CardConnect Lawsuit Alleges Payment Processor Charges Merchants Hidden ‘Junk Fees’

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CardConnect faces a proposed class action lawsuit that accuses the payment processing service of charging unauthorized “junk fees,” which are allegedly hidden in a document separate from a merchant’s contract.

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The 20-page CardConnect lawsuit says that the company’s services allow small businesses to accept credit or debit card payments in exchange for a fixed percentage of each transaction and certain agreed-upon fees outlined specifically in merchant contracts.

However, the suit alleges CardConnect often imposes hefty, previously undisclosed charges that customers “never agreed to pay.” The case cites allegedly unfair provisions laid out in the company’s Program Guide, a purportedly “secret” document of “nearly 50 pages of small-print legalese” that is never provided to merchants.

“In this way, merchants like the plaintiff see and execute one document, which prominently displays the agreed-upon rates and fees (the Merchant Agreement) but are also purportedly bound by a separate document (the Program Guide),” the case shares.

According to the complaint, the Program Guide purports to allow CardConnect to raise or add new fees with 30 days’ notice, and claims to give the company “unilateral and unlimited discretion to charge whatever it wants,” even if the imposed rates are “vastly different and higher” than those detailed in the merchant agreement.

CardConnect frequently includes notices in customer billing statements declaring that it will be charging new fees in subsequent months, the filing relays.

“CardConnect apparently takes the view that the Program Guide gives it the right to change its agreements with merchants in this manner, even if the merchants never previously agreed to the new charges,” the false advertising lawsuit contends.

In addition, although the merchant agreement requires signatures from the customer, CardConnect and member bank Wells Fargo, the suit alleges that on many occasions, neither the defendant nor the bank actually signs the contract.

“Under those circumstances, no enforceable written contract is ever created,” the CardConnect lawsuit argues.

Per the filing, CardConnect faced a similar lawsuit in 2016 over allegations that it was assessing unauthorized fees. In that case, the court limited the charges that the company could impose to only those outlined in the merchant agreement, and held that “unsolicited and unilateral changes” to the contractual terms were unenforceable, the suit says.

“Despite the Court’s orders limiting CardConnect to the fees it identifies in the Merchant Agreement, CardConnect has not changed its practices,” the complaint asserts. “Instead, CardConnect continues to unilaterally impose new fees upon its customers, even though its customers never agreed to pay them.”

The CardConnect lawsuit looks to represent any entity in the United States against whom the company assessed amounts not explicitly identified in their merchant agreement at any time since July 8, 2020.

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