By: Karen Hobbs
Today, people expect to swipe, dip, tap, enter, and use their credit and debit cards everywhere — including at small businesses, local shops, and neighborhood restaurants. If you own a small business, you’ve probably gotten a sales pitch for payment processing services. As the FTC’s case against First American Payment Processing and its affiliates Eliot Management Group and Think Point Financial demonstrates, some of those sales pitches are misleading and violate the law.
According to the FTC’s lawsuit, First American tricked small business owners — including people with limited English proficiency — into signing lengthy and complicated payment processing contracts with hidden terms. The FTC says First American made baseless cost savings claims, often falsely claimed you could cancel at any time with no penalty, failed to reveal that the contract was actually a three-year agreement with a $495.00 early termination fee, and failed to disclose that the contract would automatically renew every year. To settle the case, First American will turn over $4.9 million to the FTC for refunds and agreed to change its practices.
Are you a small business owner looking to manage your payment processing costs? Before you sign a payment processing contract, know what you’re getting into — and how to get out of it.
- Don’t be rushed. Sales agents want a quick decision. Take time to read the contract and check out the company.
- Do some research. Before doing business with a new company, search the company’s name online with words like “scam” or “complaint.” Read what others are saying about that company.
- Get it in writing before you agree to anything. If you don’t get the agreement terms in writing, walk away. If you do sign, be sure to get a copy of the entire document, especially if you sign electronically.
- Ask for recommendations from other business owners in your community. Positive word of mouth from trustworthy people is more reliable than any sales pitch.
Check out Scams and Your Small Business to learn more about what to watch out for, and share the information with people you know.