Payment Processing Service Settles Deceptive Claims Charges with FTC
Merchant Services Direct (MSD) has agreed to settle a complaint made by the Federal Trade Commission (FTC).
The company used deception and unsubstantiated claims when signing up businesses for its payment processing services and processing equipment. The company and its operators will pay $175,000.
In the future defendants must provide to merchants a separate document disclosing all fees, charges, and rates before merchants sign any contracts, and a complete copy of any documents merchants sign before submitting their applications for payment processing services.
According to the FTC's complaint, MSD was an independent sales organization that sold small businesses the ability to accept credit and debit card payments. The businesses paid fees whenever their customers paid with a credit or debit card.
The FTC charged MSD, also doing business as Sphyra Inc., with making false representations and failing to disclose key facts concerning their processing services and equipment, and with misleading merchants about the fees and costs of services and equipment.
MSD agents tricked merchants into signing binding contracts by telling them the documents were just applications to obtain price quotes; led merchants to believe they were associated with the merchants' current card processor, Visa or MasterCard, or their bank and tricked them into signing new contracts by telling them they were just updating existing account paperwork; duped merchants into leasing new card processing terminals for two to four years, falsely claiming their current swipe terminals were outdated or incompatible with its services; and falsely told merchants they could cancel at any time.