DealMaker's dispute policy is to challenge all dispute claims when there is the ability to do so. When a dispute claim has been submitted, DealMaker will notify your company and will provide details on the investor, the disputed amount, and the stated reason for submitting the dispute claim. DealMaker will work with your company in managing the process to help maximize your company's chances at getting the dispute claim dropped.
Step 1 - Contact the investor and request they drop the dispute claim
DealMaker will request your company to get into contact with the investor and inquire why they submitted the dispute claim. This approach is highly recommended as it provides the opportunity to engage directly with the investor with the hope to retain their investment.
If the dispute claim was a mistake or if it is decided the investor will drop their dispute, the investor must contact their financial institution and request the dispute to be dropped. Further, if the investor is able to provide confirmation of the dispute withdrawal request, such as a withdrawal-confirmation email from their financial institution, it would be helpful as supporting evidence of the dropped dispute.
Step 2 - Submit evidence to contest the dispute claim
Two weeks after a dispute is received, DealMaker will automatically submit evidence (ex. the signed subscription agreement, evidence of shares already being issued) to the financial institution to substantiate the legitimacy of their payment with an explanation of the investment process. As such, your company is expected to provide any additional supporting evidence within two weeks to support the dispute process. Please note that once evidence is submitted, it will be in queue for a formal review and can take a few months before a decision is made.
As an alternative for the investor, if the investor is willing to drop the dispute, your company can offer to refund the payment. The advantage of this approach is that the investor will get their payment back much sooner and will avoid being flagged as high risk. As well, your company will not have to deal with the continued hassle and uncertainty of managing this dispute and this investor can be confidently removed from your raise.
Step 3 - Understanding the final outcome and its impacts
The most desirable outcome is that after submitting evidence, the financial institution sides with your company and does not clawback the payment from your account. This will mean that either (a) the investor will remain as a prospective investor and you still retain the ability to accept them into your raise with their funds remaining on account as the criteria for disbursement hasn't occurred yet; or (b) the investor was already accepted, the funds were already disbursed to your bank account and therefore your ability to use these funds is unchanged.
If the outcome of the dispute is in favour of the investor, a chargeback will occur and the investor's payment will be clawed back from your account. Even though your company's attempt at contesting the dispute wasn't successful, your company still has the option to pursue the investor civilly as the investor did sign an agreement obligating them to pay and the company relied on that information. Further, if shares had been issued prior to the dispute claim, your company may independently pursue the investors for a receivable.
DealMaker maintains a holdback (generally 5% for 90 days) of all accepted investments in order to minimize risk of insufficient funds in your company’s payment processing account in the event of a dispute or refund. In the event that the amount exceeds the holdback balance, your operating account will automatically be debited to cover any shortfall. However, this is rare, and it is unlikely refunds and disputes will affect your company’s operating account. As disputes, and ultimately chargebacks, are inevitable when dealing with digital payments, a proactive holdback strategy ensures that there are always funds available on account to cover any shortfall.