Nominal owners appear to own or control a business on paper but have little to no involvement in the business's operation or decision-making process. As such, they can make payment processing disputes a bit more challenging.
If you have a payment processing dispute and there is a nominal owner involved, it is important to reach out to a skilled merchant processing litigator immediately. Contact Sigal Law Group today for a free consultation.
The Issue with Nominal Owners in the Payment Processing Chain
Nominal owners are typically used in the merchant processing industry to circumvent regulatory scrutiny or hide the true ownership of high-risk businesses. While this practice might be technically legal, it can create significant legal and compliance issues for anyone involved in the payment processing chain.
Some dishonest merchants use nominal owners to obtain merchant accounts when they would otherwise be denied because of prior violations or high-risk business models. If caught, the merchant can face increased chargebacks, fines, and legal disputes with payment processors and acquiring banks.
Additionally, nominal owners present unique challenges during litigation. For instance, they can make it harder to identify who the true decision-maker is for the business. To ensure the proper decision-maker is named, extensive discovery and investigation would be needed. Furthermore, while legal, nominal owners can still cause a host of compliance issues for businesses because many credit card brands and state and federal regulations ban the use of nominal owners.
How a Merchant Processing Litigator Can Help
If you have a payment processing dispute with a business that has a nominal owner, you need a merchant processing litigator on your side. Your merchant processing litigator won't just review the facts of the case and conduct a thorough investigation into all parties involved; they will also conduct a forensic accounting of the business's finances, leverage any depositions and documentary evidence to uncover the business's actual operational structure and work closely with regulatory bodies and card brands to address the compliance concerns.
Want to learn more? Contact Sigal Law Group today for a free consultation.
