THE BLOG
05/24/2016 08:42 am ET Updated May 25, 2017

Dealing with Impossible Clients: What to Do When a Client Is Dishonest

What should you do if you encounter a client who lies, cheats, and eventually steals from you? That's what happened to Cynthia, who provided various marketing and PR services to a client I'll call Derrick, to protect the identity of the innocent and guilty.

Derrick initially approached Cynthia to help him create a marketing and promotional campaign for his business as a CPA and financial adviser. He was finding his business slowing down, because there was growing competition from large firms which provided the same services under a branded corporate name. He needed to do something to stand out and emphasize his more personal touch in independent practice, so he contacted Cynthia to write some press materials, direct sales and marketing copy, phone scripts, and website blogs.

At first, all seemed fine. Derrick said he liked the material Cynthia prepared after she worked for two days on it. He paid her by a credit card, and asked her to do more, in time for a trade show he planned to enter. So she canceled her own plans for the day to meet his deadline, worked for about four hours writing additional marketing material. She sent it by email as before, and as before she charged his credit card. However, this time it was declined.

After she told him this, he assured her that paying her would be a priority, but then came several excuses. First, his wife had trouble finding another credit card that wasn't maxed out. Then, she claimed she tore up a new card by mistake, and it would take 10 days to get another card. After that, Derrick indicated he was having some financial difficulties, and he asked if Cynthia would she take the balance due in trade. After Cynthia told him no, since there was nothing she wanted to trade for, she offered to accept payments of $100 a month. But her offer got no response, and Derrick didn't reply to a few voice mails she left for him.

Then, about 6 weeks later, she suddenly got a chargeback complaint from her merchant account on which she had charged his first payment, in which Derrick was claiming fraud, on the grounds he had not authorized or participated in the transaction. She sent him an email, saying there must be some mistake, but received no response again. After she responded to her merchant account service with copies of all the correspondence back and forth showing Derrick's original copy, her changes, and his approvals, along with his email about making paying her a priority, her bank reversed the chargeback. Again, Derrick again lied to his own bank to claim no authorization and that he was not a party to the transaction. So his bank reversed the chargeback reversal, because the way the laws are written, the customer is given the benefit of the doubt in claiming fraud, even though the customer is actually the one committing fraud. Unfortunately, Cynthia didn't have a formally signed contract or signed receipt of materials delivered, since all their communication had been by email and phone. So despite all her evidence of carrying out the work for Derrick successfully, she lost, and Derrick gained all her work for nothing. And later she saw he actually used it in the press releases and marketing pitches he sent out..

Only in retrospect did Cynthia realize there had been some warning signs leading up to Derrick's actions. He was having financial difficulties due to the slowdown in his business. He had parted ways with a former partner, who he claimed had simply left and taken his name off the business, because his partner wanted to do something else. But when Cynthia later spoke to the partner, he said he had left because he was uncomfortable with some of the unethical things Derrick was doing, such as when Derrick unilaterally sent out sales pitches with false information about how he could save or make people money. Thus, the partner just wanted out. And then, Cynthia realized that some of the material she had written for Derrick contained false and misleading information, though she didn't notice this at the time, since she wasn't a knowledgeable expert in financial matters.

So what might Cynthia have done in the first place to avoid this problem - and what should you do in dealing with a client who is dishonest?
1 You should work on a retainer or payment in advance basis, except in working with large, established companies that usually have a 30 day or 60 day payment after invoice policy.
2. You should notice if prospective clients are having financial difficulties, such as if they are experiencing a slow-down in their business. If so, you should go over the financial costs of your services and make sure clients understand that these payments will be required before you provide the service.
3. Ask clients to sign a contract in which they acknowledge the costs, give you the go ahead to provide certain services at a predetermined cost or hourly rate, and understand that there are no refunds for the work that is completed.
4. Send any work to clients, so the client has to sign for it by mail or has to acknowledge receipt if the work is emailed or faxed.
5. Be cautious in working or continuing to work with a client if that client is asking you to write up material with false information or claims, since this suggests you are working with an individual who is fundamentally dishonest.
6. Consider filing a small claims suit if the amount is large enough, though you may not want to face down a deadbeat who lies in court - or invest the time in fighting the case.
7. Report what the individual did to the appropriate agencies, such as to a professional certification board or association, if the person has to be certified for their work, such as filing a complaint with the bar association if the person is a lawyer. You can also file a report for the record with the police department where you live or have your offices, as well as where the criminal client lives or works.

Future posts on this subject will deal with other stories of problems with clients. I invite readers to send in their stories, which I can post and comment on in future blogs.

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Gini Graham Scott, PhD, writes frequently about social trends and everyday life. She is the author of over 50 books with major publishers and has published 30 books through her company Changemakers Publishing and Writing. She writes books and proposals for clients and has written and produced over 50 short videos through Changemakers Productions and is a partner in a service that connects writers to publishers, agents, and the film industry. Her latest books include: Resolving Conflict and Lies and Liars: How and Why Sociopaths Lie and How to Detect and Deal With Them.