It’s January 2026. A grandmother bought your $2,000 package as a gift for her daughter. You attended the birth, but the daughter felt you weren’t “supportive enough.” The grandmother—who paid—is now demanding a full refund and threatening to sue for “breach of contract.” You look at your contract and realize only the daughter signed it.
Key Takeaways
- Contractual Privity: You have a contract with the person who signed (Mom). You have a financial transaction with the person who paid (Grandma). This mismatch is a liability nightmare.
- Third-Party Payer Agreements: You need a specific document signed by the payer acknowledging they have no say in the services rendered.
- Refunds to Source: Anti-money laundering and credit card rules in 2026 often require refunds to go back to the original card.
- Privacy Violations: You cannot discuss the birth with Grandma to defend yourself unless Mom gives written permission.
The “Why” (The Trap): The “Customer” vs. “Client” Gap
In the eyes of the law (and credit card processors), the “Customer” is the one who paid. The “Client” is the one receiving care.
If Grandma files a chargeback saying “Services Not Received” because she didn’t think you did a good job, the bank often sides with her because she holds the money. Your insurance doesn’t cover chargeback disputes. Furthermore, if Grandma sues, she is a “Third Party.”
The Investigation: Managing Third-Party Risk
I spoke to a contract lawyer and an underwriter about this specific mess.
1. The Insurance Stance
- My Analysis: Insurance covers you if the Client (Mom) sues for negligence.
- The Gap: If Grandma sues for “Unjust Enrichment” (taking money without value), insurance rarely covers it because it’s a fee dispute, not a bodily injury claim.
2. The Banking Stance
- My Analysis: 2026 AI banking systems are aggressive. If a chargeback is filed, they freeze your funds.
- The Fix: You need a “Gift Certificate Terms” document signed by the purchaser.
Comparison Table: Who Can Sue You?
| Person | Can Sue for Malpractice? | Can Sue for Refund? | Your Defense |
| The Mother (Client) | Yes | Yes | Signed Contract & Medical Records |
| The Grandma (Payer) | No (No duty of care) | Yes | Third-Party Payer Agreement |
| The Partner | Maybe (Loss of Consortium) | No | Limited |
[IMAGE: Photo of a ‘Third Party Payer Agreement’ template document]
Step-by-Step Action Plan
- Create a “Third-Party Payer” Addendum: This document states: “Payer agrees they are paying for services for Client. Payer has no management authority over the services. Refunds are subject to Client’s contract.”
- Get Two Signatures: When a gift is purchased, get the Payer to sign the financial terms and the Client to sign the service terms.
- Strict HIPAA/Privacy Rule: If Grandma calls screaming, “Why didn’t you help her?”, you must say: “I cannot discuss the birth due to privacy laws.” Document this interaction.
- No Cash Refunds to Client: If you must refund, refund the Grandma’s card. Giving cash to the mom while keeping Grandma’s credit card payment opens you to fraud claims.
FAQ Section
Can Grandma sue me for ‘ruining the birth experience’?
She can try, but she likely lacks “standing” because you didn’t owe her a duty of professional care. She can only really sue for the money.
What if the gift certificate expires?
Check your state laws. In 2026, many states (like California and New York) prohibit expiration dates on paid gift certificates.
Does my insurance cover the chargeback fee?
No. That is a business expense.