August 2017 Complaint Roundup: A $21,000 Fee, Sales Tricks, And An Agent Speaks

What Are Other Merchants Saying?

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© Depositphotos – James Steidl
Here at CPO, we review every comment that we receive from our readers, and sometimes we see merchants mention a topic that isn't covered in our reviews. To help you stay on top of the trends and issues in the credit card processing industry, we've gathered the following merchant complaints posted to CPO during July and August. If you would like to respond or add your thoughts to any of these comments, please follow the links to the original comments and reply to them directly, or leave a comment of your own below the appropriate company's review.

Liquidated Damages Strike Again

Bill Hyman's August 3 comment on our Vantiv review states the following:

I am in a similar boat. Been with Mercury/Vantiv for 10 years. I cancelled the contract and switched processors because they kept moving our negotiated rates up and adding in extra fees. They now want $21,000 in liquidated damages for 2 locations.

$21,000! Even though it was split between two locations, this is one of the highest single termination fees we've seen. As is usually the case, the culprit here is liquidated damages, an insidious contractual clause that has been lurking in merchant account contracts since the industry was born. Mercury was no longer enforcing a liquidated damages clause in its standard contracts by the time that it was acquired by Vantiv in 2014, so it is likely that Bill is currently being punished by an outdated contract term from an extinct company.

This is a cautionary tale on two counts. First, there's the obvious warning that you should scan any contract you sign for tricky termination policies because even 10 years of patronage is worth nothing to some processors. Second, merchants may think they are safe to cancel contracts if they are charged extra fees or rate increases that violate the terms of the initial contract. However, processors are crafty when it comes to informing merchants of upcoming rate hikes, and they will often bury these announcements on page four of a monthly statement with little fanfare. This ensures that they have the legal coverage to pursue an early termination fee in a case like Bill's.

Appstar's Sales Machine In Action

Michael Parker's August 9 comment on our Appstar Financial review states the following:

My office has been solicited by three different representatives of AppStar – who seem to work like a tag team. I was greeted by one representative who took some notes about the size of my business and the past 3 statements of our current merchant service provider, and then said representative #2 will call with the comparison. Rep#2 called and made a presentation indicating how much they have saved other business owners and how he saved one business owner from having to pay termination fees. Impressive… rep#2 showed me copies of statements of a particular business (redacting the names and address) showing the comparison and savings of this particular client. When I asked why they were showing me statements of 2014 and not more current, he said “oops” and fiddled to find more current statement – which did not adequately show a proper comparison.

Rep#2 wanted to collect as much information about the business as possible, including the name of the owner, the tax id, the owner’s DOB and SSN. I said show me the rates and he sends me a screenshot of his spreadsheet calculations. He claimed he did not want to show me the actual contract with the rates because I could use that to negotiate with my current merchant service provider. When I asked about what types of charges I could expect on AppStar’s statements, the rep#2 connected me with rep#3 who was the man who knew the numbers.

While rep#3 was less “pushy” than rep#2, he was insistent on getting the owner’s approval and information. i was able to “convince” rep#3 to provide the contract with the rates listed.

true to the claim of rep#2 and Rep#3, the rates that were listed were lower… way lower than my current processor. Rep#3 explained the “INT” as the interstate rate (or cost) which was the actual charges from Visa/MC/Discover/AmEx. He explained the per transaction charges. BUT he could not clearly define the “DFA” (which he noted as dues, fees, and assessments)

After reading on this website of the experiences with all of the business owners, I will tell AppStar when they call back to “stick the contract where the sun don’t shine”. I am saddened to realize how the hundreds of hard working business owners who have had unnecessary stress added to their lives by deceitful companies… but I am relieved that they shared their experiences. Because of your help, I will not become a statistic in these companies’ con game.

This entire process is very typical for large payment processors that employ independent sales agents. Usually, the company's telemarketing team makes first contact by phone, then a sales agent will come in for a face-to-face pitch, and then a third agent will remotely provide a statement analysis and act as the “closer.” The details were slightly different in this case, but a few tactics stand out as very typical of low-rated providers.

The second rep's presentation “indicating how much they have saved other business owners” and “showing the comparison and savings of this particular client” is a classic tool for persuading business owners that the rates they are currently paying are higher than average. By sharing an anonymous sample company and matching their own rates up with the anonymous company's sample statement, agents can present a very compelling case for the low cost of their services. However, it's common sense that the agents have handpicked these case studies to paint their company in a positive light, and merchants should not assume that anything in the provided cost comparison is relevant to their own business.

Another major red flag appeared when Michael asked the second rep to “show me the rates and he sends me a screenshot of his spreadsheet calculations. He claimed he did not want to show me the actual contract with the rates because I could use that to negotiate with my current merchant service provider.” The rep's hesitation is understandable because merchants will often obtain a competitive quote and bring it to their current processor to secure lower rates. However, that's just how business works. If an agent won't show you the exact contract terms with the full fee schedule transparently laid out, then you shouldn't sign up with that agent anyway.

Join The Club?

Shane Harrison's July 23 comment on our Sam's Club Merchant Services review states the following:

Sam’s club merchant services where to start. Was misslead about fees, they record the conversation but do not go back to hear what sales had promised. will tackle your batch , with out in going in to your bank account, you will not know untill you see bank statement. Each months fees donot stand alone, there are fees not charge form past months . That’s crazy, unless you’re just trying to confoun your customers. They are worse than most , look elsewhere for a merchant service company. Very dissatisfied.

In addition to standard complaints about hidden fees and incomplete sales disclosure, this complaint mentions a billing tactic that sounds a lot like enhanced billback. Enhanced billback is a form of billing that charges merchants a fixed percentage below their standard rate on all transactions for one month, then calculates the difference owed and bills the merchant for the remainder at the end of the following month. This has the effect of obscuring exactly what rates the merchant pays as well as ensuring that the merchant doesn't see the full cost of doing business until two or three months into a new contract.

Another possibility is that Sam's Club charged Shane its annual PCI compliance fee in the third month of service, which is a common procedure designed to keep merchants from jumping ship in the first two months. Without specific details, it's hard to say what exactly happened here. However, merchants should be aware that the industry is full of ways to obscure the full cost of service during the early months of a new contract. Since Sam's Club is partnered with First Data to provide merchant services, it's likely that it does not monitor or regulate how First Data handles the billing on these accounts.

CCNow Finally Frees Funds

Over the past six months, our review of an Iceland-based payment processor called CCNow has been flooded with complaints alleging frozen payments and zero replies from the company:

Nedzad Becirovic on May 12:

Good afternoon,

We sell flowers and our company has been operating successfully for over 40 years.

we began using the service from CCNow since the beginning of 2010. and by 2016 we had no problems. Payment was so far under the contract, net pay, with the first day of the month and the money is on our bank account, max. for 7-10 days from CCNow notice of payment!

Problems with payment began from December 2016y, and the delay in payment!
Currently CCNow to our companies did not pay, payment of February, payment of March, the payment of April, and payment of May !!!
CCNow did not pay our company for the last 4 months!!!
With today ‘s waiting over 130 days for our money , a big amount of money !!
And for 19 days after the schedule should be still another net payment for June 1, and CCNow so far has not paid the net payment of February !!!
We contacted CCNow repeatedly sending emails regarding payments and why are late with payments and we called on the phone to which no one answers, and then we get an answer in April that it will pay the debt of February
together with the March payment!!
And so far we have not received any payment, the promised payment of February and March, as we have not received payment from April, and from May !!!!
Due to the unprofessional attitude CCNow and delay in payment over 130 days we Rating CCNow as catastrophic company for cooperation, and we do not want to recommend anyone collaborating in this way.

I urge the public: the company CCNow to make payment obligations owed to our company !!
If you are a serious and professional company “CCNow” need to approach to solving this problem, in order to save the reputation of your company and of all the problems that can cause, such an unprofessional way of your business and cooperation with other companies !!

Rosy on June 24:

CCNow is sister company to Dalpay and is owned by Snorrason Holdings in Dalvik, Iceland…we’ve been e-mailing CCNow for 3 outstanding payments since beginning of March 2017…they sent payment memos of wire transfers (including wire fee deductions) to us but until now June 26, 2017 nothing reflected in our account…CCNow does not reply to e-mails or calls anymore. We contacted Snorrason Holdings and in the last 4 wks someone by the name of Thorsten Felstead (Risk Dept) promised to followup on this with their bank…but now he too has stopped communicating with us and e-mails to his dept bounce…When you call Dalpay CCNow’s sister company…same story…they promise to forward the concern to CCNow but in reality they don’t….CCNow numbers go to voice mail since March 2017 and their US contact (Bill Wysocki) has disappeared…Why is Visa and Mastercard (via Arion Bank Iceland) dealing with Snorrason Holdings and making us suffer for our hard-earned money!!! Stay away from CCNow, Dalpay and Snorrason Holdings…and alert/contact Snorrason Holdings’ partner Bank (Arion Banki) in Reykjavík, Iceland…
CCNow was indirectly implicated/affected by fraud allegations in the US in Sept 2016 and ever since, payment problems started…I will not rest until CCNow clears my hard-earned money!!!

Vladimir Gohman on July 8:

Hello everybody!

CCNOW owe me $ 5859.06 USD.

The last time they answered me on April 25.
They don’t reply to emails or phone calls.

Let’s bring suits together in court.

After they were posted, each of these cases received an update explaining that CCNow is finally working through its backlog of fund holds and releasing the money it owes:

Nedzad Becirovic on June 20:

Good afternoon,

With today’s day, CCnow has paid all late payments to our bank account. We thank the company, CCnow, for solving problems with late payment and I hope that such things will no longer happen in future cooperation.
I wish you a pleasant day and a successful cooperation in the future.

Rosy on July 20:

UPDATE: All outstanding payments have now been cleared. Thanks to Snorrason Holdings Risk Dept for the effort on behalf of CCNow…this case is closed and i rescind all previous statements about Snorrason Holdings, Dalpay, and CCNow…Please be advised that they are determined to clear all outstanding client payments…just a matter of time and patience.

Vladimir Gohman on August 7:

Yes, you were right, and glad that I received my money, but only after contact Snorrason Holdings Risk Dept, and waiting 4.5 months is a horror!

Other commenters have described similar situations: large fund holds, months with no contact, and eventual release of the funds in installments. In CCNow's case, the reason for the holdup has yet to receive an official explanation. However, it appears that the company's relationship with its acquiring bank was unexpectedly severed, forcing it to partner with a new bank before it could clear its backlog of frozen funds.

A multi-month wait time for customer service is an extreme case even for an offshore, high-risk processor like CCNow. However, this situation appears to have been resolved in a much more desirable fashion than merchants expected. Despite commenter speculation that the company was the subject of criminal investigations or had gone out of business, CCNow appears to have been merely working through an organizational snag. The company's failure to provide adequate updates about its status reflects poorly on its customer service team, but merchants who use similar processors can take some comfort in the fact that situations like CCNow's can sometimes receive positive resolutions.

Main Street Still At It

Hannah's August 1 comment on our Main Street Processing review states the following:

(855)409-2667 kendra called, same review as all prior complaints..this company is not to be trusted

The commenters on our Main Street Processing review almost uniformly describe the company as a hiring mill that primarily uses aggressive telemarketing to pressure or “slam” merchants into signing up for service through a poorly rated provider on CPO. These types of companies rarely use the same business name for a long period of time, and, in fact, Main Street's partner company Tier 1 Processing never appears to have bothered to even set up a website.

That's what makes Hannah's comment so interesting. It appears that Main Street hasn't altered its standard sales approach despite a significant number of commenters publicly describing it as extremely deceptive. In fact, the company has updated its website and appears to be committed to the Main Street brand. Merchants should be aware that multiple commenters have described this company's sales team (specifically a “Kendra”) calling them and pretending to be with their current processor.

Former Chyp Agent Defends His Company

John's August 10 comment on our Chyp review states the following:

I worked for Chyp for a period of time, full disclosure. As with any company there are business practices or what have you that you can be critical of, but the kind of things mentioned in this comment thread just are not fair.

For example..

1) I have seen the inner workings of the deals, disclosures, and contracts and I can tell you that if you are surprised by any of the functionality of your account, you weren’t paying attention. As a Financial Institution lying to a consumer is a crime..a really big crime. So if rampant lying is really happening..why aren’t the principles in jail or banned from the FinServ industry?

2) Leasing costs. If you don’t like it, but your own equipment. Leasing has it’s own sets of advantages beyond the bottom line cost.

Just my two cents.

John's response is more civil than the comments we usually receive from current and former sales agents, but it still reflects beliefs shared by many agents that continue to harm merchants. For one thing, the question, “[…] if rampant lying is really happening..why aren’t the principles in jail or banned from the FinServ industry?” conveniently ignores that the credit card processing industry isn't subject to the same stringent regulations that consumer banking must abide by. Credit card processors have much broader leeway in structuring their contract terms and paperwork, and they take full advantage of that freedom to conceal their real pricing from sales agents and merchants alike. There also have been cases, though rare, where unethical processors actually were banned from the industry for outright lies.

Furthermore, John does not acknowledge that a large number of leases are sold without proper disclosure of the lease's overall cost and cancellation penalty. In particular, the industry goes to great lengths to keep merchants from looking into the retail cost of equipment or understanding that renting equipment is more flexible than leasing and comes with almost the exact same benefits.

We disagree with John's perspective on these issues, but many processors and sales agents share his opinions. We believe that the industry should proactively strive for transparency rather than make excuses when merchants feel deceived. You owe it to yourself to hold them to that standard as well.

Have you had an experience that you would like to share with these commenters? Reply to their comments and you may be featured in next month's complaint roundup!

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