Case Studies

A Legal Demand Letter Yields Wire Refunds from the Bank and Broker

Case Study: A Legal Demand Letter Yields Wire Refunds from the Bank and Broker

This case involved the following MyChargeBack services: preparation of a chargeback request and a legal demand letter.

The Basis for the Dispute

G.E. is an elderly retiree in South Africa. He was persuaded by an unregulated investment brokerage to engage in what he was led to believe would be online trading. Toward that end, he commenced his relationship with the company by making two relatively small credit card transactions of approximately 5,000 ZAR and 21,000 ZAR. Probably related to the merchant’s desire to obfuscate its illegal activities, different merchants were listed on G.E.’s bank statement for each transaction.

The initial transactions above were then followed by much more substantial deposits of 60,000 ZAR, 40,000 ZAR, and 85,000 ZAR all made by bank wire transfer. Similar to the confusing credit card money trail, one of the bank wires posted a different beneficiary from the other two.

The likely reasons for such complex accounting on the part of the broker include confusing their customers and customers’ banks enough to make successful payment disputes unlikely. Another possible reason is a general criminal tendency to avoid concentrating their assets.

Despite repeated requests on the part of G.E., and despite the merchant occasionally promising to comply, no refund or withdrawal was ever processed for him. Faced with permanently losing a sizable portion of his retirement savings, G.E. turned to MyChargeBack for help.

Strategies and Tactics

There was much preliminary work that we needed to do before even determining the best recovery strategy for our new client. First of all, the details mentioned above regarding the numerous beneficiaries for five separate transactions were not immediately obvious; we had to do our research to establish and verify all that.

In addition, a great deal of paperwork needed to be collected, compiled, and created. This included bank statements and proof of the merchant’s activities and legal and regulatory status, among many other things. One particularly interesting fact that we uncovered was that one of the bank wires, for 60,000 ZAR, was performed without any authorisation on the part of G.E. That particular transaction did not even post any recognisable beneficiary.

We also needed to formulate a recovery strategy that would be customised for the specific details of G.E.’s case. First of all, we provided our client with the paperwork necessary to request a chargeback with his bank for the credit card transactions.

In addition, we walked him through the process of contacting the merchant’s beneficiary bank for two of the bank wires to demand a refund.

Under these circumstances, we determined that the optimal course of action would be to start with sending the beneficiary bank (for two of the wires) a legal demand letter drafted by a law firm. The letter accused the bank of accepting fraudulent payments on behalf of a criminal business and alleged an improper relationship with them. The letter also demanded an immediate refund of all the transactions that the bank processed.

We also advised our client to demand information from that same beneficiary bank regarding the third (unauthorised) bank wire. We did this even though it wasn’t clear if they were the beneficiary for this transaction. The reason we did so, and the effect on the outcome of the case, became clear in the coming weeks.

The MyChargeBack Difference

It is a common misconception that money sent by bank wire is gone forever. The truth is that bank wire recalls are possible if you possess sufficient expertise, experience, and tenacity.

Faced with a strongly worded and carefully constructed legal demand letter, and fearful of potential punitive regulatory action in the event of escalation, the beneficiary bank approved the refund of both of its transactions, totaling 125,000 ZAR.

We reminded them of the other 60,000 ZAR (which, remember, they may or may not have had anything to do with). Shortly thereafter, the merchant itself refunded the total remaining wired funds. Why? In all likelihood, they were under intense pressure from their bank, threatened with the loss of banking privileges, not to mention possible legal and criminal liability.

As for the credit card transactions, the 5,000 ZAR one was refunded, leaving only 21,000 ZAR, or less than 10% of the total unaccounted for. In the end, the bank improperly rejected that chargeback. The dispute was actually below our normal threshold for taking a case in the first place, though we had bundled it together with the bank wires as a courtesy. Nevertheless, keeping our focus throughout the process on the main part of the case allowed our client to recover over 90% of his lost funds, a tremendous victory.

At a Glance: MyChargeBack in the USA

  • The case involved the loss of over 200,000 ZAR by an elderly pensioner to a fictitious forex brokerage
  • Small initial deposits made by credit card were followed by much larger bank wire transfers
  • By focusing our efforts on the major beneficiaries, we were able to recover more than 90% of our client’s lost funds

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