TIANCHI Corp., doing business as Jiuzhou Car Wash, and its operator, Yong Fu Hong, were named as defendants in a civil complaint filed on Dec. 21, 2023 in federal court for allegedly conducting fraudulent charges in the use of a debit/credit merchant terminal.
First Hawaiian Bank is also accusing the defendants of breach of agreement, and has asked the District Court for the NMI to issue an order awarding damages in the principal amount of $95,879.01.
The plaintiff, through attorney Richard L. Johnson, also asked for an order for costs of collection, attorney’s fees and other relief.
According to the lawsuit, Tianchi Corp. submitted to FHB a merchant processing agreement application.
Tianchi requested that FHB provide merchant services including the provision of a credit/debit card terminal for use by Tianchi at its car wash business on Saipan.
Once his application was approved, Tianchi could swipe customers’ credit/debit cards or insert credit/debit cards into the merchant terminal in order to charge the customers’ credit/debit card accounts for services provided or goods sold to the customers by Tianchi.
FHB would then collect those charges from the issuer of the customer credit/debit cards.
Hong guaranteed the obligations and performance of Tianchi under the agreement with FHB, the lawsuit stated.
Pursuant to the agreement, FHB installed a merchant terminal at Tianchi’s business premises and Tianchi commenced utilizing the terminal to process customers’ credit card and debit card transactions.
Commencing in approximately February 2023, the number and amount of transactions processed through Tianchi’s merchant terminal increased, the lawsuit stated.
It added that FHB began receiving notices of dispute initiated by the issuers of the credit/debit cards purportedly used by their cardholders at Tianchi’s place of business using Tianchi’s merchant terminal.
FHB alleged that transactions were fraudulent and that the credit/debit cards in question were not or could not have been presented to Tianchi for services rendered or sales made by Tianchi to the cardholders.
To date, FHB has received notices of disputes in the aggregate amount of $117,549.04. FHB has been able to recover certain of those funds but $95,879.01 remains outstanding, its lawsuit stated.
As a consequence, FHB said it has been required to reverse the fraudulent transactions and reimburse the issuers of the credit/debit cards used in the fraudulent transactions.
FHB wants Tianchi and Hong to pay to the bank the full amount of its losses resulting from the fraudulent transactions.
