Lawsuit Claims First Data Corp. Charges ‘Improper, Excessive’ Termination Fees on Equipment Leases

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Three Rivers Resort, Inc. and Wilderness Trails, Inc. have filed a proposed class action against First Data Corporation that alleges the company, which operates as First Data Global Leasing, charges improper and excessive termination fees for leases of point of sale (POS) equipment, such as payment terminals, card readers and mobile payment devices. The lawsuit, which describes the defendant as structured as “hundreds of corporate entities in an intricate shell game to avoid transparency and accountability,” seeks reimbursement from First Data stemming from the profits reaped by the company from subjecting merchants to “complex agreements involving several parties just to lease a POS terminal which could simply be purchased for less than $200.”

The plaintiff companies claim the defendant pushes merchants to lease payment equipment from First Data upon entering into payment processing agreements with financial institutions, who serve as the company’s agents in POS leasing transactions. First Data allegedly tricks merchant customers into spending thousands of dollars leasing payment equipment that can be purchased outright for less than $200, the lawsuit says, by allegedly binding merchants to years-long agreements that do not allow for the cancellation of the lease of POS terminals.

The complaint makes a point to remind that this lawsuit was not filed over the defendant’s alleged general business practices, but over what it supposedly charges customers who want out of their leasing agreements. 

“First Data includes a ‘non-cancelable agreement’ clause within its form contract as well as its affiliates’ Program Guide. This clause is an attempt by First Data to maximize profit regardless of the circumstances,” the complaint reads. “In fact, First Data claims the contract cannot be canceled without the customer paying all remaining sums due for the full term of the lease agreement, even if First Data fails to perform its obligations under the contract.”