First of all, get your shit together when it comes to payments/transactions. Part of running a business (any business) is being organized. It looks to me like you are not. I'm also confused: Is what you are doing legal? If yes, why is the bad customer (I will call him Customer A) threatening to go to the police? If anything, Customer A should be scared that you will go to the police. If your business is legal, the law is on your side. Meaning, you should be the one threatening Customer A with the police for not paying you for the account and not being scared of the police. The 2 things that you can do are: 1.) not let Customer A buy anything anymore from you until he pays and/or B.) use the legal system against Customer A for not paying you. What you have to realize, however, is that suing Customer A will be a lot more difficult and require a lot more time, effort, and money than probably doing nothing and just writing that money off as a bad debt expense. Unfortunately, those are part of business unless you charge customers up front for their services and/or have some sort of an insurance (which you should probably consider knowing how much this situation is bothering you). Unfortunately, when it comes to the second person (Customer B), you will have to either refund the service or provide Customer B with the service, since you are the business owner and, therefore, YOU are responsible. It's not Customer B's job to talk to Customer A. He is buying from you NOT from Customer A. If you don't pay Customer B back, then you are the one legally (and ethically) in the wrong NOT customer A. Take the loss, pay customer B back (or give the account), move on with your life, and learn from this experience. Be more organized, charge people upfront in the future, and/or buy bad debt expense insurance. Now, if what you are doing is illegal then STOP DOING ILLEGAL SHIT AND START A LEGAL BUSINESS.
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