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Comment by matte_black | Hacker News Reader

Defrauding a seller with stolen credit cards is despicable. I know someone who had an online startup selling tickets and was massively defrauded by foreign hackers with stolen credit cards. He was personally liable for the losses and it ended up bankrupting him. His life was a downward spiral after that, resulting in divorce, losing his home, and ultimately committing suicide.

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Remember reading here about how candy japan being hit by something similar. [0]

[0]: https://www.candyjapan.com/behind-the-scenes/candy-japan-hit... / https://news.ycombinator.com/item?id=10237697

What's crazy is it only takes one bad actor to cause problems like this. Often fraudsters will just use one website to "test" if a card is good, by using it to make a small purchase. If it goes through, the card is good. One fraudster might do this 100 times on a small site. The merchant is liable for the chargebacks that will come within 30 days, and each chargeback typically costs $15. Additionally, if the percent of chargebacks as a total of all transactions goes over 2%, the merchant account provider will likely close the account due to risk.

Why was he personally liable?

I suspect its because he won't have setup the company as one with limited liability: https://en.wikipedia.org/wiki/Limited_liability the result being that when people sued, they sued him personally rather than the company.

or he had it as an LLC, but made a mistake along the way that pierced the corporate veil. Or as a small business, he was just straight-up forced to pierce the corporate veil. (banks do this to small biz all the time).

It's not always so simple when you're a small company owned by one person. Even if you have an LLC, if you run into significant money problems someone with enough resources WILL come after you personally.

More than likely he borrowed money and despite the entity structure, personally guaranteed it (which is typical for most small business loans)

If you are a small business with no significant assets or revenue - say you are plugging away making $4k/mo scraping by - you will likely not be getting a merchant account without a personal financial guarantee.

The corporate veil is mostly a fiction for small bootstrapped startups without initial seed capital.

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