Hidden surcharges have become an increasingly contentious issue in the payment processing industry. These fees, often buried in complex statements or added without proper disclosure, can significantly impact businesses' bottom lines and potentially violate consumer protection laws.
Common Hidden Surcharges in Merchant Processing Agreements
Merchant processing companies employ various tactics to conceal additional charges, including:
· Miscellaneous Fees: This catch-all category can include a range of unexplained charges, making it difficult for merchants to identify and dispute them.
· Annual Fees: Some processors charge these fees on top of their regular markup, essentially double-dipping on their profit margins.
· Terminal and Gateway Fees: These charges for using payment processing equipment or online gateways are often unnecessary add-ons to existing service fees.
· PCI Compliance and Non-Compliance Fees: While PCI compliance is crucial, some processors exploit this requirement by changing ambiguous fees that do not correspond to specific services.
Legal Implications for Hidden Surcharges
Given how unethical these practices seem to be, new legislation has enabled further scrutiny. For instance, California has recently passed the Honest Pricing Law, which requires businesses to include mandatory fees in their advertised prices. The goal of this legislation is to eliminate “drip pricing” schemes that manipulate customers.
Other legal implications include different types of fee structures, such as:
· Credit card surcharges being added to the end of a transaction.
· PIN debit card fees that are disclosed only after checkout is initiated.
· “Optional” surcharges automatically added to the transaction unless they are specifically declined.
How Merchant Processing Litigators Can Help
Many businesses do not understand how pervasive hidden surcharges can be and end up acting after it's too late. However, if you or someone you know is being subjected to unnecessary hidden surcharges, your attorney will be able to:
· Interpret complex fee structures and identify potential violations.
· Advise your business on compliance with evolving regulations.
· Represent merchants in disputes with processing companies.
· Advocate for clearer industry standards and consumer protections.
The Sigal Law Group has years of experience helping businesses manage their payment processing contracts, including fighting against hidden surcharges that have the potential to cripple their profits. To ensure you are not being taken advantage of by your payment processing agreement, it is important to work with a skilled merchant processing litigator. Contact the Sigal Law Group today for a free consultation.
