June 2018 Complaint Roundup: One Agent’s Very Bad Reputation

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 May and June. 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.

Reputation Is Everything

Alexandra Sparks's May 18 comment on our United Card Solutions review states the following:

I was contacted by UCS and was looking for a change so I listened but didn’t want to sign a lease agreement as I had already had a bad lease experience. They kept sending me “up the chain” – offering to pay off my old lease agreement and finally offering a $295 payoff to get out of any agreement through them (Jon Lund).

I was kicked out the recorded agreement 5 times because I kept saying I didn’t want an uncancelable agreement and that was what was listed. Jon Lund then sent an addendum saying I could leave for $295. I received 6 huge boxes of equipment (for a small single location business) which I could use and also a letter from First Data telling me I would be leasing equipment from then for $299/mo for 48 months. I called everyone – many times because they don’t always answer and found two more companies involved in this scam: Blue Square and Prestige Payment System. I tried to cancel with everyone but was told by First Data that even though the contract didn’t start until June 1, two weeks away, that I would owe them $17,000 on June 1.

Prestige said that Jon Lund was only a salesman and it didn’t matter what he said and the $295 release would not apply to the lease in any case. He also told me no attorney would take my case because it evidently says somewhere (I certainly didn’t see it) that nothing a sales rep says affects the lease. He wouldn’t cancel – why should he – they only want the lease money – you owe them for years. I’ve not started with them and they’ve already said I own $17,000 for the lease and another $1500 to get out of the processing that will never begin. I’ve sent a complaint to the Attorney General’s office – Please do this -and I’ve contacted an Attorney. I don’t know if we can get help – don’t you all think we have a Class-Action Suit here?

This is not the first time we've received reports about Jon (possibly spelled “John”) Lund at United Card Solutions. Other complaints we've received can be found here, here, here, and here. These complaints consistently accuse this agent of misrepresenting the terms of their contract, signing them up for long-term equipment leases without proper disclosure, and then cutting off all communication when they attempt to resolve the issue.

We do not typically review individual agents because the credit card processing industry tends to burn through them rapidly. But these regular complaints about a single representative, which have been posted every few months since May 2016, suggest that this type of sales conduct has become an accepted pattern at United Card Solutions. Merchants and agents should both take note of this situation. It's a classic case of how much merchants talk to each other, and of how much one sales representative can damage a company's brand among business owners.

Slamming With EBT

Laurie Delegal's June 1 comment on our Velocity Merchant Services review states the following:

I was conracted by VMS as I was applying for EBT from USDA for business. I have no idea how they got my cell number from a government agency. I was advised they are the vendor who provides the machines for EBT and I would need to use them to obtain service. They use Clover. I had a Clover. I said why can’t I use my Clover. Well it is not programmed for EBT. Long story short I was scammed. Their machine does not work correctly and still waiting now 5 days for tech support. I added EBT to my Clover no problem. Just an app download. I have a vouce message from the VMS sales person today saying I have to use their encrypted/programmed Clover. I played the voicemail for the Manager Shannon and she said she does not feel I was scamned. I said you hear her right today saying I cannot use my clover! She is offering to cancel their transcation fees or contract but I still have to pay for all the equipment and I was advised it was not useable. They program the Clover to only be used with their VMS company so she basically said tuff luck or call a lawyer. She knows her salesperson scammed me and she basically said well you signed a contract so oh well. She said get a lawyer. This company would not return my calls for help until I sent a complaint to the BBB. Her salesperson was furious and called me from her cell phone with the message I have recorded. She said I should have called her. Well Sue after leaving 2 messages for you after a whole week no call I dont know what to say. You were there when I called as I could here you talking in the background. How many times should I call to beg you or a manager to call? I think five calls are plenty as I left messages for a manager 3 or more times.

It seems like every month we find out about a new form of slamming, a practice in which a sales rep from a different company poses as an employee of your current merchant account provider in an effort to switch you over to their service. Usually, slamming scams convince you to switch by saying that you are overdue for a “rate review” or that you are non-compliant with government regulations. In Laurie's case, though, it sounds like a VMS representative took advantage of the fact that Laurie had recently decided to add EBT processing to her business. Laurie thought that she was following the proper procedure to start accepting EBT cards, and her salesperson led her to believe that the only way she could do that was by leasing a brand-new Clover POS system from VMS.

EBT processing is a little-known type of processing for most merchants, so it's understandable that Laurie was confused. It is likely that other merchants could fall for similar tactics. A good rule of thumb is to never sign up for merchant services during a phone call that you do not initiate. Any incoming call could be a salesperson who is all too willing to lead you into a bad deal.

Worst Foot Forward

Kris S.'s May 14 complaint on our National Merchants Association review states the following:

I am a small business owner who was looking to connect with a credit card processing company with low transaction fees. After signing up with the National Merchants Association (NMA), I realized that I was being charged an exorbitant rate of fees (much higher than what our contract had stated or what the rep had communicated). I was charged 42% (it was supposed to be 1.2% – 3.25%) in service fees (authorization/transaction/card brand fees) by the NMA. Additionally, I was also told directly from NMA, as it was outlined in the Account Setup Form and Agreement, that I would be charged $10/month with a 1.2% – 3.25% service fee per transaction. I was charged $40.42 last month for a total of $0.01 in charges from one transaction (I only had a “test” charge done using their hardware/software from my personal credit card into my business account). Could you imagine how much this would’ve cost me, if I had ran a “real” transaction for several thousands of dollars!! This type of fraud is alarming and I do not want to see this happening to other unwitting victims.

Usually, we encourage merchants to calculate their effective rate, which can found by dividing the total amount of your monthly credit card processing bill by the total amount of your monthly credit card processing volume. This method gives you your real overall rate for accepting credit cards because it accounts for recurring and one-time fees in addition to the per-transaction rates that merchants are accustomed to looking for. In Kris's case, however, we feel that her effective rate has misled her.

With many credit card processors (particularly ones with average ratings like NMA), the first month of processing often comes with a massively inflated bill. This is because it includes any annual fees or PCI compliance fees related to the opening of a new account, as well as any monthly fees that merchants were not expecting. For this reason, the first month of processing is not a useful bill to use when calculate your effective rate, and it's likely why Kris came up with a 42% figure (a criminally high number) for her effective rate after one month of service. The $40.42 that she was charged for a total of $0.01 in transactions likely consists of a statement fee, a monthly minimum fee, and a few other recurring or incidental fees that aren't calculated as percentages of her sales volume. It is unlikely that her rate would scale up accordingly if she were to process a thousand-dollar transaction. It's certainly possible that Kris is in a bad contract with a higher-than-average effective rate, but it looks like she picked a bad month to run that calculation.

Avoid Invoice Influx

Mark's May 24 comment on our QuickBooks Payments review states the following:

Horrible! Horrible! Horrible! Last Thursday, my customer paid about 10 invoices using Amex via the online payment button in the invoices. The amount was near $10k. On Friday I received an email from Merchant Services stating that they are holding the entire batch due to “unexpected activity” , and that they required additional paperwork to release the funds such as 6 months bank statements? , detailed description of services on each of the invoices, information about my customer,etc. So, very unhappily, I took Monday off, sent all of the information as requested and called them directly several times. By the end of the day I finally got them to “release” the funds for payment, but it would take another 2 business days before deposited. Now it is the next Friday, and the funds are still being held and no money deposited… needless to say, I am extremely stressed about this situation. My company is very small and cannot afford for Merchant Services to withhold my income for no real reason (none was given to me). It cost me $6k to make that $10k. This has held up the operations of my company for an entire week and I have lost money. Today, I get to spend my entire day dealing with Merchant Services to get my money released, and find another software for accounting, payroll and payment services.

Mark does not explain why his customer had 10 separate invoices waiting to be paid, but the simultaneous payment of 10 separate invoices is definitely a transaction pattern that looks suspicious to a credit card processor. This is because it appears as though the merchant has broken a single large transaction into multiple, smaller transactions to avoid having to report a transaction of more than $10,0000. Criminals who are attempting to conceal the nature of their business will use this tactic often because regularly selling $1,000-$2,000 products looks far less suspicious than occasionally selling $20,000 products.

Of course, it doesn't sound like Mark is involved in any kind of criminal activity. But when those invoices stacked up in his customer's mailbox, he became a sitting duck for an account freeze. To avoid this issue, do not give your customers the option to pay many large invoices at the same time, or consolidate many smaller invoices into one large one. If you lump the invoices into a large one-time payment, be sure to give your credit card processor plenty of heads-up that a huge payment is coming through.

Update For Payza Users

Maddie's May 26 comment on our Payza review states the following:

They set up an .eu for people living in Europe when they got problems in the US, but that site isn’t paying either. Can’t even send money from me to me… Have tried to email them but it just bounces. Please, give me my money back.

If you weren't already aware, Payza has been indicted by a federal grand jury on charges that it “operated an Internet-based unlicensed money service business that processed more than $250 million in transactions.” Its U.S. website (payza.com) has been completely shut down, but its payza.eu domain is still active. Merchants who find the payza.eu domain might expect that this channel is a way for them to contact the company, but Maddie's report seems to confirm that Payza is no longer responsive in any of its markets. Unfortunately, the future for Payza users who have had their money frozen by the federal government's action remains murky.

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!

Reader Comments

Tell Us What You Think

1 User Reviews

  • Cydney Wilkes

    It’s reassuring that smart and caring people like Phillip Parker offer such depth in resources in the confusing world of merchant processing. As a small business owner, I’ve learned so many things to be watchful around from his easy to understand reports and blogs. And I feel a little smarter too.

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