More than $46,000 in restitution will be paid back to Arizona customers who filed complaints against Merchant Processing Solutions, LLC dba Payment Systems Corp, a California company that markets and sells credit card processing services. Attorney General Mark Brnovich obtained the restitution as part of an Assurance of Discontinuance from Payment Systems.
The Arizona Attorney General’s Office received 25-complaints from small business owners in Arizona. The merchants claimed Payment Systems violated the Arizona Consumer Fraud Act (“ACFA”) by promising a flat 1% transaction surcharge for credit card processing and failing to deliver on that promise. Most of the complaining merchants found the 1% transaction surcharge rate impossible to achieve due to most credit cards being deemed “non-qualified” and subject to a 2.79% transaction surcharge. Merchants also alleged Payment Systems sales agents inadequately disclosed hidden processing and equipment fees, including documentation fees, monthly statement fees, wireless connection fees, inactivity fees, security standards compliance fees, and federal regulatory reporting fees.
Many merchants agreed to Payment Systems processing contracts because they were told by Payment Systems sales reps that they would significantly save on processing fees, receive special limited time processing rates, and incur zero start-up cost. The Merchants believed they could terminate their equipment leases at any time. However many Merchants claim they discovered they were paying much more under the new Payment Systems contract than their prior processing contract, the special processing rates and fee waivers were not special limited time offers, and the equipment leases were only cancellable if the entire lease was paid off in advance.
The Attorney General’s Office investigation culminated in the acquisition of the Assurance, under which Payment Systems agreed to discontinue all behavior in violation of the ACFA and resolve the Merchants’ claims. Payment Systems also agreed to comply with the ACFA and the Arizona Telephone Solicitation Statute, properly disclose processing fee calculations and pricing promotions, and properly disclose all equipment lease termination terms and other fees or costs related to the contract.
Payment Systems will pay $46,684 in consumer restitution and $16,500 to the Attorney General’s Office for fees and investigative costs. Payment Systems will pay up to an additional $10,000 in restitution to eligible customers who file complaints with the Attorney General’s Office within 180 days of entry of the Assurance. Also customers who wish to renegotiate or terminate their contract with Payment Systems may do so without a termination fee or penalty within the next 6-months.
“This case is a good reminder to merchants,” said John Hunnicutt, owner of Paytran Merchant Services and one of the founders of the industry’s watchdog organization, the Electronic Transactions Association, “if it sounds too good to be true, it probably is.”
If you believe you have been a victim of consumer fraud, please contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6504, or outside of the Phoenix and Tucson metro areas at 1(800) 352-8431. Consumers can also file complaints online by visiting the Arizona Attorney General’s website at https://www.azag.gov/complaints/consumer.