North American Bancard (nabancard.com) is a large merchant account provider based in Troy, Michigan. The company began operations in 1992 and has grown to be one of the largest merchant services providers in the United States. North American Bancard is a large super ISO that specializes in providing credit card processing services supplied by First Data and Global Payments but manages its merchant customers directly with its own in-house customer support. The company also markets a mobile processing app and card reader called “Pay Anywhere.”
North American Bancard is sponsored by HSBC Bank USA, National Association, Buffalo, New York, and Wells Fargo Bank, N.A., Walnut Creek, California, as its Acquiring Banks. The company’s president and CEO is Marc Gardner.
In September 2002, the State of Arizona filed a complaint against a merchant that processed through North American Bancard, a Nevada corporation called CP Direct, Inc., alleging violations of the Arizona Racketeering Act. CP Direct ultimately admitted to defrauding tens of thousands of customers by falsely advertising penis enlargement supplements. As a result, the company was ordered to pay restitution of more than $4 million and to forfeit assets totaling over $45 million. In May 2004, the receiver for CP Direct, Lawrence J. Warfield, filed suit against Marc Gardner of North American Bancard alleging violations under the RICO Act, conversion, and unjust enrichment.
Specifically, Warfield’s complaint alleged that Global Payments, the backend processor for North American Bancard, placed CP Direct on its watch list in under a year of processing due to an excessive rate of chargebacks. The complaint further alleges that as a result of this, North American Bancard advised CP Direct to create a new company and reapply for processing under the untarnished name. According to Warfield, CP Direct continued to accept its customers’ credit card payments under the fictitious and fraudulently maintained name of “Nutritional Supplements, Inc.” at the direction of North American Bancard. Warfield further claimed that CP Direct was ordered to pay a monthly consulting fee of $250,000 (plus bonuses of $50,000 for each million dollars over $8 million in monthly sales) directly to Marc Gardner as a condition of North American Bancard processing payments for the company. According to Warfield’s complaint, these payments totaled over $700,000. In July 2006, Marc Gardner was scheduled to be deposed in the case, but Marc Gardner’s counsel terminated his deposition immediately after he was sworn in.
Unfortunately, we are unable to locate any third-party sources or legal documents that explain how this suit was ultimately resolved. However, the parties were known to have reached a settlement amount in April 2006. It is therefore likely that the suit was settled. If you have any knowledge of how this case was resolved, please share that information in the comment section below this review.
|Key Points – Sales & Marketing|
|Uses independent resellers?||Yes|
|Promotes deceptive rate quotes?||No|
|Discloses all important terms?||No|
North American Bancard’s biggest downfall seems to come from its marketing practices. In particular, the company appears to be a “hiring mill” that relies heavily upon recruiting independent agents and resellers. This marketing practice often results in problems for merchants and damage to a provider’s reputation because the sales practices of the resellers are hard to control. In North American Bancard’s case, it appears that its agents are poorly trained on the terms and conditions of the merchant account contract and are encouraged to sell expensive accounts in exchange for large commissions. In fact, numerous merchant complaints report that agents misrepresented fees and policies in order to persuade them into signing up for services. It also appears that North American Bancard’s underwriting policies do a poor job of preventing merchants from being signed into predatory agreements.
North American Bancard Marketing Example
|Key Points – Costs & Contract Terms|
|PCI compliance fee:||$79|
North American Bancard’s merchant account rates and fees vary from one merchant to the next based on a variety of factors including business type, processing volume, and especially the agent setting up the account. North American Bancard’s standard contract (available below) has a service agreement of 36 months with what appears to be a Liquidated Damages Early Termination Fee (ETF) that is automatically debited from a merchant’s checking account upon cancellation of service. Essentially, merchants who cancel service prior to the expiration of their contract will be expected to pay the remainder of any monthly fees that would have been assessed throughout the entire contract, with the minimum ETF costing $295. Due to this policy, merchants have reported cancellation fees totaling into the thousands of dollars. Additionally, merchants may also be subject to additional fees if they lease equipment and cancel early.
Based upon merchant reports, North American Bancard also charges a variety of unexpected monthly fees as well as an annual PCI Compliance fee of at least $79 (may vary). Learn everything you need to know about rates and how to get the lowest fees in “Fee Sweep: How to Get the Merchant Services You Need Without Getting Scammed.”
|Key Points – Complaints & Service|
|Live customer support?||Yes|
|Most common complaint:||Hidden fees|
North American Bancard has a moderate-to-high number of complaints filed against it, many of which are filed on Ripoff Report and in the comment section of this review. The company appears to make some effort to respond to and resolve public complaints; however, North American Bancard would fare much better in this review if it did a better job of preventing the problems that are causing the complaints.
Many of the complainants report difficulty resolving problems and little cooperation from North American Bancard prior to filing a public report. The most commonly reported problems are agents using deceptive sales tactics, hidden and surprise fees, sudden rises in fees shortly after service begins, non-disclosure of the service length agreement, and the cost of the early termination fee. Nearly all of these problems can be traced back to agents who fail to verbally disclose important terms of the contract. These agents are either unaware of the terms or rely on merchants to read the fine print prior to account setup; however, we hold providers responsible for their agents’ actions since the provider enforces the terms and conditions of the contract and sets the policies by which agents can sell their services.
|Key Points – BBB Report|
As of this update, the Better Business Bureau (BBB) is reporting that North American Bancard has been accredited since 2001. Astoundingly, the BBB is awarding North American Bancard an “A+” rating despite 365 complaints filed in the last 36 months. Of the complaints, 187 are regarding problems with products and services, 163 with billing and collection disputes, 12 with advertising and sales issues, and the remaining are spread across delivery and guarantee/warranty issues. North American Bancard has resolved 342 complaints to the merchants’ satisfaction while 23 reported dissatisfaction with the company’s response.
Based on the company’s complaint count and resolution ratio, we are adjusting the rating to a “D” for the purposes of this review. You can learn more about why we adjust BBB ratings in our rating criteria.
North American Bancard appears to be suffering most of the damage to its reputation due to its outside sales agents and marketing policies. The company seems to work to resolve complaints once they become public (especially with the BBB) but, as of this update, shows no signs of improving the areas causing dissatisfaction. The company could improve its rating by enacting more favorable sales and underwriting policies, removing its early termination fee, and greatly reducing future merchant complaints.
This review was originally published on 11/2/12 and was last update on 1/1/15.
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