This post is a lot different than most. Most of the posts on here are about how to do different techniques, tutorials, avoiding scams, and just other website related things. This one is how I almost became a scammer.
I’ve been working with “John” for a couple of months on some small deals. A few hundred dollars to a thousand or so dollars every week more or less for web related work. Everything was working out great. Then he brought me a concept. I said to him, “Are you sure you can fulfill this?”
He says, “I’ve been doing this for 10 years. I can definitely do the work.”
I said, “Ok I’ll take care of the advertising, getting everything setup on my end, customer service, billing, etc…”
We have a deal. I put up the advertisement, I get really bad food poisoning (with fever) and I’m out of commission the first day. No big deal I wasn’t expecting much for that day anyway. The next day I’m 90% recovered. I go check my emails and I have like 40 emails and a few payments. I spend a couple of hours responding to emails. That day we made over $1000, this was a Friday. In my mind I’m thinking, “I think we’re onto something here.” I start working on an Excel spreadsheet with all of the information needed to fulfill the orders. I send it to John. He says he’s taking care of his end.
Next day I have over 100 emails when I wake up and a lot of payments were made. I’m happy, money is rolling in after just answering a few questions. This is a Saturday. Update the spreadsheet send to John. Sunday the same thing, over 100 emails over $1000 in payments, updated spreadsheet send it to John.
Monday rolls around same as the previous few days, even more money. I said to John, “Hey you said you’d have some of these ready from almost instant to up to 3 days. Do you have any ready so I can start giving out the good news?”
John says, “I’m working on it. Can you send $XX to this person? $XX to this person? And $XX to this person? They are going to help with the fulfillment.”
“Ok no problem. I didn’t expect these costs, you should have told me about these before, but no problem we’re still making okay money with this.” I figured I’d do my side of the work for a couple of weeks and just hire an assistant to do most of my end. I saw this as a very scalable business that I would be able to do without much intervention from my end once I got everything automated and setup.
Tuesday rolls around. He got a couple of the jobs done. I have over 100 emails and over $1000 for the day already. Do my side of the work. I say to him, “We need this done a lot faster, or we won’t be able to keep up with demand.”
He says, “No problem. I’m just getting more contacts while waiting for these other people that I already started on the jobs. By the way, can you send $XX to this person, this person and this person? They are my new contacts they should be able to help us scale even faster.”
“Sure thing. The faster we can get these done the more we can expand this.”
Wednesday. No other jobs have been done. I get on him again, “We really need these jobs done. We are going to look bad, every day we’re getting over $1000 practically on auto-pilot. Tell your guys to speed things up.”
John, “Don’t worry we gave a good timeline to the buyers we still have a few days for fulfillment, we’ll be fine.”
Thursday and Friday the same story more or less. On Friday I decided I’m not going to accept any more orders the total in a week was close to $15,000. This was taking up a lot of my time due to the sheer volume of emails I was receiving daily, but I can automate this within a week or two. I was still working with my regular clients but didn’t do much to get new clients, although I picked up a couple of new ones, from previous marketing and a referral.
Now I’m really getting on John, “I don’t know if you understand how serious this is. My reputation and my payment processing accounts are on the line here. We have to fulfill these orders fast.”
John, “No need to worry, you extended the timeframe for delivery a few days ago. My guys are working on it and I’m working on it. Can you do me a favor and send money to these people to speed things up?”
My answer, “No. I’m not putting out any more cash until I see results. Right now I see very minimal results and orders aren’t getting fulfilled.” At this time I’m thinking I’m going to have figure out how to fulfill these orders on my own. This isn’t a business I’m familiar with whatsoever.
I start doing research all afternoon and late into the night. I find several “reputable” suppliers. I reach out to some of them. Now it’s Saturday. I finally have contact with a few of them. I negotiate terms with one of them and pay them to do the work. I figure if one doesn’t work out it’s refundable and I move onto the next supplier. John still says he’s working on things from his end.
Monday. I decide to checkup on the supplier and they tell me it will be another day or two. Ok no problem, I expected this but my time was running low. Tuesday hits, same thing. I agree to terms with a 2nd supplier, says he takes up to 7 days to complete the work but it should be sooner, I wasn’t to happy with the timetable but I can try to make it work, I pay him.. Wednesday, the first supplier fills one of the orders and says he still needs more time for the other orders. I also find a 3rd supplier. This 3rd supplier says he can have almost everything done in a day or two. I also gave several refunds throughout the week because my time was just up and I promised refunds to everyone that I wasn’t able to fulfill the order for.
Thurday my payment processor calls me. “Sir we are going to have to take $2500 out of your earnings as a reserve and 10% off of future transactions for at least the next 6 months.”
Friday I tell the 1st supplier if he can’t get the work done to refund me, his time is up. He was able to fulfill 4 orders out of about 40. He gives me a partial refund the next day and tells me to wait until next week for the rest of the refund. I have buyers antsy as it is because I haven’t been able to fulfill a large enough amount of orders and I’m delaying everyone. I’m apologizing like crazy to all of these customers and I know it’s my fault because I started a business without having a backup plan. I refund all of the customers from the first supplier, except for the orders he was able to fulfill.
Saturday and Sunday I more or less take off from this business to do some other work I had pending, to relax a little and give the suppliers and John some more time.
Monday roles around, it’s a nightmare. I send out more refunds, more apologies. The 3rd supplier is only able to fulfill 4 orders out of about 90. I told him his time is up and I need a refund. He says I have to wait a few days to get the refund. I refund the orders that the 3rd supplier wasn’t able to fulfill. I ask the 2nd supplier about an update, he says he needs a couple more days.
Tuesday. More refunds, more apologies.
Wednesday. I tell the 2nd supplier I need a refund or a big update. He doesn’t answer me.
Thursday through Monday 2nd supplier tells me to have faith, it will get done. Tuesday he completed two orders out of about 50 or so. I tell him I need a refund. Which I told him every other day also. He stops replying.
Wednesday. I can’t wait for this guy anymore I’m getting chargeback emails like crazy. I send more refunds.
Thursday, Friday. Refund the last few. Still waiting on refunds to me.
The timetable is a little off in some places since I’m posting this from memory, but as of right now I’ve lost about $4000 in suppliers and of course my payment processor is holding $2500 of my money and over $1000 in advertising/fees. Everyone has been refunded and I’m happy my payment processor was understanding enough to not suspend my account for now. Who knows if they will decide to suspend my account in the next few days over the amount of refunds and disputed transactions? My reputation took a hit and I very much regret having started this business,
Just to give you an idea of what this looks like. Here is a picture of the Excel spreadsheet that I made. The parts in red are refunds, the parts in green are fulfilled orders. You can click on the image to expand it.
This is a lesson learned for me and an expensive one at that. I lost almost a month of productivity and money out of my pocket over this. Remember before you begin any business make sure you do your due diligence first and make sure you have a system in place to fulfill orders. I’ve seen many businesses start, especially in the virtual/online services world with no idea on how to fulfill their side of the transaction. Sales are important but fulfillment is just as important.
If I didn’t have enough funds to refund everyone I would have become a scammer, gotten my payment processing account and possibly my bank account shut down. Remember when you’re doing business always have backup funds in case things go wrong and you have to give money back. This was an extreme circumstance in my eyes and what made everything harder was that this was a fairly low ticket item so there were a lot of separate refunds and a decent amount of grunt work involved.
This was all my fault. There is no one else to blame. I’ve lost a lot of sleep over this.
“John” is still “working” on his side of the agreement. 😯