Leaving SmugMug

Taylor Photography

I have had a pro account with SmugMug for 3 years. I will be leaving SmugMug ASAP because of their refusal to work with me on a fraudulent charge.

Short version: someone paid the $500 price I had in my Download section to immediately download my original image. It was purchased in September and I was paid for it in the October payout schedule. I was contacted by SM in mid-November with an email that simply said "Just wanted to give you a heads up that order # was a fraudulent charge so we will be removing the profits from the order. Both you and SmugMug lost out on this one. Sorry!" Since then I have been involved in a back-and-forth email conversation where I have been repeatedly told that absolutely nothing can be done about this, SM just took the amount out of my profits so I am sitting at a negative $500 in my account.

This situation is unacceptable to me. The credit card companies reverse charges and take the hit when stuff like this happens. And considering it was a digital download and not a print sale, it costs SM basically nothing - but it has cost me $500 and it is forcing me to look for a new hosting company.

I have eliminated the option to download my images and am currently in talks with another hosting company to host my website. I will also be taking to social media (over 200k combined followers) to explain why I am leaving SmugMug after three years.

I am posting this here as an FYI to all Smuggers.

Ben

I'm so sorry you had deal with fraud. We are generally pretty aggressive with fraud detection, and as such we have insanely low fraudulent activity overall. Unfortunately though, all the fraud protection measures in the world can't eliminate it totally these days. If someone grabs a purse at a restaurant, runs home and buys a digital download- everything will be long processed before the credit card company has ANY idea it is a stolen card. We (SmugMug) only find out about it weeks to months later when the credit card company takes the money back from us, and we get no say in the matter. Not only do they take all the money back from us, they issue penalty fees as well. "The credit card companies reverse charges and take the hit when stuff like this happens" isn't entirely accurate. The credit card company reverse charges, and SmugMug takes the hit when stuff like this happens.

With download orders, we lose the entire charge and get issued a penalty. With print orders, we lose the entire charge, get issued a penalty, and are out the costs of the actual prints and shipping.

We never pass those penalties and fees along to our customers. Just like with our print guarantee, in which we reprint entire orders when needed at no cost to the photographer even when the photographer is at fault, we do our best to take care of our customers.

Because it can sometimes take weeks to months for the charges to be disputed and the money taken from SmugMug, we have occasionally already paid out the "profit" to the Pro. We don't want to escrow profit for months to make sure it is all legitimate charges. As I mentioned, the fraud rate is so low we feel comfortable paying out profit quickly. Only very occasionally do we have to make a correction.

In this case, the download was placed and no fraud flags were raised through our own methods or the credit card companies. Because of that, we paid you the $500 profit on schedule. Afterwards the credit card company took the $500 and made us pay penalties associated with it. In essence there was no order, no profit. It's an unfortunate situation to be sure. We have paid you $500 that doesn't exist to you or us. No matter what happens, we are already out money because of the penalties and work involved. Your profits are sitting at $500 down only because we already paid you that money. We are not charging you for this, we are just adjusting it to reality... which is that the money doesn't exist.

To be perfectly honest, I don't know there is a good answer for any of this. Fraud is painful for everyone involved. We can't afford to just pay out imaginary profits every time there is a fraudulent charge and the money doesn't exist. Our efforts are focused on shielding our subscribers from incidences of fraud, and then doing our best to make sure they aren't penalized for it either in terms of fees or cost of goods.

I'm happy to answer any other questions about how this works, or how it might be improved.

photoclick

First of all I must say that I believe there is something not entirely kosher going on between the photographer and the client who ordered $500 download and then reported the transaction to the credit card company. So, why don't you bring this up with the person who reported the transaction as fraudulent? For sure you do know who they are:)

Ben - paraphrasing you "...credit card company takes the money back from us, and we get no say in the matter" is NOT entirely accurate:) You do have a say in it. It is call a Dispute Resolution. You send an immediate rebuttal to your credit card processor so they can respond, on your behalf, to the financial institution that initially reported the fraudulent transaction. If, as you say. no red flags were raised - name on card and billing address were correct, the bank is not a foreign bank etc., you payment webpage has all the necessary legal disclaimers - then you have 90% chances of winning this dispute at this step. Only when the payer who reported the transaction is really stubborn and knows how to play the MS/VISA system OR when the transaction is really fraudulent then a Pre-Arbitration Notification will be send to you. You can still fight back at this step.... although if you lose you are at risk of paying amount well over $500 in case you lose. But the bottom line - you DO have a lot of say in this process. I am saying all this NOT to teach you - you are wery well aware of all this. I am stating these facts here for other customers so they know that you DO have a lot of say in this process.

What happens with the product the the photographer sold?

Ben

Thanks for the info. Honestly, I have never personally worked on the fraudulent charge resolution with the credit card companies so you probably know more than I do personally. That is generally handled by our awesome finance team, and they definitely try to work with the credit card companies to make sure we do everything we can on your behalf. It is a good reminder of other steps we take to try and protect our subscribers from fraud, we'll work the phones to keep the charge from being reversed if it seems like a legitimate charge. Obviously if we get to keep the money we would be treating the order as normal and profit would be paid out. There would be no scenario I can even think of where we get money but refuse to pay it out.

As mentioned, we have a really low fraud rate which is awesome. I think that generally means when we see fraud activity it tends to be real fraud with stolen cards and not just a disappointed legitimate customer. Our print guarantee helps prevent chargebacks from customers disappointed with the prints they received. We'll do everything we can to help them get a print they are happy with, which helps the Pros keep their money!

photoclick

So, what happens with the product that was delivered to the person whos dispute you accepted thus returning funds?

Ben

That's a case by case sort of thing. In the case of Digital Downloads, there isn't much we can do. In the case of a stolen card, we don't know who got it and have no way to track them down and delete the file. From the few I have personally dealt with, I often think it might be an attempt to see if a stolen card will work and not a desire to get a free image. That's hard to say though with any certainty.

For physical goods, it gives us more leverage to talk to to the credit card company. We know where the prints went because we have a physical address. That allows us to tell the credit card company that it was a legitimate charge if the person is claiming it wasn't, but it was delivered to their address. It also would allow us to get law enforcement involved if it really got out of hand I guess. For those reasons, we really don't see any significant fraud there... who wants their shipping address known when using stolen cards? Those chargebacks are often people who don't know what SmugMug is on their statement, and we can often work it out with them directly and it wouldn't affect the Pro at all.

photoclick

Yes, with digital order it's hard to pursue. I had a couple of instances - not a joke, it really happened - when a traffic infraction was paid online, to the corresponding police department... with a STOLEN card:) Go figure, some peole are really ...well.. not bright:)

I am a bit confused about what the OP complaining about - looks like he did get the funds. If the funds are in his hands - what is the issue then?

Mitchell

I'd like to hear back from the OP. There were some harsh comments thrown at SM that I don't understand. Did the OP get paid $500 and now feels SM should just eat the loss while the OP keeps the money? Why would anyone feel that is fair?

Fraud is a terrible thing, but I fail to see why SM alone should bear the cost with this transaction while the photographer gets to keep the money.

Taylor Photography

In answer to the question "What happened to the product?" - the guy downloaded it. Or not. SM can't tell me either way. But I have to think that he now has my original work.

I don't feel my comments are harsh at all. SM paid me and then took the money back almost 2 months later, resulting in my account being $500 in the negative. There was no talk of splitting the cost with me, or any other info. Just the email that I quoted in the original post. We have been emailing back and forth but there has been no offer to help me in this situation, I'm just "out of luck."

photoclick

It is indeed an unfortunate situation. I hope, I want to believe that Smugmug did everything possible, up to the pre-arbitration step, to defend you as a customer. I know I do it for my clients. Although it is easier in my case because my customers are police department and if people keep disputing the charge - there are intimidate and legal consequences. What I can advise you is to confirm if Smugmug exhausted all options before debiting your balance - all steps I describe above are documented steps. SM is not obligated to give them to you.. but try asking.

In any case - this situation, as unfortunate as it is, is part of the Terms of Services agreement:

In the event a customer requests a refund or otherwise disputes or changes any order made in connection with the Profit Program (including, but not limited to, the return or destruction of physical Products), SmugMug may adjust any current or future Profit Payments to which you are entitled to reflect such refund, dispute or change. If you do not have a current balance of unpaid Profit Payments sufficient to cover the amount at issue in such refund, dispute or change, you will be responsible for directly reimbursing SmugMug for all such amounts by any designated payment method that SmugMug deems appropriate. Your failure to provide such refunded, disputed or changed Profit Payment amount to SmugMug may result in SmugMug pursuing legal action against you in order to recover such amounts.

SmugMug is entitled to withhold payment of current or future earned fees under the Profit Program, recover any refunded, disputed or changed Profit Payments as set forth above (including any amounts owed by you to SmugMug arising out of the use of coupons, discounts, branding tools, boutique packaging and other services as set forth above) and/or suspend or terminate your participation in the Profit Program if you violate these Terms of Use or otherwise use the Profit Program (i) in violation of applicable law, (ii) in a manner that is misleading, fraudulent or deceptive or (iii) for the purpose of perpetrating any scam or other illicit purpose.

DmitryS

photoclick wrote: »

It is indeed an unfortunate situation. I hope, I want to believe that Smugmug did everything possible, up to the pre-arbitration step, to defend you as a customer.:

I think that's partially what's OP is complaining about. There is really no financial motivation for Smugmug to fight for him, since SM did not loose anything. I guess we can believe the reply from Ban that they did fight, but as he admitted latter he doesn't know how does it work. So all what we left is the statement that they have "awesome finance team"

Ferguson

Just to clarify, there are two things being discussed here I guess: let's call them disputed charges, and fraudulent charges.

One, Disputed Charges, are when the legitimate cardholder disputes a charge made because (they claim) the vendor did not deliver as promised in some fashion.

The other, fraudulent charges, are when the person making the charge is not the cardholder, but someone who has stolen the card or number, or otherwise using it illegally.

For disputed charges there is recourse to say "they really should still pay".

For fraud, there is really nothing to debate, nothing for Smugmug to fight about "for him" (that doesn't answer the question what obligation Smugmug has to the OP, though it is very common for intermediaries to try to claw back such payments or charges).

I am not part of this event, but it sure sounded like this is a case of a stolen credit card and not just a dispute whether product was as promised. I don't know that Smugmug had anything they could do beyond either take the money back, or let you keep the money.

Was there?

Ben

Ferguson wrote: »

Just to clarify, there are two things being discussed here I guess: let's call them disputed charges, and fraudulent charges.

One, Disputed Charges, are when the legitimate cardholder disputes a charge made because (they claim) the vendor did not deliver as promised in some fashion.

The other, fraudulent charges, are when the person making the charge is not the cardholder, but someone who has stolen the card or number, or otherwise using it illegally.

For disputed charges there is recourse to say "they really should still pay".

For fraud, there is really nothing to debate, nothing for Smugmug to fight about "for him" (that doesn't answer the question what obligation Smugmug has to the OP, though it is very common for intermediaries to try to claw back such payments or charges).

I am not part of this event, but it sure sounded like this is a case of a stolen credit card and not just a dispute whether product was as promised. I don't know that Smugmug had anything they could do beyond either take the money back, or let you keep the money.

Was there?

This was a case of a stolen card. We actually first heard about it apparently when the cardholder wrote in and asked what SmugMug was, and why it was on their statement. We get that occasionally, and usually can sort out the confusion and keep the charge. When referring to our finance team (and support team), that's what they are usually doing for you. Most of the times there are any disputes, we can solve it without involving the Pro at all. You get to keep the order and the money, because we worked with the customer and the banks to make it clear it was a real intentional order.

In this case, they were fairly clearly not the purchaser and they had to go through their credit card company as a stolen card to protect themselves.

The credit card company told us it is fraudulent, and took the money back. We don't have the money, there is nothing to split or divide or anything. The only thing that would be available to split would be the penalty fees, but we decided that wouldn't be nice to share and ate the entire cost.

Sam

First to Taylor, (OP), While I understand your unhappy. You had $500.00 now you don't, but it isn't SmugMug's fault.

Consider yourself lucky ten times over. You are not out any tangible property. It's not like you shipped out a camera or lens.

There is no logical reason why the legitimate card holder should be held responsible for an unauthorized and fraudulent use of their card.

Smugmug is not being enriched in any way. They have not acted in a negligent manner. They had no choice with regard to giving the money back. They are only acting as middlemen. There is no reason they should cover the loss.

I recognize you didn't do anything wrong, but if you had sold this directly through your own website merchant credit card account the bank would have taken the money back from you not SmugMug. You are in the same position.

There is no scenario that I can see where you would end up keeping the money.

Sam

DmitryS

Sam wrote: »

Smugmug is not being enriched in any way. They have not acted in a negligent manner. They had no choice with regard to giving the money back. They are only acting as middlemen. There is no reason they should cover the loss.
There is no scenario that I can see where you would end up keeping the money.
Sam

I don't think it's that unambiguously given that Smugmug charges 15% of the sale for digital downloads to cover "credit card payment fees, customer service, and the costs of administering the program."

Sam

DmitryS wrote: »

I don't think it's that unambiguously given that Smugmug charges 15% of the sale for digital downloads to cover "credit card payment fees, customer service, and the costs of administering the program."

Under what legal theory do you think SmugMug should be responsible to eat the $500.00?

Do you think they should be responsible because if the transaction had been legitimate they would have received 15% ?

Because their automated shopping cart accepted a credit card in good faith?

Because they are a big company with more money than the OP?

While I haven't looked up the terms of service from my bank or SmugMug I believe it quite likely you will find this is covered and has been handled in accordance with these terms.

If not please inform me.

Sam

DmitryS

Sam wrote: »

Under what legal theory do you think SmugMug should be responsible to eat the $500.00?

Oh, I am not talking about legal theory, I am sure TOS are written so that they have no responsibility.
Just saying that it's not so black and white and 15% is a large mark up for digital download, so one may expect that "costs of administering the program" covers such case.

Sam

DmitryS wrote: »

Oh, I am not talking about legal theory, I am sure TOS are written so that they have no responsibility.
Just saying that it's not so black and white and 15% is a large mark up for digital download, so one may expect that "costs of administering the program" covers such case.

I am trying to be consistent here. It really is black and white. The 15% is not a markup but a commission on a transaction. The transaction was fraudulent and thus reversed. SmugMug did not get 15% of anything.

Or are you saying that you believe that the 15% commissions from other transactions should be used in order for SmugMug to eat the fraud?

I do understand the emotional aspect of this for the OP, but he has been defrauded, he absolutely loses. Is it fair he losses? No but the only one responsible is the perpetrator, and he or she is in the wind.

Any theory needs to have a good basis, not an emotional one. If you are trying to recoup money then a legal theory is required. If your looking for sympathy, the OP certainly has that from me.

I really don't see any moral, ethical, or legal reason for SmugMug to eat the charges.

If you read my posts you will see I am absolutely fair and consistent with my opinions concerning SmugMug. Sometimes in favor and other times against.

Sam

leftquark

AdamNP wrote: »

Wow, we've reached a new level of dishonesty here on Dgrin. I can't believe the 700% shipping thread is still there (I just checked that all posts were there, for the record). Deleting an entire post is one thing - removing the negative parts and KEEPING the pro-SM stuff is just shameful. What has happened to SM...

As the dgrin admin, it's been my policy not to censor threads, despite being pretty hurt by some of the things many of you have said towards me and other SmugMug staff. We're certainly not going to start now. I will say, however, that if this thread continues to dive away from the original topic, I will split the thread so that it remains on topic.

Sam wrote: »

I do understand the emotional aspect of this for the OP

It's never fun to find out that you think you've made a sale, only to have it ripped away from you. We certainly hate having to reverse a Pro's profit and we're glad that its occurrence is so rare. As Ben mentioned, we do everything we can to prevent this from happening.

photoclick

leftquark wrote: »

... if this thread continues to dive away from the original topic, I will split the thread so that it remains on topic.

I initially took participation in this topic because the story OP described is too suspicions to be true, because I deal with chargeback situations pretty often and know a lot on this topic, because I wanted to know (in addition to reading every single letter of the TOS) where Smugmug stands when it comes to similar situations. So, I hope I stayed on topic and I hope everyone here can stay op topic as well.

However, it is a fact that a Smugmug employee introduced another topic in this thread - deleting part of the message a member posted here. A part of the message that was neither offensive nor in violation of any terms of usage of this forum (yes.. I read it all:) ). I believe Aaron is correct - this thread must be split so the chargeback topic can continue on its own and censorship topic can live in a separate thread. This s a great idea Aaron. Thank you!

tartan snow

Taylor Photography wrote: »

In answer to the question "What happened to the product?" - the guy downloaded it. Or not. SM can't tell me either way. But I have to think that he now has my original work.

I had someone buy a digital download but she didn't know how to do it so she got in touch with me about it and I got the photos posted for her instead. However, in my sales history that digital download order is still listed as 'order accepted' whereas other digital downloads I have sold are listed as 'order shipped'.
I therefore assume that if it says order accepted then they have not actually downloaded it but have paid for it.