Legal Question in Business Law in California

Merchant Account Screw Job

Hello,

I have had a merchant account in perfect standing for over 3 years. I have taken a new direction with my company and am now charging fees that are substantially higher than what I've previously processed through my account. Recently I took on an assignment that required payments of $1,500, $1,000 and another $1,000 due 30 days apart. The $1,500 was initially declined by my merchant account company because my limit with them wasn't high enough. After jumping through some hoops, they allowed it to process out of what they called ''courtesy''. I requested an increase in my limit and was declined. Now the next installment of $1,000 is due from the same client for work I've already done. However, the merchant account company refuses to process it saying that it's an underwriting decision. They say that I need to get payment in some other form. As if I'm going to go back to my client and look like an idiot. Meanwhile, they�ve been happy to take my $35 each month for the �privilege� of having an account that is basically useless. Is there any possibility of bringing a class action or some sort of discrimination suit against these bastards? I am totally beside myself. Livid. Thank you for your consideration.


Asked on 10/17/03, 2:13 pm

3 Answers from Attorneys

Sheldon G. Bardach Law Offices of Sheldon G. Bardach

Re: Merchant Account Screw Job

I am afraid you have no recourse. Read the agreement you signed with them to start your relationship. I'm sure it gives them the discretion to stay within their limited commitment. If not, you may have recourse. Look around for another source. Sometimes it is difficult to have a lender treat you better than they are accustomed to. Look around.

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Answered on 10/17/03, 3:36 pm
Edward Hoffman Law Offices of Edward A. Hoffman

Re: Merchant Account Screw Job

You have offered no reason to believe that this company is practicing illegal discrimination. A class action suit would require not only a showing that you were treated in a way which violated the law (and I see no such violation here) but that many others were treated the same way by the same defendant.

There really isn't any reason to be mad at this company. You have a deal with them and you signed a contract with a third party which presumed that the processing company would modify your pre-existing deal. They are not required to do this, so your mistaken presumption is your own fault and not theirs. You don't get to sue them because you made a mistake, even if you think they should be acting differently.

You can either try to sign up with a different processor or you can ask these folks to make additional accommodations for the two further payments -- which they might agree to do given that the client's prior payment went through. Alternatively, you will have to work something out with your customer.

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Answered on 10/17/03, 5:03 pm
Siamak Pishvaee Pishvaee & Bavar

Re: Merchant Account Screw Job

The contract governs this relationship.

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Answered on 10/17/03, 6:47 pm


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