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Table of Contents

Lead Story

Home sweet business


Industry Update

New Arkansas law caps early termination fees

Market in acquiring state of mind

2007 calendar of events


Chuck Saden

Surcharge-free ATMs abuzz

Tracy Kitten


Debunking wireless myths

Bulent Ozayaz

No more margin compression blues

Ken Musante
Humboldt Merchant Services

Recession may roil acquiring risk

Marc Abbey and Ray Carter
First Annapolis Consulting


Street SmartsSM:
Good lead hunting

Dee Karawadra
Impact PaySystem

Who's messing with our meds?

Steve Schwimmer
Renaissance Merchant Services

Technology: The ideal employee

Marcelo Paladini
Cynergy Data

Vertical marketing verve

J. David Siembieda
CrossCheck Inc.

Keep the FTC off your back

David H. Press
Integrity Bankcard Consultants Inc.

Company Profile

Positive Feedback Software LLC

New Products

Look to the light: Retail POS system can replace ECR

Vivonet Inc.
Halo Retail POS

Cash, credit or cell phone?



Cool your jets, mighty MLSs



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

June 07, 2007  •  Issue 07:06:01

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Keep the FTC off your back

By David H. Press

On April 13, 2007, the Federal Trade Commission announced that the Federal District Court in Oregon had frozen the assets of Beaverton-based Merchant Processing Inc., its owner and affiliated companies. It also appointed a receiver to temporarily take control of the business.

The FTC alleged that the defendants used deceptive tactics to sell credit and debit card processing services to thousands of small businesses. For full details on this case see:

The Washington State Attorney General's Office also sued the defendants in Washington. For more information on this action, visit

The FTC accused MPI of falsely promising it would save the small businesses money and saying it would buy out merchants' existing equipment leases. The FTC also charged the defendants with failing to disclose fees and concealing pages of fine print from the merchants until after they had already signed contracts.

In January 2004, the FTC accepted $23.5 million to settle charges that Certified Merchant Services violated the FTC Act. The payment to the FTC came from the forced sale of CMS' assets.

The list of don't's

To prevent FTC scrutiny, you, as ISOs and merchant level salespeople (MLSs), should never lie to a merchant or assist others in misrepresenting material facts. Specifically, do not:

The list of do's

It is imperative that ISOs do the following:

Consumer rights for merchants

Remember, it is imperative to adequately disclose all changes to your merchants, whether they are fees, charges or other terms of the merchant agreement.

A Tennessee class action, American Golf Schools LLC v. EFS National Bank, brought under the state consumer protection acts, was settled for $37.5 million. The suit was based upon the failure to properly notify merchants of changed terms in the business relationship including:

Regulators are treating merchants as consumers, and this gives merchants additional power that can put ISOs out of business.

In April, the Arkansas legislature passed a bill that limits fees for merchants who cancel credit card servicing agreements.

They will pay no more than $50 in cancellation fees on agreements signed after July 31, 2007. The law also imposes new disclosure requirements for servicing contracts.

Violations of the law would be considered unfair or deceptive trade practices. For more information about this legislation, see "New Arkansas law caps early termination fees" in this issue of The Green Sheet.

There is no monetary reward in lying to merchants to get their business. Long gone are the days of the big upfront commissions from equipment leasing. Today, income comes from maintaining long-term relationships.

David H. Press is Principal and President of Integrity Bankcard Consultants Inc. Call him at 630-637-4010, or e-mail him at or visit

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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