January 2018 Complaint Roundup: Fees From Heartland & CardConnect

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 December and January. 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.


Heartland Fee Hikes Coming?

Card guy’s December 21 comment on our Heartland Payment Systems review states the following:

Be aware come Feb Heartland will be increasing their fees on their smaller merchant base. It was only a matter of time until they finally hit their customers with rate increases and its coming so keep your eyes on your statements as it will be announced there.

Card guy has posted on our Heartland review in the past and claims to be a former Heartland agent, so it’s very likely that his claims are valid. Unfortunately, he does not provide specifics on how much rates will increase or which merchants will qualify as “smaller,” but it’s still a very useful heads-up. He is correct that Heartland will probably announce any rate increases on merchants’ December or January statements, as this is a common practice among processors that plan to add new fees.

We advise current Heartland merchants to check every page of their statements and to watch their email inboxes closely in case Heartland announces these hikes there. Many merchant account contracts state that merchants are free to terminate service within a given timeframe if the processor changes its rates, but there is usually a very short window of eligibility for this. If you do discover the specific amount that rates will increase, please let other merchants know in the comment section of our Heartland review!


Charged If You Do, Charged If You Don’t

Stephanie King’s December 27 comment on our CardConnect review states the following:

I am so upset with this company. Never have I been so deceived by a so called legitimate business. I have been in business for 20 years and I have had other merchant vendors and have never had an issue in the past. ON December 15th, 2017 I received a letter that my contract was bought by Cardconnect and I would be charged a fee of $199 if I continued service past 12/31/2017. Ridiculous to receive 15 days notice of erroneous fees for a contract they decided to purchase. I then looked elsewhere and found a merchant who was nearly $90 less per month and decided to cancel. I sent in my cancellation letter so avoid my $199 fee. I have no contract and my documents do NOT state a cancellation fee and I am charged almost $500 to my checking account as a deposit that was debited out of my account and rantings from my sales person that I was charged fees for cancelling. How is it possible that I am to be charged $199 if I continue with the buy out and then I cancel as indicated as choice and I am charged nearly $500 for cancelling. I own all my equipment outright I have no contract and I never committed to this company. This is outrageous. I don’t care how nice any review is on this page read all the BAD ONES and be mindful of how they will charge you and STEAL YOUR Hard earned money. This company is crooked all the way.

This is a very strange case, as it appears that CardConnect acquired some other company’s merchant portfolio and then provided those merchants with only two weeks’ notice that they would be subject to what is most likely a $199 annual fee if they continued service into 2018. That’s naturally unfair, of course, because it adds a fee that merchants did not consent to when they entered into their contracts. Stephanie was right to expect that she could terminate her contract after this news, as it is common practice for processors to allow merchants to exit contracts if they impose unilateral fee increases.

What’s surprising is that Stephanie was charged an early termination fee after rightfully switching providers. It’s unlikely that she truly has “no contract,” as she claims, since she must be processing payments through some company. And if she can find the contract that currently defines her service, then there is a good chance that she will find a clause that releases her from it as a result of CardConnect’s fee increase. For instance, the standard First Data program guide (which CardConnect uses) states the following: “In the event we provide notice to you of any new fees or increases in existing fees for Services, pursuant to Section 19.5, you may terminate this Agreement without further cause or penalty by notifying us that you are terminating this Agreement prior to the effective date of such new fees or increases. However, maintaining your merchant account, or your continued use of the Services after the effective date of any such fee changes shall be deemed your acceptance of such fee changes for the Services, throughout the term of this Agreement.”


The Future Of Swindles

Lance’s December 27 comment on our Direct Processors review states the following:

STAY CLEAR of Direct Processors. SCAM CITY. I was told NO pci Compliance fee…LIES, NO annual fee…LIES. Hidden costs all over my statement. Kicker is… I asked for a square type device since I’m a mobile business. They sent a Device without telling me it was 59 bucks for 4 YEARS (I only signed on with them for 3 years) PLUS… 14 a dollar wireless fee for the devise. now they say they will be happy to send me the FREE one I asked for but I’m stuck with paying for the one I didn’t want in the first place. And the kicker… it rarely has service where i do business. I will say.. my fault for skipping through the pages on my phone tapping all the little red spots for a Digital signature. I will NEVER do that again. Direct Processors are SCAMMERS AND LIERS.. I say again. STAY CLEAR OF THIS DISHONEST COMPANY.

This experience is a fairly typical description of Direct Processors’ sales approach. What stands out, though, is Lance’s description of “skipping through the pages on my phone tapping all the little red spots for a Digital signature.” Digital applications and contracts are becoming more common within the industry, whether they are sent to your phone as a PDF or, worse, displayed for you on the salesperson’s tablet. This change is often made under the guise of “going paperless,” but make no mistake: it is also an easy way for reps to evade, obscure, and rush their way through an explanation of the full contractual terms.

It’s commonly expected that merchants will take the time to sit down and read every word of a paper contract before signing their name on the line. That same convention does not yet apply to digital agreements, which are usually consented to by clicking “I Agree” or simply tapping a checkbox. We recommend that you always request a hard copy of your contract before signing anything, or at least a digital copy that you can print out and read beforehand. If a sales rep insists on using some kind of tablet or digital screen to go over your merchant application, you should always treat it with the same seriousness that you would treat a paper contract. Your signature counts just as much whether it’s digital or physical.


An Application Is Never An Application

Sergio Nardi’s December 15 comment on our Smart Card Merchant Services review states the following:

STAY AWAY, this company uses illegal tactics to get you to sign up. Stay away especially from Lee Min Woo he is a sales rep. for Smart Card Merchant Services. His tactic? he will use the excuse that he needs your signature to get your merchant account approved, he will say things like “not anyone” can get approved. Then use your Social Number and Signature to get you involved into a lease through First Data Global Leasing. Nothing he says is true, its all a ruse to get the lease agreement. Stay Away

While most of this is a problem with a specific sales agent, it does give us an occasion to discuss a scam as old as the credit card processing itself: the tendency to call legally binding contracts “applications.” Unlike almost every other application in every other industry, a merchant account application is really an agreement that, when signed, initiates a multi-year, legally binding contractual relationship. It’s true that you can still be turned down for a merchant account once you’ve applied, but if the processor accepts you, you won’t have a chance to opt out. This is common knowledge for anyone who has been accepting credit cards for a while, but new merchants might understandably be caught off-guard by the word “application.” In general, don’t give a sales agent your signature unless you are ready to enter a long-term contractual agreement with them.


Fill In The Blank

Ken Morris’s January 10 comment on our Red Payments review states the following:

My local rep left the Annual fee space and the PCI Annual fee space on the contract empty and I, unfortunately, did not catch it . I just had $ 284.00 taken out of my business account due to this. Buyer beware.

This type of scam is becoming less common these days, but it still happens from time to time. Merchant account applications are full of confusingly labeled boxes and lines that may or may not apply to your account, so it’s natural to assume that spaces left blank will mean “zero fees.” However, we recommend that you specifically ask your sales representative to fill in any non-applicable boxes with “N/A” or a simple slash to ensure that they can’t slip a few fees in after you’ve signed the agreement.

Most processors will release you from your contract if you can prove that a sales agent modified it after you signed it, but this can be difficult to prove. To avoid the headache of arguing with them, make sure that everything is filled in before you sign the contract.

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!

Phillip Parker is a former merchant services sales agent who believes the industry has been overrun by people who engage in fraud and deception in order to steal from hard working business owners. He created this website to help you avoid the bad players, save money on fees, and to get peace of mind with your merchant account. If you would like to help support his work, learn more about our cost reduction service. We can evaluate your statement, tell you exactly how much you're overpaying, and then help you dramatically reduce your fees with your current credit card processor. Looking to switch instead? See our list of the best merchant account providers.

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