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FTC charges defendants for making false statements about card processing equipment

150px-US-FederalTradeCommission-Seal.svgThe FTC recently charged five defendants with violating federal law after they allegedly made false statements and failed to disclose material facts to storefront businesses and proprietorships before they applied for debit and credit processing equipment.

Merchant Services Direct, Boost Commerce, Generation Y Investments, Kyle Lawson Dove and Shane Patrick were named in the FTC’s complaint, which seeks to halt the allegedly illegal business practices and return money to victims of the scheme.

According to the complaint, MSD sales agents contacted small businesses and led them to believe they were associated with the businesses’ current card processor or bank. The agents promised savings on credit and debit processing, quoting a much lower rate than the businesses currently pay and quote one fee and a fixed transaction cost.

MSD agents also encouraged customers to lease new card processing terminals for two to four years, claiming their current swipe terminals are outdated or incompatible with MSD’s services. Merchants were also falsely told they could cancel at any time, but many discover their new lease obligation only after being billed.

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