In a recent post I updated the current situation with Bartercard, an Australasian Trade Exchange in the advanced stages of demise – layoffs, a decade of downsizing, increasing debt, dissatisfaction and currency depreciation (inflation). Their share price has also taken a dive since the bossman got caught insider trading and got bumped and the other Smiles in Suits got their arse-card simultaneously with their companies confession to the stock market of their lies. I also shared the difficulty that members face – those in credit keep hoping against reality that the dying system will return them something for their investment into the dodgy system, thus prolonging the inevitable. In this post though, I go through the issues for those in trade debit and who may be fighting Bartercard in court – when their account has been closed and they are facing a cash conversion attempt by the crooks. I use a comment from a reader as the trigger to post. I hope it helps!
The reader says:
We have some “running” [run-in] with bartercard,
They “creative” accounting and practices in “trade dollars” cost us real dollars, now, they suspended our account, preventing us from payment in they “trade dollars” valued currently at the best at $0.20, converted “trade dollars” into real ones on the base 1 to 1.
Bartercard did not allowed us to pay in they “trade dollars” and demand repayment in real dollars!
Bartercard account manager is threatening us with court action and demand immediate payment of fictional debt with real dollars!
As from your articles, you have much better knowledge of teh issue than I ever want even to know – could you offer some word of advice?
Bartercard Members who are in a trade debit situation have obtained real goods or services from a dodgy system. They have generally paid an inflated value for them but they are often the smarter traders because they are using the system for cheap/free credit . . . that is until they want to (or have to) escape the trap they are in. Bartercard can and will enforce a cash conversion of that debt/overdraft. It typically starts with a letter of intent – a threat from the Green Monster to close their account OR ELSE, and a string of stock standard documents that tell you to trade out (down) your balance or they will sue you. Most people ignore this as they feel that they are in a dispute situation.
Bartercard’s position is actually quite simple – that you agreed to the Bartercard Terms which they are quick to present in court to validate their process and conduct. “You agreed to these terms!” “You gave a personal guarantee!” “You didn’t [whatever]!” or “You did [whatever]!” can look serious and threatening to the uninitiated or uninformed. Even experienced lawyers can look at a comprehensive legal case and find no way to defend. “Settle!” or “You have to pay up!” is often their advice after perusing the Bartercard Terms.
This omits critical factors though – trading issues, marketing issues, true valuation (as this commenter notes).
Bartercard’s Terms are arguably the best in the industry – for them. Honed and tweaked over decades, it is a strong legal document BUT there are always two sides of any story – ALWAYS!
While every case is different the essence of any successful court case is that a judge (or adjudicator) needs to see and should want to see BOTH sides of the story:
- Evidence – documents, proof of events;
- Witnesses – people who were there and who know/saw things;
- The Law – what the rules are by which he/she has the authority to pass judgment one way or the other.
Both parties at court have opportunity to present their case. Bartercard are professionals in court. Most Bartercard members are not. Bartercard is skilled at presenting one side of the story – theirs. Most Bartercard members are not – and don’t.
Bartercard’s primary evidence will be documents and historical file notes. They will produce your signature on the signup papers, including [usually] a personal guarantee and agreement to their Terms of Trade. They will also likely produce copies of all written warnings (as I mentioned above) and any file notes that verify their claims. A word of warning here that they will have no hesitation in omitting any file notes that undermine their claims or that could assist any counterclaim or defence. Remember that these guys are a business extremely short in the ethics department and are only interested in getting cash – from you – and as much as possible.
Bartercard’s primary witnesses will be people in positions of responsibility – do not expect to be facing your local friendly Trade Co-ordinator in court! This is a two-edged sword, because while they have authority they often do not know the details of all engagements between you and Bartercard. If things happened external to the File Notes or if the File Notes contain some half-truths or a distortion (which they often do) then you will have an advantage. Quite often things can be said at Trade Events, client’s premises and can complement (if not even contradict) your File Notes. You need to present these things and prove them on the balance of probabilities.
Bartercard will obviously present the situation in the best legal light for their own purposes . . . “you signed, you agreed, we followed due process, you owe us! ” sort of thing.
But, that’s only one half of the story and the judge will be (or should be) just as interested in the other side of the story – yours!
A few general points . . .
- When you signed up, you would have been given information additional to the agreement. That sales presentation, those promises made – even if only given verbally by the salesperson are just as important as the documents you signed. The commitments given and the promises made at the time gave the context in which you agreed and signed. Note that a verbal agreement is legally binding. If the sales person said that they would bring you business and they didn’t, or won’t, and you have sought it, then that is a breach of commercial contract. When you can show the judge that Bartercard changed the rules on you (either by decree or through slack performance normally expected of a barter exchange), didn’t honour their side of the deal or that you entered into a conflict situation because of THEIR conduct, breach or omission, then an apparently strong case from the aggressor can easily become a well contested case.
- A disputed situation changes all things until it is resolved. While not a black and white matter, when you enter into a dispute with Bartercard and especially when you inform them of how their failings have caused the dispute . . . hold all bets. Note that in most situations in life there are two sides and the judge will be establishing his ruling on the balance of probabilities. If you can show that the dispute occurred BEFORE the account closure actions, demands or threats, then you could have turned the tables on a legally aggressive company. You could easily be the aggrieved party or the victim of wrong, not Bartercard. If so, this is your job to convince the court of it.
- You need to show and build your credibility. A judge does not know you and has a limited time to ‘get it’! They will assess your demeanour, evidence, presentation, logic and more. If you argue the little things just for the sake of arguing, or get overly emotional then you will lose credibility. If you have no evidence or are attempting to fool the court and get found out, you will likely lose and have to cough up the cash.
- Who starts it all has an impact. Defending a case that Bartercard has initiated, threatened and then taken against you puts you on the back foot as anything you say or do will look like a guilty person just making excuses. The judges see this sort of thing all the time. They know quickly whether you are simply fighting to get off the hook. Taking it to them however and either suing them first or advising them that you will take action against them or defend or lodge a counterclaim shows the court that you are serious and likely have a genuine beef with the buggers, oops, I mean ‘the company’.
If you have a counter-claim (that means that you want Bartercard to pay you for something) telling them that you have it and inviting them to take you to court before they do shows the court that you are serious and do have a legitimate defence.
- Because Bartercard is only interested in the cash – when push comes to shove, they really don’t give two hoots about Trade Dollars or people or memberships – they generally go for a deal. In two out of three cases I fought them, they settled. The third they lost outright. So many times when I ask other people, “What happened?” I hear, “Oh they settled!” For Bartercard to get SOME cash out of you is better than none.
- Bartercard do not pay for their legal fees. They pay cash for the legal disbursements but their legal costs simply do not figure in their calculations as they use their own currency. As they can print as much “funny-money” as they like, and they have lawyers galore on their books ready to take trade – why not sue left and right? Any cash conversion is a bonus isn’t it?
Some Core Issues
1. Currency Valuations
This is a subject that strikes fear into the heart of the Bartercard Boys. The Bartercard Terms states quite clearly that one Trade Dollar equals one Local Dollar/Pound. Pegging this private fiat currency onto a local Legal Tender fiat currency is a huge call! Valuing a currency by fiat (declaration) requires that the owners/operators of that currency honour that declaration (in other words it actually has the backing claimed). There are two components here where Bartercard is exposed – can something that is used/traded by members and the public (through gift vouchers) be declared by fiat in the first place? And secondly if it can be, then if it has devalued and the owners/operators know this, then there is deception, i.e. fraud. Every member who signs the Bartercard contract expects the Bartercard Trade Dollar to have the same value as a local currency unit. If it doesn’t, then the contract has been breached from the outset. Then if the market value of a Trade Dollar is [say] 20c in the dollar yet Bartercard expect you to pay them back on par, then where’s the justice in that? Bartercard’s owners and senior management cash convert this way themselves – that’s the whole point of who they are and what they do – leveraging the members’ credit for personal gain. Repayment of a trade overdraft in cash is nonsense when the trade currency is devalued. Prove this devaluation in court through anecdotal or other evidence and a judge must listen. Whether or not it applies in your circumstances is an individual thing but the principle remains – with a devalued currency – repayment in cash in full at par is unfair if not illegal. Bartercard do not want this matter to be discussed in court – for obvious reasons – if found to be valued at less than on par (fiat) their entire marketing machine and indeed operations are destined to implode forthwith. Criminal charges would follow shortly, for sure. Now you know!
2. Cash Conversions
When you take the above issue into account the Cash Conversion of your debit balance to Bartercard becomes hugely important. If a Trade Dollar is valued by the market at 20c cash in the dollar and Bartercard is not only getting $1.00 from your Trade Dollar but profiting to the tune of 5x, the idea of Bartercard’s cash conversion in the first place is downright gross – it’s a huge embarrassment to the crooks. Showing the court how Bartercard not only cash converts but profits obscenely may not swing the day fully with every judge, but boy the negative press for the Bad Boys will be highly unwelcome. Simply having the issue examined in court is a constructive development in the legal landscape, something all barter companies across the globe along with the International Reciprocal Trade Association (IRTA) all fight to keep under wraps. The valuation issue and associated consequences is HUGE!
3. Breaches of Contract
I’ve already mentioned the typical scenario where a member cannot sell enough to clear their balance, “Because Bartercard [whatever]!” but any breach of contract is an opportunity to develop a defence. Now the Bartercard Terms state that any breach in one area of their agreement doesn’t forgo the validity of the rest BUT in real life if, (say for example) they do not honour their part of a deal and that affects you or your business adversely then if you can prove that this affected you in other areas then you can use that to your advantage. Breaches of Contract need to be proven sufficiently that a judge can say, “Bartercard, you didn’t [whatever] which cost this member [whatever] and therefore you are liable, but many people do not realise the significance of this in a court setting. One simple breach may open a court case right open in the hands of a skilled lawyer. Equally a pattern of even dubious or only semi-proven claims can also weigh things in your favour. If you have 20x emails over 18 months complaining and threatening to take them to court, for example, any one of them may be insufficient to justify your claim on its own, but a pattern of callous or unprofessional behaviour on Bartercard’s part can speak volumes. In the last 4-5 years this has been the norm repeated to me – nasty, greedy, dishonest . . . simply present your experiences in court and the judge will work it all out.
4. Proving your case
The level of proof required in court depends on the level of court. A Small Claims matter of only a few thousand dollars requires lesser quality of evidence to succeed than a High Court hearing. All courts however must have the evidence in front of them if you want them to consider your story. Be creative in gathering evidence and bring your witnesses, documents and Affidavits. In New Zealand we have systems that support the right of a defendant, victim or indeed any member of the public for access to information about them. If Bartercard are suing you in a court then they could be required to supply you with things like your own File Notes. Check your own jurisdiction’s rules and use them to your advantage.
Most people hate the entire court experience. They generally don’t want a fight – especially with a company that they either liked, profited with or they think has similar ethics or creative approach to business as them.
It can be a cold lesson to find that Bartercard are the opposite to them, or their expectation – that they are in fact clinical in their litigation. They are ruthless, lack integrity and actually welcome court intervention – because they usually win and when they don’t or can’t they will quickly settle and get on with making money off the good name, goods/services and credit record of their members. All considered, when you’ve seen what I have, you could well believe that the legal system has been a generous source of cash income to them over the years and that this is not a “necessary evil”; rather that it is a deliberate business strategy.
I think that most Bartercard Members need to wake up, toughen up then get up and go – to court or on their way.
Bartercard in 2017