Unauthorized Payments

For protection from fraud, financial institutions have given the option for clients to mark transactions as “unauthorized”. Any banking or credit card transaction that you didn’t make or approve should be marked as an unauthorized transaction. Unauthorized transactions may occur when your debit or credit card is lost or stolen, or your banking information is compromised. Someone could also steal your identity and use your information to make transactions without your knowledge or consent.

However, marking a transaction as an Unauthorized Payment when you have a valid contract with a company can potentially be considered an intentional breach of contract. When parties enter a contract, they establish a legally binding agreement that outlines their rights, obligations, and terms of the transaction. By labeling a payment as unauthorized, one party is essentially challenging the validity of the contract and attempting to circumvent their contractual obligations. It can also be seen as an attempt to unjustly avoid payment or to gain an unfair advantage over the other party.

Additionally, labeling a transaction as unauthorized when a contractual relationship exists may also undermine the legal remedies available to the parties. Contract law typically provides mechanisms for dispute resolution, such as negotiation, mediation, or arbitration, which parties should resort to in order to address any disagreements. Engaging in unilateral actions like marking a payment as unauthorized can disrupt this process and hinder the parties’ ability to resolve disputes in a fair and legitimate manner. For example, it is written into the Family Business Funding (FBF) contract that should the merchant be faced with hardship, and be rendered unable to make the agreed-upon payment, FBF is obligated to review and adjust the payment. Here are the exact words: “If at any time during the term of this Agreement Seller shall experience unforeseen decreases to their Daily Receipts, the Seller shall have the right, at its sole and absolute discretion, to request a modification to their scheduled remittance.” (Terms and Conditions, Section 6. a. i.) However, once FBF has received notification from the financial institution that the reason for nonpayment is “Unauthorized Transaction/Payment”, the merchant will be sent immediately to collections unless they can prove that notification was made in error.

Overall, deliberately mischaracterizing a payment as unauthorized when a valid contract is in place can have dramatic legal consequences and is generally considered improper conduct. Parties should seek appropriate legal advice and follow the established procedures outlined in their contract to address any disputes or concerns that may arise.