an f&I manager at a dealership!
Lastly I have a gf who owns a business and she obtained a list of people who write bad checks, I would make sure this lady gets put on your local list!!! Maybe through the local chamber of commerce?
Other than that I agree with everyone else, live and learn. Don't let this bad experience ruin all the great ones! Get $ upfront & make sure your contract includes things to cover your but! Good luck!
Quote by @%username% on %date%
%body%