Lawsuits against credit card processor

I know that getting money back with a credit card dispute following a timeshare scam has been discussed many times. I've seen people discussing the fact that credit card companies should be able to do something to disable the merchant accounts of these known scammers and should be more willing to return funds to scam victims. However, if the scammer produces a "contract" the credit card processor tends to find in favor of the scammer.

Today, for the first time, I saw that a Truth in Lending Act claim was filed in federal court, alleging that a major credit card processor refused to correct the situation after the plaintiff was the victim of a timeshare scam. I'll add this to my list of cases to watch. If this gets some traction, it might be the best way to shut down scammers. You can't sue the scammers, because they disappear, but if they can't get merchant accounts and can't keep any money that they attempt to collect, it will really put a damper on their "business model."

could you provide us a link to more info about this case? it would be most interesting!

Ive argued till im blue in the face with law enforcement and other such agencies as to why they dont simply start putting pressure on the merchant accounts and credit card companies when these obvious scams are uncovered.

Unfortunately the CC dispute process puts the initial and follow-up decision in the hands of the creditor, who has to eat the charge if the merchant has abandoned their account. If there is no longer a merchant to charge back, the creditor has an unfair motivation to consider the charge as valid. But there is still further recourse which eventually includes a lawsuit. The lawsuit against the creditor is the final process and it heavily favors the consumer who is willing to go that far.

http://www.consumer.ftc.gov/articles/0219-disputing-credit-card-charges#investigation

The case is Wald v. American Express, pending in the USDC Northern District of Texas, case number 3:14cv2897.

I reviewed the complaint, and it was a Mexican timeshare purchase, where the plaintiff was buying a timeshare and was going to "sell" his current timeshare to the company. As one might guess, the sale of his existing timeshare never took place. The complaint alleges that based on plaintiff's investigation, "this timeshare scam is well known and likely known to Defendant, since it is likely to have been informed of the scam by other cardholders."

famy27 said:

"this timeshare scam is well known and likely known to Defendant, since it is likely to have been informed of the scam by other cardholders."

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I have to side with Amex. Fundamentally it's a weak argument. The purchase and sale are contracted independently, and the credit card company cannot possibly mediate the details of what was verbally promised. The credit card charge is for the timeshare purchase, any sale would be independent of the credit card charge.

The verbal "promise to sell" tactic is low and dirty but is not legally a scam, it's simply timeshare sales deception. The timeshare buyer should know better and require it as part of the purchase contract, which would then alter the amount owed and therefore the authorized amount to charge the credit card.

The credit card company is interested in one thing only and that's whether the amount charged was authorized by the user. Any "ifs" or "buts" outside of the authorization of the specific amount is outside of their responsibility. They do have a responsibility to deliver, but my guess is that the plaintiff does not want delivery and what comes with it.

Saintsfanfl said:

I have to side with Amex. Fundamentally it's a weak argument. The purchase and sale are contracted independently, and the credit card company cannot possibly mediate the details of what was verbally promised. The credit card charge is for the timeshare purchase, any sale would be independent of the credit card charge.

The verbal "promise to sell" tactic is low and dirty but is not legally a scam, it's simply timeshare sales deception. The timeshare buyer should know better and require it as part of the purchase contract, which would then alter the amount owed and therefore the authorized amount to charge the credit card.

The credit card company is interested in one thing only and that's whether the amount charged was authorized by the user. Any "ifs" or "buts" outside of the authorization of the specific amount is outside of their responsibility. They do have a responsibility to deliver, but my guess is that the plaintiff does not want delivery and what comes with it.

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This makes a lot of sense. I don't understand the argument that the bank is in any way responsible for a bad purchase decision.


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I can see both arguments here. A bad purchase is one thing, but this is scam territory. The Mexican timeshare company gives you the name of a company that is going to buy your timeshare for a set price, and then it turns out that the company doesn't exist or never answers your calls. That's outside the realm of "misrepresentation" and pretty much a scam. I don't think I've ever heard an example of a single case in which the purported buyer actually accepted delivery of the timeshare. That, to me, is much different than a TS salesperson telling you that a timeshare will trade really well when it actually doesn't.

famy27 said:

I can see both arguments here. A bad purchase is one thing, but this is scam territory. The Mexican timeshare company gives you the name of a company that is going to buy your timeshare for a set price, and then it turns out that the company doesn't exist or never answers your calls. That's outside the realm of "misrepresentation" and pretty much a scam. I don't think I've ever heard an example of a single case in which the purported buyer actually accepted delivery of the timeshare. That, to me, is much different than a TS salesperson telling you that a timeshare will trade really well when it actually doesn't.

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I really don't know the details of this scam. But, if the timeshare sales only gives a name of the buyer, as you suggest, and it's not part of the purchase agreement then I can't see how it matters. If it's not a written component of the agreement, then it's worthless. So, the question I have is whether or not it's part of the contract. Does anyone know?


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I guess I didn't read too carefully when I skimmed this earlier. It looks like the timeshare he bought was a scam as well...

According to the complaint, he signed a contract to both sell his timeshare and buy a different timeshare. The sale was to be for $9499 less a $599 processing fee in exchange for the purchase of a timeshare for $8700. He paid $500 (either in cash or by check, it's not disclosed how) and the remaining $8200 was charged on his credit card. The closing on the sale of his existing timeshare never took place.

The complaint says "The purchase of the timeshare turned out to be a scam: it had a non-functioning website, the promised discounted prices were not provided, no reservations could be made for the timeshare spot. The phone number for the timeshare is rarely answered and a physical address was not provided or able to be located."

There is no contract attached as an exhibit, so I have no idea what the timeshare in question is.

If it really was concrete and on the same contract, the plaintiff never should have made a down payment and most definitely should not have authorized an $8,200 cc charge. They should have been receiving the net of $200. Yes they were deceived but they made really bad decisions and they want Amex to pay for it. They could win the lawsuit based on failure to deliver what was agreed, but it's going to depend on that contract and I have doubts that the wording was a guaranteed sale for that price. Chances are the language is based on some form of listing.

Timeshares in Mexico are sold all the time where the purchase is for something yet to be developed and things may not materialize as intended or communicated. There can be a fine line between bad business and a criminal scam. But this is Mexico we are talking about, where the two are commonplace and probably all just grouped as bad business.