This happened to two of my friends within a week of each other this past month, and it seems to be happening more lately. I theorize that people want a big fancy party because they've been watching too much tv and "they deserve it," then pay too much for their parties overall, so they try to get money back by complaining or by contesting charges where they can.
It's not just cakes, either. I know of a rental company, a venue, a florist, and a photographer who were taken advantage of this way within the past three months.
So what is this called? It's called STEALING, people. If you can't afford a big honking wedding then don't have one. There's no shame in staying within your budget. Don't take delivery of something then say that you didn't get it later, because that is also called fraud. And don't complain about things just to get refunds, that's called being a massive jerkola.
Luckily, most people are honest. In doing this for 16 years I've only had problems with 4 people that I can think of, but two of those were within the past year. With that information, and the number of people I know who have been scammed this year alone, and who have also seen an increase in this kind of thing recently, I can't help but think that something is going on.
So what happens when a credit card charge is contested? The company will notify you that the funds were either frozen or removed from your account, and they go back to either the client or into limbo somewhere. You'll have to show proof that the cake was delivered, and each company will require different proof.
For Paypal disputes they just pull the money from your account. You'll have to get on the phone and be really persistent with them. The problem with cakes is that there's no shipping info, which is something that Paypal requires, so it isn't even covered under their policies, so if you use Paypal you're taking your chances. The guy at Paypal told my friend that cash or checks only is the best type of payment for this type of business. And they ended up keeping her money, so she was totally out of luck with them.
When you have a credit card disputed they'll send you a laundry list of things that you need to send them. They'll usually pull the money from your account too, and hold it until the dispute is settled one way or another. Make sure you have photos of your cakes, signatures to verify delivery if you can get them, thank you notes, screenshots of harassing emails, whatever you need to get to show what your client has been up to.
Don't forget that you can sometimes go onto facebook and find photos of the client enjoying their cake that they said they couldn't eat. (That did happen to one person I know...The photos of the birthday cake being eaten were worth more than her word would have been.) Or that you can call the venue or other vendors to see if they're also being shaken down for refunds. If more than one vendor is getting complained about that says a lot.
The good thing about this process is that after you turn all of your information in and they refund your money, they don't just say "oh well, better luck next time." Credit card companies don't like to be jerked around, so they'll generally make some kind of an effort to recoup their loss. And if the client was clearly trying to use the system to get an illegitimate refund, they'll see that. Let them take it from there.
And if you have a client call to complain about something and you feel like it's unsupported, go straight to email. Get everything in writing because you might need it later to show that their complaint changed, they're being threatening, whatever.
Have you seen an upswing in phony complaints and credit card challenges? Let us know your experience by posting a comment. If this is a widespread pattern it might be worth it to switch to cash and checks only!
Kara Buntin owns A Cake To Remember LLC in Richmond VA, and cake supplies online at www.acaketoremember.com and www.acaketoremember.etsy.com