In January 2007, a budding alliance among merchant acquirers began to unravel when Total Merchant Services and Advanced Merchant Services brought suit against one another in the Second Judicial District Court in Denver. Six months later, the parties reached an amicable out-of-court settlement.
TMS President and Chief Executive Officer Ed Freedman announced the alliance's formation at a sales meeting in 2005. The group included TMS, AMS, Money Tree Merchant Services and CardReady International.
Hailed as an innovative approach to growth, members were free to distinguish themselves through individual sales programs while enjoying the efficiencies of shared back-office functions at TMS' Colorado headquarters. Over time, the limited, nonexclusive relationship between TMS and AMS soured. And when TMS sought a new, exclusive agreement, AMS refused. Claims and counterclaims ensued.
Under the terms of the binding resolution, TMS will pay AMS amounts due or becoming due under pre-existing sales and residual release agreements. TMS will also stop accepting new business and marketing under AMS' name by Oct. 1, 2007.
AMS agreed to drop its claims against TMS and to pay amounts due to TMS resulting from reprogramming of certain merchant accounts. AMS also confirmed its nonsolicitation obligations regarding merchants boarded under the "Advanced Merchant Services" program operated by TMS.
The agreement ends a battle that was closely watched throughout the industry.
"We are very pleased with the results of the settlement to this litigation," Matt Freedman, TMS Chief Operating Officer, said. "And we are very happy to have achieved an amicable end to this situation."
Jason Felts, President of AMS, said that while the settlement was not perfect, it was a resolution "that all could at least accept and move it out of the courts," allowing everyone to move forward.
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