Heartland Payment Systems faces a proposed class action wherein three merchants claim the company has charged hidden and excessive fees not authorized by its agreements with customers.
According to the 40-page case, although Heartland has represented to merchants that it will comply with its “Merchant Bill of Rights” and provide a “fair and transparent fee structure,” the payment card processor has, in reality, “abandoned any semblance of honest or transparent billing practices” and imposed “hidden and confusing ‘junk’ fees” without proper notice.
“By charging its merchants these fees, Heartland increased its revenues by tens or hundreds of millions of dollars, violated its contracts with its merchants, and reneged on its representations to those merchants,” the complaint, filed in New Jersey federal court, scathes.
According to the case, the additional charges by Heartland, including a PCI fee, reporting fee, regulatory fee, customer intelligence suite fee, non-EMV assessment fee and non-EMV program fee, were not authorized by the defendant’s application and disclosure form or merchant processing agreement, any changes to which must be amended in writing and disclosed to merchants.
Nevertheless, Heartland imposed the aforementioned additional fees without requiring merchants to sign new agreements or providing written notice of the changes, the lawsuit alleges. Per the case, Heartland’s fee practices have allowed the processor to reap millions in profit at the expense of merchants, most of whom are small and medium-sized businesses in the restaurant, lodging and hospitality and retail sectors.
The plaintiffs, three Southern California restaurants, are among more than 275,000 small or medium-sized enterprises to whom Heartland provided payment card processing services, the suit explains. The case claims Heartland has attempted to distinguish itself from other payment card processors in the face of growing competition by promising to provide merchants “full and honest disclosure with easy-to-read statements” and “fairness and transparency,” not to mention what the company refers to as a “Merchant Bill of Rights.” According to the suit, the Merchant Bill of Rights decries the problem of undisclosed fee markups by payment processors and further bolsters Heartland’s purported commitment to transparency.
The lawsuit alleges, however, that Heartland has engaged in “precisely the kind of improper and deceptive conduct against which its Merchant Bill of Rights is supposed to protect” by imposing unauthorized fees to which its merchants never agreed and of which they were never properly notified. Among the allegedly improper fees are a $125 monthly PCI non-compliance fee, a $69 reporting fee, an $8.50 service and regulatory mandate fee, a $54.95 “customer intelligence suite” fee, a non-EMV assessment fee and a non-EMV program fee that, in total, have added thousands of dollars per year to merchants’ bills, the lawsuit alleges.
Despite its promises of transparency, Heartland has, according to the case, failed to properly disclose the added fees, obtain written agreements from merchants authorizing the charges or send an amended schedule of fees containing a specific effective date before imposing such.
“Heartland’s attempt to create a new cash cow breached the terms of its contracts with its merchants, misrepresented its fees, and contradicted Heartland’s representations to Plaintiffs and the Class,” the complaint charges.
The lawsuit seeks to cover any Heartland customer who processed credit or debit card transactions through the defendant at any time after 2018 and was charged any of the aforementioned fees. The complaint notes that the lawsuit excludes any merchants who received a full refund of these fees before the filing of the case, signed an application or agreement specifically identifying the fees, or signed an agreement with Heartland containing an arbitration agreement or class action waiver.
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