GS Logo
The Green Sheet, Inc

Please Log in

A Thing

Certified Merchant Services Paid FTC $23.5 Million in Settlement

Principals of Certified Merchant Services (CMS) paid the Federal Trade Commission (FTC) approximately $23.5 million to settle charges alleging that CMS participated in "unfair and deceptive practices related to the marketing of credit and debit card merchant accounts to small businesses nationwide." This was the FTC's first-ever complaint against an ISO.

CMS settled with the FTC in December 2002, admitting no guilt. The amount of the settlement had remained confidential until Jan. 5, 2004, when the U.S. District Court for the Eastern District of Texas ordered it to be disclosed. The FTC recently collected the judgment.

Payment to the FTC was the result of a court order requiring the defendants to sell the corporate assets of CMS to an "unrelated third party," and payments were made over an extended period of time. The funds will be used to provide redress to merchants and to cover administrative costs.

The FTC brought charges against CMS in February 2002. A federal district court issued a temporary restraining order against the defendants, froze the defendants' assets and appointed a receiver to oversee the company's operations.

Mary Dees, President of, Inc. and current ETA President, acted as sole receiver for CMS through the later part of the FTC investigation; she was appointed General Manager of CMS at the time of the settlement.

The defendants in the FTC's complaint were Certified Merchant Services, Ltd.; Certified Merchant GP, Inc.; Certified Merchant Services, Inc. (collectively CMS); Jonathan Frankel; Craig Frankel; and Randal A. Best, of Plano, Texas. The companies also did business under the names Transaction Merchant Services (TMS), Transaction Merchant and Electrocheck. Jonathan Frankel and Craig Frankel were both officers and directors of CMS.

In October 2003, Fort Worth, Texas-based First American Payment Systems purchased Plano, Texas-based CMS for an undisclosed amount. First American Payment Systems is also a provider of electronic transaction processing services to merchants.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
Back Next Index © 2004, The Green Sheet, Inc.