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How To Sue A Business In Small Claims Court

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

If you’ve been mistreated by a large corporation you don’t have to sit there and just take it. After you’ve tried to work out your differences amicably, you can play hard ball if that’s the only way to wake them up. And the good news is you don’t need a big budget or fancy pants lawyer to stick it to “the man” either. If you have a justifiable grievance, you can use small claims court to demand satisfaction. It’s easy, fast and cheap.

Neal’s Notes – I was pretty shocked but I learned that you can also sue a credit bureau in small claims if they don’t clean up your credit history when they should.  That’s cool.

Small Claims Set Up

Small claims courts are designed to settle local disputes between individuals involving modest sums.  But many people use the same process to settle problems with very large corporations too.  Just be aware that the rules that govern the small claims system vary from county to county. So in most cases, if you want to sue someone in small claims, you do so in the country where they live or where the business has its main place of business.

But what happens if the business you want to sue is located out of state? Don’t panic. You can still get your hooks into them without too much trouble.

Suing an Out of State Business

If a business is incorporated or they created an LLC in your state, you can sue them in Small Claims Court locally. And even if they don’t meet these requirements, you can still get to a business through Small Claims as long as they:

  • Carry out on-going business activities in your state. (That means if they regularly sell products or services in your state, you can go after them if they’ve crossed the line. And this definition is very liberal; even if they only distribute catalogs or ads in your state, they are fair game.
  • Have a physical place of business in your state – even if it’s not the main headquarters.
  • Didn’t live up to a contract they signed in your state or didn’t carry out the services they promised to perform in your state.

This last point is a little complicated so let’s look at an example. Let’s say you own a fabric business in California and a firm from New Jersey asks you to do some work from them. You agree and do the work but they people in Jersey don’t feel like paying you. You can sue the East Coast firm in Small Claims in California because that’s where you did the work. The only trick is that in order to sue a business, you have to be able to serve them in your state.

As I said at the start of this post, each country has its own rules when it comes to bringing suit in Small Claims. Contact your local government for the specifics of how much you can sue for (varies from state to state) and how and who to serve.

When you use Small Claims Court, you turn the tables on companies. They can’t use lawyers and it’s a huge inconvenience. For that reason, if you have a justifiable beef, they’ll probably settle with you long before it’s time to go to court and you won’t have to even worry about collecting on the judgement.

Have you ever sued a business in Small Claims? What was it like?

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Comments

  1. Kathy Perry says

    August 10, 2021 at 5:44 AM

    My deceased husband purchased a $17,000 engagement diamond ring from a personal acquaintance’s jewelry store in NY city. We live in SC. ALONG THE WAY, we had to replace 4 of the smaller diamonds (these weren’t chips). The engagement diamond was 2+ carats.
    1. When i lost smaller diamonds, diamond 1& 2 we sent ring back to NY. we were charged for the 2.
    Then the 3rd & 4th dropped out.
    So we sent back to NY jeweler.
    The jeweler changed the setting and I was so upset when i got the new setting. The diamonds were squashed together and looked like a chicklet sitting on my finger.
    i rarely wore it. But going to meeting, I did. I look down and the 2+ carat diamond was gone!
    A jeweler suggested the clips were long enough for that size diamond.
    I contact the jeweler (my husbands
    old friend).
    That’s were I am at this point.
    Can i go thru SC small claims court?

    Reply
  2. Jerry Kuntz says

    February 19, 2020 at 5:48 PM

    What if the business is out of state!! & I orders online !!long story short they won’t honor their lifetime warranty or respond back!

    Reply
  3. Michael Hinks says

    January 9, 2020 at 5:49 PM

    I’m in San Francisco & want to sue a business located in Santa Monica. All transactions were online, I paid for a vacation that was cancelled and they have not returned all my money. As a customer can I file in San Francisco or must I file in Santa Monica. The company is an LLC.

    Reply
  4. mumei says

    August 19, 2019 at 10:29 AM

    What if the business is online? The physical headquarters is in another state, but all transactions happen online.

    Reply
    • Byron Smith says

      April 19, 2020 at 5:07 AM

      We have the same issue. We rented a condo in Florida from a company located in Denver. Because of Covid19 travel restrictions beyond our control we were not able to take the vacation. Now the vacation rental company refuses to refund our money, even though the property owners were not paid for the failed vacation. We are so mad!

      Reply
  5. Thomas E. Doran says

    June 24, 2019 at 7:36 PM

    So because Equifax has screwed up my credit account and won’t let me into it I can sue them for not taking off false information. Because I can not answer whatever questions they are asking they won’t let me into my account.

    Reply

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Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
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