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PNC Merchant Services Improper Annual Fee Class Action

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When a small business accepts a card payment from a customer, it pays many different parties for the use of that payment method and the processing of the payment. The complaint for this class action alleges that PNC Merchant Services Company, LP adds an extra annual fee that it should not charge.

The class for this action is all US customers of PNC Merchant Services who were assessed an annual fee.

The complaint alleges that salespeople for PNC make a pitch about the company’s services and, if the merchants express interest, the salespeople have them sign a Merchant Processing Application and Agreement. “The Application comprises several fine print contract documents, including a Program Guide,” the complaint says, implying that the merchants can’t review all the terms in detail at the time. 

Most at issue in this case is an annual fee that PNC charges to its merchant customers. The complaint quotes the Application’s Service Fee Schedule as saying, under the heading “Annual Fee,” “We reserve the right to assess, on an annual basis and with at least 30 days’ advance written notice, a reasonable fee to defray the cost of necessary systems technology upgrades, communication requirements and reporting.”

The complaint notes three components to this statement: PNC may or may not assess an annual fee, but if it does (1) it will give at least thirty days’ advance written notice, (2) the fee will be reasonable, and (3) the fee will only be charged if it’s needed to defray specific kinds of costs.

However, the complaint claims PNC does in fact assess the fee every year but knew that merchants would be less likely to subscribe if it was up front about this. The complaint alleges that sales agents tell customers, “I can’t remember the last time we did that,” even though the fee is charged every year.

The complaint alleges that PNC does not abide by the three conditions for the fee. The plaintiff in this case, Choi’s Beer Shop, LLC, received notice of the annual fee to be charged “on or after September 1, 2019” along with its August 2019 statement, which the complaint says “was first made available to [Choi’s] on September 3, 2019.” This is certainly less than thirty days’ notice.

The sum charged was $109.95, and PNC took that amount out of Choi’s bank account on October 2, which was still less than thirty days after the announcement of the fee.

The complaint claims that the fees charged “are neither ‘reasonable’ nor are they used to offset ‘the cost of necessary systems technology upgrades, communication requirements an reporting.’ Rather, they are imposed as a planned yearly ‘release’ strictly to pad [PNC’s] bottom line at the expense of its customers.” 

The complaint supports this accusation by pointing out that the fee has been the same for years now, demonstrating that it is not based on changing costs or requirements. 

The complaint alleges breach of contract.

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