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NSW Debt Recovery Chasing Me for Corporate Credit Card Transactions?

Discussion in 'Debt and Bankruptcy Law Forum' started by Rostos, 3 December 2017.

  1. Rostos

    Rostos Well-Known Member

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    I was a director at a company along with 2 other company directors. Those 2 other directors (Director A and Director B) were the major shareholders of the company. I reported to the other 2 directors (Director A and director B).

    I was instructed by Director B that American Express (AMEX) was going to call me to set up a credit card so I could pay for various expenses by the company on that card. Naturally the company will then pay the credit card.

    When AMEX called me and set up the card, they asked me numerous questions on the company's financial position, ie revenues, cashflows, etc etc. The card was then set up.

    During my tenure, I was asked by Director A to go and purchase various items on the AMEX. I would do so, then when the credit card statement came through the company and then from its bank account, would then pay AMEX.

    This was happening for approximately 1 year.

    During the final month of my tenure, Director A asked me to go and make various purchases like every other time. I had then resigned from my position.

    Both directors then asked me to hand back the credit card which I did.

    A few weeks later, AMEX called me and asked for the final payment for the balance O/S. All purchases that were made were during my tenure and all business related and instructed to me by Director A. There were no transactions that should not have been there. They were all consistent with every other purchase that I had made.

    I then called Director B and asked him to make the final payment to AMEX.

    Director B then made this payment. I received confirmation from AMEX that payment ha been made. I also called a few weeks later to AMEX who confirmed there is $0 O/S on the account.

    Some 5 months later, I received a phone call from a debt recovery agency demanding from me payment for AMEX to the amount that equaled the last payment that was made to AMEX.

    I then said it had already been paid. They said the payment had been rejected and was never paid.
    The woman on the phone seemed to guess as I explained that it was indeed cleared funds. If it had not been cleared funds, then a rejection would have come back some approx 72 hours later and AMEX would have called me demanding payment a week later which never happened.

    I can confirm that it was cleared funds. A snapshot of the companies bank account will also prove this.

    I then called AMEX who had a different story and said the bank made a request (where the funds came from) to reverse it as a dispute was made, ie unauthorised transaction.

    I have escalated this to Financial Ombudsman Service and I have a conciliation in a week's time.

    The bank account under the company name was a joint account that requires dual signatures (electronically) except where there is a direct entry which was the case in this particular transaction.

    Director B (who made the payment) was still a director and still authorised to use the bank account.

    Director A it seems had raised a dispute, however, it was Director A who had asked me to make those transactions in the first place (there is proof for this). Again, there was no transaction that should not have been on there.

    AMEX are chasing me for this payment.

    I believed that the company was responsible for the card as I described when I set up the card, the rep from AMEX was asking me several questions about the company's financial position. If the card was solely my responsibility, why would the rep ask me those questions?

    Also, at the time, my salary was very low ($40k), yet the card had a limit of several hundreds of thousands of dollars. If the card was under my name, why would AMEX give me a card that it purely my responsibility with such a very large limit based on a very small salary?

    Also, all the correspondence I was receiving during the time I had the card such as statements had the companies ABN/name on it as well. They were also advertising directly to me the benefits of paying the companies GST using the card. If the card is just under name and my responsibility, why would they do this?

    Can someone please help?
     
  2. Rob Legat - SBPL

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    When you say the statements 'had the company's details as well', what do you mean? The crux of the issue is in whose name was the account held?
     
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  3. Rostos

    Rostos Well-Known Member

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    It had my name on it along with the companies name/ABN.

    Regardless, a payment was made to pay the balance outstanding from the company bank account in which it was supposed to come out from the whole time. I made these purchases on the card as directed by one of the directors on the promise that the company would pay for it.

    This was the arrangement/agreement we had the whole time i had the card and the company was indeed paying for the purchases.

    As I said, a payment was made for the whole amount. This was confirmed by AMEX at the time.

    Then 6 months later, a reversal request came from the bank and AMEX reversed the payment. They claimed it was unauthorised. The director who made the payment was still a director and authorised to use the account.

    I believe it was the other director who made the request to reverse it...However he was the one who had asked me to make all the purchases for the company with the promise the company would pay for it like all other purchases.

    Suppose you are a builder and I contract you to build an extension on my house. Suppose you go and purchase materials for the job on your AMEX. After the job is completed you give me the invoice. The invoice has the details for your AMEX and I pay it off.

    After the job is completed I pay the invoice and 6 months later I make a request to the bank to reverse the transaction. Then AMEX reverses it and they start chasing you for the outstanding amount and i essentially get away with an extension on my house for free at your cost?

    Imagine if anyone can do this? The whole economy would break down.

    AMEX are claiming I am responsible? How? I declared a salary of around $40k. Provided no assets, nothing. Yet the card had a limit of several hundreds of thousands.

    Amex also used to send me quarterly emails asking me if I would like to pay the companies GST. If the credit was just a personal credit card, why would they send me emails asking me to pay company GST with it?
     
  4. Rob Legat - SBPL

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    Okay, there's a couple of issues here. The reversal process you're referring to is probably what's commonly known as a chargeback. These can generally happen up to 12 months after the transaction, and it's unlikely to be AMEX's 'fault'. Whoever initiates the payment that is reversed puts the dispute through their bank. Their bank them contacts the payee (in this case AMEX) on very short timeframes asking for verification. In many cases, the time limit to do that expires before the notice is even received. Once the time limit expires and no verification is provided, the transaction is taken back - in this case restoring the payable balance on the card.

    Next, if your name is on the account with the company, it appears that you may be joint and severally liable for the debt. This means that AMEX can choose which of you it wants to pursue for the money. In this case it appears it is choosing you. Since you appear to have been an account holder, you are liable for the debt. You also appear to have a right to chase the company for its contribution - although, because the who situation has occurred, it appears there may be some dispute from them as to liability.

    I suggest you get in charge with the company and try to sort it out. Get them to pay be some method which is harder to dispute, like a cheque.
     
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  5. Rostos

    Rostos Well-Known Member

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    Thanks for the response. By accepting the reversal request from the bank, AMEX has automatically assumed I am in the fault.

    The director who made the payment was still a director and authorized to use the account. The other director (who I believe raised the dispute to the bank) was the one who instructed me to make those transactions as a condition of my employment. There was no transaction that was in dispute, ie, I should never have that transaction.

    All the transactions in the final statement are identical to all other purchases on the card during my tenure. So, the question is, what is exactly the dispute? I have witnesses that can verify the director asking me to make those transactions and the company will pay for it. The other director paid for it. It seems AMEX have jumped the gun and automatically assumed I am guilty.

    When I set up the account, AMEX asked me about the companies key financial indicators, ie, cashflows, revenues etc...This suggested to me that the company was ultimately responsible for the card. The card had a limit of several hundreds of thousands of dollars on it. I stated my salary was $40k.

    If I am to be liable, why would AMEX grant me such a massive credit limit based on my small salary?

    Also, the directors both asked me to hand back the card when I resigned.

    Ultimately, my argument is..

    The reversal (chargeback) was done based on a dispute. What is the dispute? The director who made the payment was still a director at the time and had authorization to make such payments.

    The other director (who I believe raised the dispute), was the one who instructed me as a condition of my employment to make the purchase on behalf of the company for the company with the promise for the company to pay for the purchases. The historical statements show this to be the case.

    What is the dispute about?

    At the end of the day, as you suggested SB, that Amex probably did not respond to it and the money was charged back. AMEX are at fault here for

    1. Not investigating the dispute to see if it is legitimate
    2. Contacted me and advised of the situation.

    They automatically assumed I am guilty.
    The judge would see there is no legitimate dispute and no claim that the money should not have been paid.
    Basically it should be left up for AMEX to chase that money back. Not me, i met my obligations initially lawfully. That is where it ends for me. If AMEX did not respond to the request at the time or did not investigate the matter properly and just assumed i am guilty then that is not my problem.
     
  6. Rob Legat - SBPL

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    You're assuming that AMEX has made a determination of 'guilt'. I'm saying that they probably have not. If it occurred as I have assumed, it is the company's bank who have caused the transaction to be reversed on the basis of the company's complaint. AMEX may not have had any say in the matter.

    AMEX may not have been given sufficient opportunity to investigate the dispute, or time to contact you. As I said, it may have all occurred before they even received notice of it.

    As for what the dispute is, you can contact AMEX and ask if they'll provide you with a copy of the dispute. It will likely say something bland like "payment not authorised" or similar. You can ask the company's bank, but I'd almost guarantee they won't speak to you.

    As I suggested above, I think you should get on to the company as soon as possible.
     
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  7. Rostos

    Rostos Well-Known Member

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    Thanks for the reply
    The problem here is, if I am not guilty, or nothing untoward happened here, why should it be my problem?

    There was an obligation, it was met. It was lawful, etc etc. This is where it ends for me imo. This has to be between the company, bank and Amex to prove something unlawful happened. If not, then it is not my problem.

    If anything, before reversing any payments, they should have contacted all parties and discussed the dispute.
     
  8. Rob Legat - SBPL

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    You're looking at it the wrong way. On the basis of what I can see, AMEX's agreement is with you and the company. It can pick and choose who it chases for the debt - and has apparently chosen you. That makes it your problem.

    It doesn't care, nor does it have to care, what the arrangement is between you and the company.

    What you're not seeming to understand is that AMEX probably did not have any say in reversing the payments. It's entirely possible the money was taken from them without their input. It can't chase that transaction back. It can only chase the account holders - one of which is apparently you.
     
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  9. Rostos

    Rostos Well-Known Member

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    Thanks for the reply SB

    I understand what you are saying regarding AMEX chasing me, however, from my view, the obligation was met. Cleared funds were paid to AMEX. It was a lawful payment. Why should I be penalised for this?

    It is not as if AMEX gave me the invoice and I did not pay it or was relying on someone else to pay it and it never happened.

    As I mentioned above, suppose I contracted you to build an extension on my house. You go and buy materials using your AMEX to build this extension.

    Suppose after the job is completed, you give me the invoice. The invoice asks me to pay your AMEX (for the materials). Suppose I pay it.

    We both leave happy.

    Then 6 months later, you get a call from a debt collector saying they want the money from you. Are you going to say, no worries I will pay it while I get away with an extension on my house for free?

    Surely there are protections against this?

    Why should I have to go and chase payment for something twice especially after the first time nothing unlawful happened?
     
  10. Rob Legat - SBPL

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    Because, from AMEX's point of view, there is money owing on the account. They had the money, sure, but now they don't. It sucks, but it is the way the banking system works.

    Imagine someone stole your credit card details and made a payment you didn't authorise. You'd want a mechanism to get it back. Unfortunately, the flip side is that people can lie and improperly get the payment reversed - which is what seems to have happened here. AMEX is an innocent party - your argument is not with them.

    If you really don't want to go back to the company, provide the collectors with the proof of payment that you have and let them chase it through. Odds are, it will come back to you.
     
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