Refund Dilemma

I need some suggestions with a sticky issue, and who better to ask
than you all?

Some time ago a customer placed a small deposit ($400) on a half
carat diamond, which I purchased for him. Well, before I started
working on the setting, he got unengaged, then re-engaged, then
unengaged. This all took about a year, but he’s a really nice guy
and kept in contact, so I didn’t mind. I told him I’d display the
diamond for sale and give him almost all of his deposit back when it
sold, which it just did. The sticky part is that the original
deposit was made with the girlfriend’s ATM card (and he reimbursed
the account so it was he who actually paid the original deposit). He
asked that I give him the refund by check since they were no longer
talking, and I said I would since it was HE that I dealt with all
along. Then I started thinking, am I in any way obligated, legally
or ethically, to only refund the money the same way it came in: by
crediting her ATM card? I have no vested interest one way or the
other, just want to do the “right thing”. Today I explained to him
it’s not as clear cut as I thought, and he’s not thrilled (he knows
he won’t see the money if I credit her account), but he’s OK with
whatever I decide. (I sure have great customers.) Whaddayathink?

Cindy Crounse
Refined Designs

Treat it as if you had sold the diamond for him. You agreed to sell a
gem for him, you sold it, and it doesn’t matter how he originally
paid for it since this was a resale, not a refund.


I’m sure that law varies from state to state, but in Indiana, refunds
must be made on the same card that it was originally charged.
Refunding any other way is termed as ‘conversion’ and does carry a
legal penalty. How much I don’t know, but my attorney informed me of
this a couple years ago. But then thats Indiana. It may be worth
checking with the bank card issuer.

Ed in Kokomo

All laws vary state to state but I don’t believe there are many that
specify the exact way refunds must be made (actually I’m pretty sure
most don’t). Assuming the guy is on the up and up about repaying the
girlfriend (and you could assume after a year that if you haven’t
heard from her that she thinks you owe the money to her, than she
doesn’t have a problem with it) you can give him his money back in
any form you choose. I mean if they forced you to refund money in
the exact way you got it and the customer had stopped using a
particular type of credit card then no one would ever be able to
issue refunds.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140


ATM cards be damned, say I! He who risked his coin deserves the


Hi Cindy,

Since you may not have direct access to a lawyer, I would suggest
you contact SCORE (Senior Corps of retired Entrepreners). You can
usually find one locally through your Chamber of Commerce. Typically
they will either have someone on their panel that is a lawyer or be
able to hook you up with one that should be able to answer this

I do believe a refund should most likely be made via the way payment
was accepted. Although you feel he has been forthcoming in
communicating with you there is no way for you to be certain. It
could come back to bite you…

Best of luck,
Pam Farren

Dear Cindy,

I certainly sympathize with your refund dilemna…I have a
silimilar problem going on now. A couple of years ago a young doctor
came into our town and brusquely threw some money around and
displaced another doctor who had been in town for decades. The real
estate machinations leading up to this event kept the gossip mill
going for quite some time. Last Christmas the doctor came into my
shop ( we are business neighbors ) and ordered a ring for his wife.
The doctor explained that he wanted his wife to have this ring
inspite of the fact that she is a horsewoman and eschews the use of
jewelry. He ackowledged that she was very actively physically and
that the ring would have to be built to withstand abuse. I explained
how I might make it using heavy white gold and tube settings for the
stones. He liked the concept and ordered the ring. A couple of weeks
after Christmas the wife came in wanting a refund explaining that she
never wears jewelry. I tried to tell her that the ring was made to
order and that I was not obligated to refund money. I told her that I
would give her a credit and she proceeded to take out half the value
of the job by getting some trinkets for her daughter. I now have the
ring, which doesn’t have general appeal because it is too heavy for
most ladies, and the remainder of the obligation. I am thinking
seriously about renegging on the deal, but I know that she will get
nasty because she has a noblesse oblige attitude. My gut level
feeling is that I may have to “eat it” because I screwed up in not
anticipating the doctor’s admonition that his wife does not like
jewelry. The lesson that I learned is that I should have discussed
the “pull out” strategy beforehand…I guess Mr. Bush and I are
slow learners…

Ron MIlls, Mills Gem Co. Los Osos, Ca.

You could put both their names on the refund and let them hash it
out :).



My understanding is that the agreement you signed with your credit
card processing agent requires you to refund only by the same means
that you accepted payment, in this case to the same card that paid
you the deposit. Is this likely to cause you any problems? Only if
the original cardholder gets wind of what is taking place and files a
complaint with her credit card company. You then may be required to
pay the same deposit twice, or risk being in violation of your

I am not sure if there are laws involved in this type of
transaction, which likely will vary from state to state, however it
may be worth paying a small fee to consult an attorney to make sure
you are on solid ground.

Jon Michael Fuja

I had a place refund some money to a card they had on file, except
the account had been closed for two years. They treated like it was
their responsibility. So I called up that card carrier and they said
that there

was the money in that account. They sent me a cheque. With my
customers, any work is considered to be customer and there are no
refunds. I tried to do a resell once for a good customer and had no
bids on the work.


If he has record of his input to her account matching said amount
and time frame, then I would think that you would be observing
protocal with him. maybe a phone conversation with said party may
relieve you of any problems…


Thanks for all the great responses about whether to refund that
deposit to the original debit card (with his fiancee’s name) or by
business check directly to the customer (the guy) I dealt with…

The thing that tipped the scales was advise from SCORE (Senior Corps
of Retired Entrepreners). I’d forgotten about this resource and it’s
worth mentioning again. (Thanks Pam for the tip!) Whether you want
specific advise for your state (as I did) or not, you can contact up
to 5 counselors - I heard back from all three I wrote to within 2
days - and it’s at no charge. They cover all sorts of issues
entrepreneurs have to deal with. The address is, oddly enough :slight_smile: Oh yeah, the advise was to refund to the original
card. I hope they’ll be able to settle it out themselves fairly.

Cindy Crounse
Refined Designs