Junk fees have emerged as a serious problem in merchant payment processing agreements. These deceptive charges, often camouflaged within intricate billing statements or tacked on surreptitiously, pose a dual threat: they erode a business's profitability while simultaneously violating consumer protection regulations.
Common Types of Junk Fees in Merchant Processing Agreements
In general, merchant payment processing companies use a number of tactics to conceal additional charges in their agreements, including:
· Statement Fees: Some processors charge for printing and mailing monthly statements despite these costs typically being included in their overall service.
· Terminal and Gateway Fees: Payment processing companies may charge merchants for using payment processing equipment or online gateways, unnecessarily adding fees to the existing ones.
· Annual Fees: These types of fees are added to the payment processing companies existing markup, allowing them to double-dip on their profit margins.
· Miscellaneous Fees: These fees include a range of unexplained charges, making it hard for merchants to dispute them.
Legal Implications for Junk Fees
Recent legislation and regulatory actions have brought these fees into question. The Federal Trade Commission has proposed a new rule to prohibit junk fees, focusing on hidden fees that are mandatory but not disclosed upfront and phony fees with misrepresented or undisclosed purposes.
Other types of related junk fees being litigated against tend to include credit card surcharges that are added at the end of a transaction, PIN debit card fees that are only disclosed to the customer after checkout is initiated, and other surcharges that are automatically applied to the charge unless the client or merchant explicitly declines them.
How Merchant Processing Litigators Can Help
Many merchants feel blindsided by an array of unexpected costs. These fees, which can range from seemingly innocuous “administrative charges” to more egregious “processing surcharges,” often accumulate to substantial amounts over time, catching many business owners off guard.
What makes these junk fees particularly insidious is their ability to slip under the radar of even the most diligent merchants. The complexity of payment processing agreements, combined with the technical nature of the industry, creates an environment ripe for exploitation. As a result, merchants are being preyed upon, potentially losing money in the process.
If you or someone you know has issues with junk fees in their payment processing agreements, the Sigal Law Group can help. Contact the Sigal Law Group today for a free consultation.
