CSC ServiceWorks Sued After Charging Allegedly Unlawful Administrative Fee

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CSC ServiceWorks, Inc. is the defendant in a proposed class action that accuses the company of imposing an unlawful “administrative fee” on its clients in breach of their contracts. The suit explains that the defendant runs a coin-operated laundry machine business whereby the company installs laundry equipment on its clients’ properties and collects the funds they generate in exchange for providing landlords a cut of the revenue.

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According to the suit, CSC, after securing market dominance by acquiring many of its competitors and inheriting their contracts, began collecting a 9.75 percent “administrative fee” that wasn’t stipulated in the original agreements. The case argues that the fee includes both charges CSC is not permitted to collect from its clients and costs for redundant or unnecessary services that the clients neither wanted nor needed.

“While CSC claims that the administrative fee covers necessary costs related to its operation and features new products and services that benefit the Landlords, it is nothing more than an attempt to withhold contractually guaranteed revenue from the Landlords,” the case states.

The lawsuit then picks at the defendant’s alleged practice of withholding taxes from its clients through the administrative fee. As explained in the complaint:

“According to CSC’s website, 16% of the administrative fee includes taxes. But, CSC fails to explain how this fee somehow accounts for various tax rates in each state in which CSC conducts business, and remarkably, why the fee includes a value-added tax (VAT) that is not even imposed in the United States.”

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