According to a statement by state Attorney General Rob McKenna in a press release, “Merchant Processing deceived small businesses in Washington by promising those merchants would save money and receive payments faster by switching from their current card processor to MPI,” McKenna said. “In fact, businesses paid higher fees, did not receive funds from bank card transactions in the time promised, and were unable to terminate equipment leases without substantial penalties.”

The FTC complaint alleged the company’s sales representatives promised companies their services will save them hundreds or thousands of dollars and failed to disclose various fees. They also said they would buy out the customers’ existing equipment leases. The FTC is seeking preliminary and permanent injunctions against the company.

If a company believes it has been deceived by a credit car processor, it should contact either the state attorney general’s office or the FTC, or both. Kristin Alexander, public information officer with the state attorney general’s office, said the agency mediates complaints between businesses and consumers — in this case, the business purchasing the services being the consumer. She says their office is successful in two out of three cases. “When the business is not responsive or willing to make it right… that may lead to an investigation,” she said.

The Federal Trade Commission does not handle individual complaints, but the agency encourages consumers to file complaints when they see deceptive practices. “If a company is getting a lot of complaints, it definitely appears on our radar screens,” said Mary Benfield, attorney with the FTC’s Northwest Region.

Although in this case there were no initial red flags — the company simply didn’t act on its promises or hid information — there are still a few things a business can do to protect itself.

“In any industry, there are unscrupulous people,” said Rob Putaansuu, manager of the Columbia Bank Port Orchard branch. “I always recommend doing business with a known and reputable company.”

Columbia Bank is the largest local credit card processor. Diane Wasalino, senior vice president of Merchant Card Services at the bank, recommends for businesses to first gather information about “how the process works.” Some of the questions she recommends asking include: Who is the company? What are the equipment terms, is there a warranty and who pays for repairs? How often will the funds be credited to the merchant’s checking account? What kind of customer assistance is available?

One of the important questions is whether the discount is assessed daily or monthly and whether it’s “bundled” or “unbundled.” A “best practices handout” the Columbia Bank gives out to its customers says: ”Some card processors quote a reduced discount, or what is commonly known as an unbundled rate, and then tack on additional costs, i.e. interchange, per item charges, transaction fees, statements fees, chargeback fees, supply charges and a monthly minimum charge. A bundled rate covers the majority of the expenses involved in processing credit card items. A bundled discount gives the merchant customer a better idea of what the actual cost is and how to price goods or services.”

Benfield recommends businesses do research before making any commitments, and not only check out the company but also, if equipment leasing is involved, they should look into all the aspects.

“I would suggest they check out the Better Business Bureau to see if the company has received complaints. If I were a merchant, I would definitely ask around to see who (others) are using… before I switch,” she said. “And if I sign anything, I would make sure I got complete copies before the rep leaves the business.”.