Read the Fine Print

We all hear the stories about how E-Commerce is the wave of the future, and what we must do to compete. Yes, the smallest "Mom and Pop" business can compete against the "Big Guys" and make a respectable buck or two. As I'm sure you have, I get email everyday about how important it is to be able to accept credit cards on line. And guess what - this is true. Not only should you be able to accept credit cards, but also online checks. When a person decides to buy, you have a very narrow window of time for them to complete the order. If you can allow them to make their purchase and pay for it online, you have a great chance of getting the order. However, if they have to write a check and mail it to you, there is a "cooling off period" and you may not get the order. So we all agree that accepting credit cards is a good tactic for an online business. To do this, you must have a merchant account, and here is where some people get into trouble. You receive an unsolicited email (spam) that says they will act as your agent, and will accept credit cards and checks on your behalf. They then go on to say they will deposit the money in your account within two working days. If you join within the next 48 hours, they will waive the usual $695 set up fee and give it to you for only $39.95 - there will be no monthly fees and they'll only charge you 1.75% of the sale - wow what a deal. I had a call this week from someone who did just that. Now here is what happened. He didn't read the "fine print" and when he signed the agreement, he actually authorized them to charge his bank account for $295 security which was non-refundable if his account was cancelled, plus the $39.95 set up fee. Now the plot thickens. He submitted about $1,500 in charges and the money never showed up in his bank. In coversation with his bank representative, he then found out about the $295 charge to his account. He called his supposed contact at the credit card company, found out that they were an independant sales agent, and the $39.95 was not a set up fee, but a referral fee. When asked about the $295 charge, his contact pleaded ignorance, told him he would have to call the Company direct, and was given their number. He called the Company, asked about the $295 fee, and was told there was no one there at that time to answer his questions, but they would call back. He then asked about the status of the charges he hadn't received, and was told he would have to fax additional information and proof of delivery of his product. He did this. After a few days passed, he checked with his Bank, and the money still hadn't arrived. He again called the Credit Card Company, was told that the information requested was never received, and they were canceling his account, which they did. He then called his customers and sure enough, their accounts were charged for the amount of the merchandise he delivered. Now - the plot sickens. He is out the $334.95 for the referral fee and the set up fee no matter what happens. In reading the "fine print" the company can hold his money for 180 days. Will he get his money then? Maybe - if the company is still in business . In the meantime, his money is most likely in an interest bearing account, and the company will walk away with the interest plus his $295. At the end of the waiting period, if they pay him the charges they are withholding, the company has acted properly as far as the law is concerned. Sounds like small potatoes until you multiply this by several thousand people. Now, the AG will probably not get involved if they return the money 6 months from now - they did nothing illegal, and they cancelled his account for cause. Will they get a bad rep - sure - and people will stop doing business with them. But as this article is being written, this particular sales agent is now operating under a different name, and spamming new suckers. Now pay attention - First, ignore the email spams you get from people promising to process credit cards on your behalf. They are simply independant sales agents, and cannot bind the actual company to anything, no matter what they promise. Second, do a little homework - how long has the company been around? Can you get contact information from some of their clients who are using their service? Are these real people or simply shills working for the company? Third, and most important, read the fine print - better yet, have your lawyer review the contract.