And this is how companies get into cash flow issues. This is not intended as a suggestion that this is the case with this transaction, it is a general description of why advance payment to a sole proprietor business has risks.
Bob sells jackhammers and Bob has to place a minimum order of 5 jackhammers from the manufacturer.
Bob missed work for a month and this put him behind on sales, but Bob still has bills to pay. Bob gets back to work, and sells his inventory of jack hammers, but because he had a bad month in sales, after paying his bills, Bob does not have enough money to buy the minimum order of jack hammers to replenish stock.
So, Bob gets a customer that is willing to pay half or pay in advance, and this gives Bob enough money to place the order.
A bad storm hits Bob's region and now Bob has another bad time selling jackhammers and this time but when finally sells out, he is now so short that he has to start asking all customers to pay half or pay in advance.
The danger is when Bob gets so far behind in the cycle that even if he sells all of the jackhammers he has, he is taking Jackhammers from the shipment that would be for the newest costumers to fill orders for customers that have been waiting for months.
Then disaster strikes, and some of those customers that have been waiting start demanding their money back, and Bob doesn't have it, so Bob files bankruptcy and all of those customers that were waiting are out of money and out of luck. The liquidation of assets in most statements will direct that customers having outstanding orders will be the first to be compensated, but that assumes that there is anything left.
This is why I would never pay for an out of stock item in advance when dealing with small businesses. (And this is not intended to be an attack on the vendor in question, but rather a general statement).. If there is someone doing something that is out of the norm (other vendors do not have the same practice) and you can find no reasonable expectation (Bob only sells hand select jackhammers guaranteed to but 10% faster than the standard model of the Jackhammer,) then my advice is to go to any other vendor that practices a normal payment-on-shipment model.
Again, I am not suggesting this is pertinent to this particular case, but in general, advance payment in the sole proprietor business world is risky. There are thousands of small business bankruptcies a year in the US, and probably tens of thousands of customers that are impacted, and if you have paid in advance and are in such a situation, there is every possibility that you will never see a penny of your money.
And in these cases, no one ever goes to jail if it was a legit business. The DA would have to have some evidence of criminal intent and that is almost never the case in cash flow situations. Bob maybe just had a lot of bad luck.
Anyway, this is why I would say to never pay in advance for something that is not in stock unless you have a hard promise for a delivery date, or if advance payment is the standard practice in that industry like custom made goods, where half or full payment is the norm.
Again, I don't know the vendor and have no particular reason to believe that this is the case here, but I do have a belief that in general, when someone has a practice that is outside of the industry norm, that (to me) would raise a flag of caution.
My point to all of this is why paying cash in advance and take any risk when there are other similar businesses that will put you on a wait list and only ask for payment when they can confirm that they are in possession of your merchandise and ready to assemble/complete the order. (In the case of the Mod 3, the dealer builds these so it would be reasonable to ask for payment before installing the tube in the housing.)
And if paying with credit card only do so if there is a guaranteed delivery date that is less than 30 days. This is because if a seller takes an order for merchandise and cannot complete the order in 30 days, then they have to contact the buyer and ask them if they want a refund, or want to continue to wait for the order.
Edited by Eddgie, 17 November 2019 - 11:28 AM.