The Seller Who Allegedly Defrauded Square Out of Millions
buzzfeed.com
buzzfeed.com
> “I don’t know with 100% certainty, ma’am, but I would guess that [Urbanovsky and the single seller] probably are [the same person],” her lawyer Steven Lefler told BuzzFeed News.
He just admitted on record that his client cost the payments company they used several million dollars.
> “This is a case that I didn’t charge enough money for,” Lefler told BuzzFeed News.
> “But of course, I’m her lawyer. So who gives a shit what I think.”
This is quite possibly the single least professional lawyer I've ever seen.
If he were my lawyer he'd be out on his ass.
No he didn't. Since Square's filing didn't mention Urbanovsky by name, the reporter wanted to confirm that it referred to her. Urbanovsky's lawyer confirmed that, but he certainly didn't admit to any particular allegation made in the filing or anywhere else.
I don't think the legal strategy is to deny that payments were received, anyway. Apparently they're hoping to blame this scheme on insufficiently-supervised employees, but that seems unlikely to succeed. Bankruptcy is likely, which means the lawyer is correct that he should have charged more up-front.
> "The price that I was look at was for a 90 day in advance reservation for $139 round trip anywhere that Southwest flies," Creative Creations customer Phyllis Hicks said.
> Hicks paid for several tickets and received a receipt. The voucher explained that customers would fly on the days they requested, and a confirmation should arrive at least month before departure.
> However, Hicks never received her confirmation email because Creative Creations exceeded the 2,000 vouchers for flights in March.
> "They're asking people to cancel their March vouchers. Well, I travel March 26, and it's not an option to cancel," Hicks said.
What a weird model. The "you can only redeem 2,000 of these per month" angle almost makes this sound like the business was trying to be a Ponzi scheme. But it just doesn't make a lot of sense.
I wonder if the intent was ever to defraud, or if they just made a colossal mistake.
It seems possible that this company was just selling 'vouchers' and, when it came time to fulfill the 'voucher', they were just buying a plane ticket with cash.
You could get away with this for a while by booking flights only for the people who wanted the least expensive itineraries and only on sale … and by taking in new money promised against future months to pay for the current month's sales.
It isn't always. Segregated merchant accounts are the way to go if millions of dollars change hands at that level the overhead of setting up a merchant account are negligible, and if you can't get one then that's a pretty good sign you shouldn't be working with that kind of money.
A couple of these instances and square will get shut down by VISA and that's the end of that. That's the references to iBill and DMR, that's exactly what happened to them and all their merchants were left without recourse.
I followed the shut-down of Dacotah Marketing and Research and iBill from 'row #1' (as a mid-sized merchant with an inside line into the company about what was going on) and the main problem was that amongst the 1000's of good merchants there were a few bad ones. VISA warned them once, fined them the second time and shut them down the third.
In both cases I lost a ton of money and I am definitely not the only party that did so.
Since then I have my own merchant account and never a problem since.
What is the main difference between 2015 and 2004?
To be fair, that's still as an outsider for one particular incident. Has someone who was basically on stage to your "row #1" for other companies, you are missing a few pieces. Maybe not in that case, but the idea that segregated accounts is some magical pill for someone in the IPSP space isn't entirely true.
And if Visa was involved, it wouldn't do anything.
Yes, I know all this, and it doesn't change what I say. Even with many merchant accounts, it's still going to happen. And again: It's the reason PayPal is so brutal. To avoid things like this.
> A couple of these instances and square will get shut down by VISA and that's the end of that.
Yeah, it's a bit more involved than that, and at the same time, segregated merchant accounts aren't going to completely solve the problem.
It's also the reason I stopped dealing with banks after 10 years of doing this. The only "rule" is money talks.