Collecting Debts via Google AdWords. Legal?

[jewboy]

Q: A small "mom and pop" client used 9.5 hours of my SEM consultation services via telephone/email at a prenogiated rate. (Relevant or not, she seemed quite happy with my advice!)

She is now ignoring payment of services rendered, and her invoice is way past due. Contact via email and telephone is being ignored.

I am aware of the many ways to go about collecting a debt - a collection agency, small claims court; however these are quite costly, time consuming, and often futile.

I would like to know if I can legally (in the US) use PPC to collect a debt. I do not want to violate any AdWords terms and conditions as well.

I think the following method may prove cost effective, and should resolve the upaid invoice.

AdWords Ad:

Company XYZ
Please pay outstanding invoice
#1234, which is 31 past due.
http://www.mysite.com/invoice1234.pdf

Bidding on "Company XYZ" as the keyword for the ad.

Thanks to all for your advice.

[DarkMatter]

I'm not sure if it's legal but I doubt google will approve the ad (I am certainly no expert), but I think it's creative and pretty entertaining. if your business contract with the client is terminated, it might not be a good idea to continue to login to their adwords account.

[jewboy]

I am willing to eat the $.05 a click on my account, even though I know they will be inclined to rack up my charges!

[NTR]

... we must have the same client LOL. That's very creative, but I would think that you would open yourself up to legal preceedings.

Funny that you should write this today, because I just got a note from my bank that a large payment from a client bounced.

I recently started freelancing and doing contract work and while the people I have worked for to this point have been 99% excellent... there is the 1%. And it's the 1% that infuriate (sp?) you.

So if anyone knows of any collections agencies, please let me know and/or if anyone has suggestions whereby I can avoid being in the situation again, your comments would be greatly appreciated.

Thanks in advance all,
Natasha "That Girl From Marketing" Robinson

[jewboy]

LOL! At least you were able to get in touch with your client!

IMO, without much legal knowledge,

If it's the truth, it is not libel - and perfectly legal to write and make public.

If there is an actual dispute whether the money is owed, that may be a different story - and a big legal mishap. In your case, it is clear that you are owed the money since the check was written, and bounced.

I THINK you can legally write:

Client XYZ
Bounced a check of
$999 on me.
http://www.yoursite.com/bounced-check.gif

I know this forum has a few sharp legal minds. I'd like to hear your thoughts.

[David Wallace]

Did you have a written contract with the person or some way to prove that they agreed to charges (emails, recorded phone calls, etc.)?

Running a "smear" type of PPC campaign surely is appealing but I think a nice "pay up or be sued" letter from your lawyer would be more effective. Of course I have seen scenarios before where people's sites have been shut down by web hosts and replaced with a message stating that site has been shut down because client doesn't pay their bills. I would imagine that would get someone to pay pretty quickly.

[jewboy]

Dave,

Interesting, I have to agree! Most would hire an attorney to draft a letter.

But I think I'd get better ROI out of a PPC campaign than retaining an attorney :D

Agree or disagree?

[David Wallace]

Not if you get sued for libel. :D

[jewboy]

IMHO, It's not libelous if it's true.

With the case of NTR's bounced check, it might be a tad difficult to scream libel since he has tangible, indisputable evidence.

Two questions questions remain:

1) Is it immoral to use PPC for collection purposes?
2) Does it violate AdWords or YSM terms / conditions?

[jehochman]

I learned a good lesson from a lawyer friend:

Make an agreement with yourself never to sue or otherwise harass a non-paying client. Once you understand this, you'll be careful not to front more work than you are willing to lose. Bill your clients frequently and make sure they get into the habit of paying. Be selective about taking new clients. The clients who don't pay are the same people who will complain about you, sue you or cause other trouble. It's best not to do business with them in the first place.

Instead of wasting your time chasing deadbeats, spend that time building relationships with your good clients, or marketing yourself to new clients.

[andrewgoodman]

3) Will it come back to bite you in the ass somehow?

There's probably a good reason not to air dirty laundry in public, even when someone stiffs you. I would use that as a last resort, if at all. Tempting, but what does it accomplish?

And you know what? In business: there will be more of those. The ones who take service and don't pay. (Unless you get the money up front.) Would you do this in the future, too? Probably not a good idea to get in the habit...

[NTR]

Wow,

Thank you all for the great (and funny) replies and advice.

Did you have a written contract with the person or some way to prove that they agreed to charges (emails, recorded phone calls, etc.)?

David - yes I have both a written contract and emails etc... though my most recent "Your bank has been unable to clear your check in the amount of X...", has gone unanswered (Not a good thing I'm guessing - huh?)


you'll be careful not to front more work than you are willing to lose... Instead of wasting your time chasing deadbeats, spend that time building relationships with your good clients, or marketing yourself to new clients.

Thank you I agree whole heartedly with the second part of your statement... however with regards to the first part: I figured it was pretty standard to be paid a deposit and then be paid upon completion.... I just have a bounced check upon completion ...

There's probably a good reason not to air dirty laundry in public, even when someone stiffs you.

Agreed... I'm trying to keep my business Karma on the postive side.

Have a great weekend all,
Natasha "That Girl From Marketing" Robinson

[Rynert]

I don't think shaming them is going to make them pay. They are either refusing to pay simply to save money, in which case they have no shame, or, they are genuinely in financial trouble, in which case they probably already feel ashamed about not being able to pay.

You may try a snail mail letter where you suggest that if they have a short term cash flow problem would they like to pay over time, 25% per month for 4 months.

Be helpful, but assertive.

You are much more likely to get your money with this approach than shaming them.

If that fails you have a choice. Legal route, write off, or wait and see. Is it worth the legal hassle and expense? These things rarely are. You would be better off biting your tongue, swallowing your pride and concentrating on building your business.

[Chris_D]

You could revolutionize the Debt collection industry with that kind of thinking! :)

I have no idea of the legal aspects of anything you are suggesting.

But I wonder what the cheque bouncing client's reaction would be to you telling them that unless they paid blah blah you would be obligated to run a PPC campaign with a picture of their bounced cheque etc...

[Gilgul]

I had a similar situation with a 2 non-service (merchandise).

Client 1:
Mailed me a check with the wrong name on it. Whether on purpose or not, I could not cash it.
In their case I found out with the local Small Claims Court (up to $3000), that you can sue, (no need for a lawyer) and the only requirement is $75 in fees and an a copy of "Letter of Demand" mailed by certified mail which clearly state the situation and that you "Demand that they pay the full amount within X days" (You can write this letter, no need for a lawyer).
In my case, I got a check in the mail within 2 weeks from mailing the letter, and 5 days from receiving the "return receipt".
Striickly speaking, it does not matter if they refuse to sign for the letter, as long as you allow it a minimum of 30 days from mailing date (although I would allow a bit more), it is okay for court. Small claims court also allows you to include any amount you may consider satisfactory for court expenses, interest, missed days of work, etc.


Client 2:
Private person, check bounced twice, mailed it to the local DA. They put a warrent on his name. 3 years later, I get a check from the DA's office, the guy got pulled over as he returned to the state, he then got taken to local jail and the next day paid the entire amount in cash to get out, and I got my money.

Both cases are not quick fixes, but collecting money never is. If people don't want to pay they just don't, they owe you money and probably to others as well, if every period they can get away without paying one or two people, they've already earned their share.

Oh, and by the way, last I checked karma doesn't pay my bills. Collect what you've earned (as long as it is for legit services), just make sure it does not get to be a part of your life.

Just my 2 cents.

[jewboy]

Promedia Corp - you could revolutionise the Debt collection industry with that kind of thinking! :)

I have to agree with that statement! With everyone habitually Googling themselves and others (or as they say in Holland and Korea, MSNing (http://http://blog.searchenginewatch.com/blog/051021-164313)), the search engine might just be the most powerful debt collection instrument known to mankind :D

[Marcia]

Legalities aside, it's a tacky way to do it and doesn't reflect well on the person/company doing it.

[jewboy]

Legalities aside, it's a tacky way to do it and doesn't reflect well on the person/company doing it.

I am inclined to agree. Going after a person or company's reputation by publicizing that he or she is a deadbeat payer is harsh, and I would be very, very reluctant to do it.

But isn't that the essense of a credit reporting bureau? To publically proclaim that XYZ Corp. has bad payment history; and allow for all who might potentially do business with XYZ Corp. to be forewarned? Is the firm who filed against XYZ Corp. reflecting badly upon itself by putting XYZ Corp. in the light of public scrutiny?


Do you think that search engines should behave as the Experian or Equifax for small businesses?

[St0n3y]

Sometimes it works to report them to the local Better Business Bureau. The BBB puts out newsletters with names of companies that have been reported and non-responsive.

In our case we generally require fees up front (since we work of flat fees, rather than hourly) and when we do charge hourly for services, such as phone consultations, they must purchase that in advance.

I think having a retainer system is the best format for working hourly. On the other hand, you have to look at it from the client side. They are giving money up front for services promised, but not rendered. That can be a pretty dicey situation for some.

[NTR]

So it seems that not only was the check bad... but it was fraudulent (s?)!!!

soIs it worth the legal hassle and expense? These things rarely are. You would be better off biting your tongue, swallowing your pride and concentrating on building your business.

1. Pride has nothing to do with this: It's a matter of payment for services rendered.

2. Yes, the legal expense is worth it... according to my bank who I just got off the phone with... who has had my account on hold since that time of this check issue... who has told me that the only way to access my account is to file a police report... and who told me that I have been reported to check systems... and that If I wanted to open an account today somewhere I couldn't because of the deposit of the fraudulent check... and the only way to clear this up is by filling out a fraud complaint.

3. And by the way would you be feeling so "give the boy a chance" if you weren't able to access your account...

Now I'm actually feeling like you may have a point since....

What makes this all worse, is that this person is a member of this forum. Matter 'o fact that's where I found the listing at for the freelance work- was this forum. I would hate it if anyone else here is doing business with them and may end up getting a fraudulent check as well from them.

Well I'm off to the police department... yippee - sorry I had to vent somewhere.


Natasha "That Girl From marketing" Robinson

[jewboy]

Sorry NTR :(

All invoices that were outstanding are currently paid in full :)

Indeed a crime was commited against you. Hopefully an arresnt warrant will force the crook to pay. I don't know what good it will do if the perp is outside the US.

Was this check from outside the US? Looks like you may have a tough battle ahead of you.

[andrewgoodman]

Do you think that search engines should behave as the Experian or Equifax for small businesses?

No, not really. Credit bureaus make enough errors that hurt ordinary people. The last thing we need is to have a snitch system that allows all kinds of mistaken impressions to be formed in cases where there might have been two sides to the story.

I notice one post on this thread mentions a check with the wrong name on it, whether on purpose or not... and taking action on it. Granted that ploy is sometimes deliberate but assuming it is someone buying themselves 1-2 weeks, the face-saving move is to request a resend and then just wait. When we start treating moderately slow payers as fraudulent then we are really looking for bad karma IMHO.

Some of the largest companies take months to pay. Guess what might happen to your reputation if you went online and squawked about that.

[rogerd]

Every industry has deadbeats. The way to avoid getting burned is to collect at least a portion of your fees up front (and 100% of any out of pocket expense, like advertising) so that the damage is reduced if the client stiffs you.

Once you are dealing with a way-overdue invoice, a collection agency isn't a bad alternative. They take a chunk of what's collected (often 25 - 40%), but it takes near-zero management time on your part. Before turning it over, though, I'd recommend two steps:
1) Notify the client that the invoice will be sent to collection in a specific number of days. Do this in a manner that will get their attention - certified mail, Federal Express, etc. Since a referral to collection shows up on their credit report, most companies will work to keep that from happening either by payment or negotiating a settlement.
2) If the client is local, consider showing up in person and requesting a check be written immediately. I've had some success with this on the few occasions where I've resorted to it. I didn't even have to bring Guido and Vinnie. ;)

I think the advertising idea is a waste of time and money, and could create legal expenses even if you ultimately prevail.

If you think the client is in weak financial condition, act sooner rather than later to avoid being one of many unpaid creditors when they go belly-up.