Rallying Vendors Affected by Digital River Payment Issues for a Class Action Lawsuit

[Pastmaster]

a) Refunds: Did anybody receive confirmations from their customers these went through? If so how many?

 

We are still checking, but you can read reports in this thread or the second one (Re: Alternatives to ShareIt/MyCommerce/Digital River) that the customer indeed received the refund.

I didn't see the other monster thread. I'll yet have to read it. In this one there was exactly one person reporting one refund if I'm not mistaken. So I'm not convinced yet. Because why would they? So I'm a bit hesitant to just refund everything. Because DR wouldn't owe me anything anymore. So I guess I could not even go the legal route in that case. Or at least I'd have made it a whole lot harder.

So at the moment I tend to asking my customers to initiate chargebacks. The first google query says card holders usually have a 120 day charge back period. Sounds to me like it's worth giving a try.

Thank you for reciting that. At face value that sounds good to me. No? Is there a particular reason you have not considered chargebacks yourself?

 

[grujicd]

I'm not a banker or lawyer, but here's what I believe chargebacks and refunds mean.

Chargeback is "nuclear option". It not only costs more, it's more effort for customers, as they have to send proofs and documentation to their banks. Also, if merchant can prove that customer received what he paid, chargeback can be denied. Chargebacks are typically used when you're a victim of fraud, i.e. got unauthorized transaction. However that's not the case here as end user was not a victim, at least not in a direct way. They paid, and they received license keys for software they purchased. So when banks look at these transactions, they could conclude that everything was in order and their customer didn't suffer any damage at all.

It also reduces merchant's trust rating with banks (merchant in this case means Digital River), and if there are too many chargebacks a merchant can be blocked from future transactions. We obviously don't care what will happen with Digital River in the future, but now too many chargebacks can raise alarms which, we collectively hope, are not raised by automated refunds. Refunds are considered a normal thing in business, and not a sign of something nefarious, like when chargeback is requested.

Something more about refunds - when you refund a customer from the control panel, customer will receive a mail with a credit note, saying that transaction is refunded, their purchase (license key) is no longer valid and that he will get the money back. If they don't receive the money - that's the time when chargeback should be asked for, since they will have a document at that point that proves there is a damage.

[DrOli]

Well, we’re also issuing refunds, and our customers have already received credit notes. If DR is indeed transferring the funds, I should have an update by the end of next week (in line with the previously reported 7-day timeline).

I see the refunds as:

1. A potential opportunity where, hopefully, the majority of customers will re-purchase our products once they see the credit note and funds in their accounts.
2. Typically, DR can’t block this process. They may charge their commission, which we’ll pay, although it’s unfair since we’re in this position due to their actions. However, if that’s the cost of recovering some funds, we’ll accept it.

If the refunds go through and the money is transferred, at the very least, we’ll have a chance to see our products purchased again. If we leave the money with DR, I doubt we’ll see it anytime soon or ever. I’d much rather return the funds to the customers than let DR hold onto them.

By the way, if they do request their commission, they’ll need to provide proof of the actual funds transfer; otherwise, we won’t pay any commission.

Btw. $100 and NET60 would not be a problem for us but as there is 0 communication and, looks like, that nobody got money in October, our conclusion is that money will disappear.

[OliverDocklight]

I want to repeat this most important post from byteplant.com, so it doesn't get drowned out. We are currently checking materials, German vendor with element5 / shareit since April 2002. But since we issued refunds and due to comparable small volume, we are as of now not expecting damage in the scale that others report here.

We at Byteplant have been using DR for 20+ years. Like all of you, we have not been paid since July.

We are already working with a law firm in Cologne, Germany to take legal action against DR and their executive team (Strafanzeige, Insolvenzantrag etc.).

To get the law enforcement authorities here in Germany moving, we now need your help to collect as much evidence as possible - so we need everybody here to join in and send your company and contact details along with any unpaid sales reports you can provide to dr@byteplant.com.
Everything you send will of course be treated confidentially and only be used in the context of the legal proceedings.

Remember: If we all stand together now and act fast to collect documentation for as many cases as possible, the better our chances are to get the authorities to do their work and hopefully help us to recover the money for all of us.

[dyamicaliri]

Digital River has no intention of paying its merchants. The new owner, Barry Kasoff, has a history of milking companies for every last drop before they die. It was his instructions to stop paying merchants, to be vague and evasive about what was happening, and to manufacture new fees for merchants. There is no business left. Their entire plan seems to be to grab and hold as much merchant money as possible, probably to pass off to another Siris-owned company before going bankrupt.

A class action lawsuit won't work, because Digital River will be gone by the time it is put together.

We refunded every order that Digital River hadn't paid us for. Even if the customers do not pay us back, I would rather that the customers have the money than Digital River.

If every vendor did this it would spoil their plan to take our money and run.

[grujicd]

Our main issue was not $100, but new 30 days wait period for sales report, as we have a 10 day limit to book sales for previous month mandated by our government. Also 10k limit for transfers outside of SEPA was a big deal, since in many months we have below that. So our effective payment terms would be more like 90 days, which is not only too much, but risky. Not to mention it's calculated from the end of the month, you're waiting for sales from the start of the month it's more or less additional 30 days.

We were trusting pretty much Digital River after 20 years, but not that much to let them hold money for 90-120 days.

[Pastmaster]

I'm not a banker or lawyer, but here's what I believe chargebacks and refunds mean.

Chargeback is "nuclear option". It not only costs more, it's more effort for customers, as they have to send proofs and documentation to their banks. Also, if merchant can prove that customer received what he paid, chargeback can be denied. Chargebacks are typically used when you're a victim of fraud, i.e. got unauthorized transaction. However that's not the case here as end user was not a victim, at least not in a direct way. They paid, and they received license keys for software they purchased. So when banks look at these transactions, they could conclude that everything was in order and their customer didn't suffer any damage at all.

It also reduces merchant's trust rating with banks (merchant in this case means Digital River), and if there are too many chargebacks a merchant can be blocked from future transactions. We obviously don't care what will happen with Digital River in the future, but now too many chargebacks can raise alarms which, we collectively hope, are not raised by automated refunds. Refunds are considered a normal thing in business, and not a sign of something nefarious, like when chargeback is requested.

Something more about refunds - when you refund a customer from the control panel, customer will receive a mail with a credit note, saying that transaction is refunded, their purchase (license key) is no longer valid and that he will get the money back. If they don't receive the money - that's the time when chargeback should be asked for, since they will have a document at that point that proves there is a damage.

 

Nuclear option sounds good to me.

That said. I'm not familiar with a charge back from the customers side. Just based on what you say my approach would be to send the customers something to pass along to their credit card company. An assurance that their licenses are now invalid because they have not been paid for by their intermediator DR. So they are in fact victims of fraud by DR.

Why even try a refund before? I can see that would be the normal procedure. But this is not normal procedure.

What are your thoughts?

[ecom-consultant]

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I have many years of experience with Digital River and MyCommerce. I know this isn't what anyone wants to hear, but I strongly advise finding a new solution. I can help get you connected with a better solution if you are interested.

The company is telling people to submit a ticket to get help with their payments. I doubt they are actually acting upon these requests. I do have the email address for a contact at MyCommerce. I will not publish it here, but you are welcome to reply so I can send it directly to you.

BTW - the company has recently seen both their general counsel and head of compliance leave. People that know better are getting out. Also, they did not pay any severance to employees during this latest round of layoffs. They marched people with decades of experience out the door with nothing. I know that doesn't help any of you, but it shows how poorly they also treated their dedicated employees.

If you haven't tried this yet, at least get the complaint logged: https://digitalriver.service-now.com/csm (https://digitalriver.service-now.com/csm)

Company emails follow a first initial, last name @digitalriver.com format. You can try emailing their executives or go to LinkedIn and search for Digital River. You will see a person with a MyCommerce manager title under people. You will also find the CFO and others. I would try emailing all of them and/or messaging them on LinkedIn. If someone wants to post on LinkedIn, I would be happy to promote the post to get visibility. I am connected to many of the enterprise accounts.

[grujicd]

If you have a suggestion why don't at least describe basics of it here for all to see? We've seen enough vague-but-actually-nothing tickets from DR.

And we're aware of layoffs in DR, many cases listed on thelayoff.com/digital-river

I'm actually sorry for all the people who lost their job there. Yes, we vendors lost money but we quickly switched to other payment processors and we're already receiving payments from them. It's not that easy when you lose a job, especially without any severance.

[Pastmaster]

To everybody who has issued refunds.

Would you be so kind to address these points:

a) What do you think about gathering data on how many refunds were issued, how many confirmations have been reported by customers and how much has actually been refunded.


b) My impression is that a lot of you are positive that the refunds will go through. I.E.

...

We refunded every order that Digital River hadn't paid us for. Even if the customers do not pay us back, I would rather that the customers have the money than Digital River.

If every vendor did this it would spoil their plan to take our money and run.

...

I see the refunds as:

...

2. Typically, DR can’t block this process. They may charge their commission, which we’ll pay, although it’s unfair since we’re in this position due to their actions. However, if that’s the cost of recovering some funds, we’ll accept it.

Why? Why can't DR block this process? The process is completely in their hands. No? Are those credit notes you mention issued by some other entity than DR? Is that the source of the optimism?


c) Are you not concerned that you no longer have claims against DR when you refund all your revenue for the period?

Thank you.

[grujicd]

Speaking for myself, I'm not 100% confident that refunds will go through.
However, we're operating in environment of extreme uncertainty, where we can only guess with some probability what might happen and none of the outcomes look that great. Refunds just looked better than other options that were in front of us.

c) Are you not concerned that you no longer have claims against DR when you refund all your revenue for the period?

Maybe? On one hand I can imagine the worst case, where someone asks us to repay full amount of these refunds (not just DR fees) as on paper DR paid us (although in reality they did not), and we refunded that money so we're now in minus on DRs accounts.

On the other hand, I don't really care that I no longer can legally claim that money from DR because I didn't expect to get anything anyway through legal means.

I could be 100% wrong though. I can tell you that I'm not sleeping very good since all this happened. And it's not just because of financial loss, it's uncertainty and the fact that you can make a choice that will turn out to be very wrong.

[DrOli]

When I wrote typically, this was based on what other users reported here that process worked. Of course, they can block it and that will be ugly as they set credit notes to our customers stating that licenses are cancelled and that they will be credited so, somehow, I see this as a creating additional complexity for DR as then they lied to customers and not only software vendors.
If I am optimistic that all will get refunds, well, no, I am reserved in this regard until my customers are not reporting that they also got money.
Let us see for me and my customers that might be end of next week looking at how quickly other users reported that money was transferred.

[Pastmaster]

Understood. Thank you for your perspective. Personally I don't see additional claims for full amount of refunds. What would be the rationale for that?

My current view also is that DR will not pay anything. Including refunds. I'd think about doing both at the same time. But if the customer receives confirmation about refunds DR may be able to hold off until it's to late.

Anyway. I share your pain and I'd already been depressed before. So it hits home. I think and hope for all our sakes that at least the current missing funds are the upper limit of the damages.

[Pastmaster]

When I wrote typically, this was based on what other users reported here that process worked. Of course, they can block it and that will be ugly as they set credit notes to our customers stating that licenses are cancelled and that they will be credited so, somehow, I see this as a creating additional complexity for DR as then they lied to customers and not only software vendors.
If I am optimistic that all will get refunds, well, no, I am reserved in this regard until my customers are not reporting that they also got money.
Let us see for me and my customers that might be end of next week looking at how quickly other users reported that money was transferred.

 

Thank you! Please send as update us when you know. I'd be really helpful for me to know.

[dyamicaliri]

We issued about 350 refunds yesterday evening. Digital River accepted them, and then later generated credit memos for all of them. I'm fairly certain that when they issue a credit memo, they are actually performing the refund.

We have confirmation from a few people who have already repaid that they received their refunds.
We will come back in a week and let you know as we hear more from our customers.