The Federal Trade Commission (FTC) has taken action against payment processing company First American and two of its sales affiliates for allegedly “trapping small businesses with hidden terms, surprise exit fees and zombie charges”.
The FTC alleges that the company and its affiliates made “false claims” about fees and cost savings to “lure” merchants – many of whom had limited English proficiency.
Texas-based First American Payment Systems provides payment processing services to small and medium-sized businesses (SMBs) across the US, marketing its services via affiliates Eliot Management Group and Think Point Financial.
On investigating, the FTC charged the company for allegedly:
- Deceiving businesses about pricing and savings with hidden terms.
- Imposing surprise fees of $495 when small businesses try to cancel.
- Using an online enrolment system that obscures key contract terms.
- Hitting small businesses with zombie charges even after they withdraw consent.
Under a proposed federal court order, which the FTC says First American and its affiliates have agreed to, First American will have to return $4.9 million to affected businesses and make it easier for merchants to cancel services.
“First American lured small businesses in with false promises of low costs and an easy exit, and hit them with surprise fees and illegal charges when they tried to get out,” says Samuel Levine, director of the FTC’s Bureau of Consumer Protection.
Levine adds the order “returns millions to merchants, bans unauthorised billings and makes it easier for customers to cancel”.
Image and article originally from www.fintechfutures.com. Read the original article here.