Merchants must be able to accept credit cards, whether they’re small or large. But credit card processing services are both complex agreements and a significant expense. The complaint for this class action alleges that processor Worldpay US, Inc. uses the complexity of its agreements to breach its contracts and charge merchants more than they have agreed to pay.
The class for this action is all US customers of Worldpay US, Inc. who contracted for payment processing services and paid a fee not listed in the Customer Processing Agreement.
One of the reasons Worldpay has gotten away with this behavior, the complaint claims, is that credit card processing agreements are complex. For example, transactions involve a number of parties: the card issuer (often a bank), the card payment network (such as MasterCard or Visa), the payment processor, the member bank, and the merchant acquirer. All of these parties charge different fees, which may themselves be complicated, for example, a card issuer may charge 1.65% plus 10 cents for each transaction.
The complaint claims that Worldpay approaches merchants by saying that their payment processing fees are lower than their competitors—an attractive proposition to merchants for whom these costs are their third-largest expenses, after labor and product.
Worldpay allegedly uses several methods of misrepresenting its fees, hiding extra costs, and charging merchants more than they had agreed to pay. The complaint cites agreements that leave out certain charges, like the annual fee; a reference in the fine print of the agreements that refers to another document of terms, containing still more fees; confusing statements that arrive only after all fees have been withdrawn from the merchant’s account.
According to the complaint, merchants are thus charged for extra monthly items such as a “payment card industry” fee; mark-ups added on to what are supposedly pass-through fees; minimum processing fees; noncompliance fees; rate increases; and so on.
The complaint says that the extra charges are added only after the merchants have signed on to long-term agreements that may run for two or three years.
The complaint quotes online postings on small business sites and the Better Business Bureau attesting to the surprise and dissatisfaction of merchants who do business with Worldpay and find out they are being charged more than they were told.
Worldpay’s tactics, the complaint claims, amount to fraudulent inducement, breach of contract and of the covenant of good faith and fair dealing, among other things.