PNC Merchant Services Company Sued Over Allegedly ‘Unreasonable’ Annual Fees

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A family-owned Philadelphia business alleges in a proposed class action that PNC Merchant Services Company, LP assesses annual fees on its merchant customers despite representing in a standard form contract that such fees will only be charged “as needed.”

The plaintiff business, a small beer and sandwich shop, claims the defendant stipulated in its “Merchant Processing Application and Agreement” that the financial services company “reserve[s] 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 plaintiff stresses that the agreement and PNC represented that the fee may not be charged every year, and sales agents have reportedly told potential customers, “I can’t remember the last time we did that,” the 13-page complaint says.

In reality, the defendant charges merchants an “unreasonable” $105.95 fee every year without providing 30 days’ notice, the case alleges. Instead, PNC allegedly informs customers in their monthly billing statements that the fee will be assessed “on or after” the first day of the same month the statement was made available. For example, the plaintiff says it received its August 2019 billing statement on September 3, 2019 yet was automatically assessed the annual fee referenced in the statement only 18 days later. 

Moreover, the lawsuit argues that PNC, rather than use the additional fee to offset “certain specified costs” as stated in its merchant contracts, pockets the amount as profit. The plaintiff argues that the defendant worded its contract “in a false manner” in order to generate more business, and therefore more profits.

“Indeed,” the complaint reads, “Defendant knew merchants would rarely agree to do business if they knew they would definitely be charged a large fee (typically $109.95 per year, as in the case of Plaintiff). Thus, Defendant crafted the disclosure to lead merchants to believe such fee may not be charged and, if it was charged, would be reasonable and would be used to defray new specified costs (and not generate more profit).”

The case points out that the annual fee amount “has been the same for years,” arguing that it cannot be based on the defendant’s costs or requirements as such factors “are not uniform on a year-to-year basis.”

The lawsuit goes on to challenge the defendant’s dispute process. As the case tells it, despite stating “deep in the fine print” of its Program Guide that disputes must be submitted in writing within 60 days of the fees’ assessment, PNC and its representatives have pushed customers to call the customer service department to voice their complaints. The case alleges that such actions were taken in order to “frustrate [the customer’s] performance of the written notice requirement” for at least 60 days after assessing a fee.

The lawsuit seeks to cover all of PNC Merchant Services Company’s U.S. customers who were assessed an annual fee.

The full complaint can be read below.