Changing Strategies in Mid-Course Led to a Negotiated Settlement

The Basis for the Dispute

T.R. from The Netherlands was contacted out of the blue by someone who identified himself as a representative of what was purported to be an online trading platform offering regulated financial products such as CFDs, indices, binary options, stocks, and commodities. He visited the firm’s website, which looked professional and impressive, and decided to take his chances by making a relatively modest initial investment, which he paid by bank wire. Spurred on by what he was led to believe were immediate impressive gains, T.R. decided to make two additional but much larger deposits, also by bank wire. 

Soon after, however, he became suspicious. The firm’s agent kept calling T.R. to insist that he make additional deposits that were beyond his means. So he did some research and found that there were many other investors who had registered their complaints about the firm on various sites online. It turned out that while the firm’s website claims its team consists of professional brokers, neither they nor the firm held licenses. And, of course, it is against the law for someone without a broker’s license to contact third parties and offer them investment services.

So, not knowing what to do next, T.R. asked around on those online sites for recommendations, and was told to contact MyChargeBack.

Strategies and Tactics

After examining all the documentation that T.R. provided to us, our MyChargeBack recovery team decided that the first step would be to submit a legal demand letter to his bank requesting a wire transfer recall. In the letter we pointed out to the bank that it is prohibited by law not to transfer money to a criminal enterprise and, therefore, it is obliged to do its due diligence to determine if the recipient of a bank wire is a legal entity before the money is dispatched electronically. In this case, obviously, the bank did not. 

Despite a prolonged effort on our part, the bank proved to be uncooperative, even though it was clearly in the wrong. We could have appealed the case to the Dutch financial regulator. The problem with that alternative is that there is no guarantee that an appeal of this sort will ultimately prove successful. In that event, we would have been wasting the client’s time while we were waiting for an answer. So, we came up with a different strategy. 

At the time, MyChargeBack was representing dozens of other investors who had disputes with this same unlicensed brokerage, which was technically located in Cyprus but owned by a British company. We had bundled all those cases together for the purposes of initiating a class action suit against the merchant in order to pressure him into a group settlement. So we sent a legal demand letter to the merchant notifying it that we were adding L.R. to the list.

There is strength in numbers. As we had assumed, the merchant finally agreed to compensate all of our clients who had signed on to the class action suit, albeit after a lengthy period of negotiation with us. T.R. ultimately agreed to accept their offer just before the unlicensed brokerage shut down for good and received his compensation as well.

The MyChargeBack Difference

T.R. was able to recoup his losses for three basic reasons. 

First, because MyChargeBack has the agility to pivot and substitute one strategy — in this case the bank wire recall route — for another — pressuring the merchant into negotiating directly with us. Even more importantly, we know instinctively when it becomes necessary to do so. 

Second, MyChargeBack was able to pressure the merchant because its client base is large enough to have yielded the credible threat of a major class action lawsuit. That is something that a smaller, less established financial services firm would never be able to do. 

And finally, MyChargeBack has the experience to conduct intensive, prolonged but successful negotiations with a reluctant merchant.