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Insights and Expertise

When payment Key allegations

The investigation uncovered a pattern of misleading com-
providers trap mercial behavior that went far beyond aggressive sales
tactics. The providers sold on the headline pricing alone
merchants and intentionally left out essential fee components, which
obviously distorted the merchants’ ability to assess the
real cost of their service.

Many businesses received charges from the provider even
after cancellation or withdrawal of consent, which came
from unfamiliar or altered company names, which made
tracking even more confusing for the victims.

The cancellation journey itself added another layer of
complexity to the mix, as merchants faced long, unclear
processes combined with unexpected early termination
fees that were all hidden behind hyperlinks in online
agreements, rather than being clearly presented during
the onboarding process.
By Viktoria Soltesz
PSP Angels Court ruling, remedies and outcomes

he fintech landscape is more competitive than The proposed court order required First American to pay
ever: neobanks, payment processors, alternative $4.9 million as remedy for the merchants but also intro-
payment methods, instant payments, digital duced stricter conditions for the future. The order re-
T wallets. Merchants don't even know what to moved early termination fees for electronic agreements
pick. Innovation and low fees dominate every merchant's signed before April 2020 and set clear and simple cancella-
roadmap, but for some unknown reason, sourcing and tion procedures for all new business. The order also made
evaluating payment providers are still considered some- transparent disclosure mandatory for all material terms
thing that finance takes care of. This is a BIG mistake. with explicit, informed consent before any charges.

Payments and banking today impact customer experience, Refund distribution started soon after, with more than
risk management, technology, product development, data $2.6 million already returned to affected merchants by
security, compliance, finance and more. These should be early 2025, but the case continued with a formal monitor-
considered a standalone function, an essential element of ing program.
the business strategy, not just a part of finance. The issue

Even more alarming: the people managing payment pro- This case highlights a much bigger issue than a simple,
viders are not adequately trained to spot the traps. Key ar- unfair contract or one aggressive provider. Even though
eas such as how providers affect cash flow, contracts, com- banks and payment providers are private businesses
pliance and other essential aspects in a business remain fighting for profit, taking advantage of merchants' lack of
absent from accounting, economics courses and MBAs. knowledge creates an uneven playing field, and we face
the consequences of it every day. When providers ben-
The case efit from confusion rather than clarity, the motivation is
One FTC case that shook the industry started with a hand- to keep merchants in the dark, but this only creates more
ful of providers targeting small and midsize merchants, regulatory pressure and long-term instability for everyone
many with limited English proficiency, using false prom- involved. The root cause runs deeper, as payments and
ises of low monthly fees (as low as zero) and significant
savings. For years, these transactions were handled with
hidden three-year auto-renewing contracts, and the pro- When payments go wrong
vider failed to disclose periodic rate hikes, as well.
The FTC's enforcement action against First American
Thankfully, regulators stepped into action when they re- Payment Systems LP and affiliates shows how deceptive
alized how these providers trapped merchants, and the contracts and hidden fees can trap merchants and prompt
FTC sued The First American Payment Systems LP (d/b/a regulatory intervention. This case underscores why
Merimac Capital), along with affiliates Eliot Manage- payments oversight can't sit solely with finance and why
ment Group LLC (d/b/a Sundance Payment Solutions) and informed leadership and education are essential to protect
Think Point Financial LLC (d/b/a Cypress Bay Solutions cash flow, compliance and long-term business stability.
and Impulse Payments) in 2022.
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