Watch Out for These Awful Merchant Accounts

April 23, 2019

April 23, 2019



In the world of credit card processing, there are endless companies that provide merchant accounts and credit card processing services. But many are opportunistic, offering low-quality or outright scam-like service that will do anything they can to make some quick money—even if it means ripping off honest business owners like you. The worst merchant accounts […]

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In the world of credit card processing, there are endless companies that provide merchant accounts and credit card processing services. But many are opportunistic, offering low-quality or outright scam-like service that will do anything they can to make some quick money—even if it means ripping off honest business owners like you.

The worst merchant accounts use deceptive practices like hidden fees, restrictive contracts, and terrible or non-existent customer support. To make matters more complicated, once a company is “outed” as shoddy, they vanish and then completely rebrand themselves, appearing to be a different company entirely.

For an example, look no further than a merchant account provider called Merchant Services Direct LLC. This scam company was charged with criminal fraud by the United States FTC, or Federal Trade Commission. The charge was that they were lying to clients and withholding information about their fees.

This company had multiple identities, also operating as “Generation Y Investments,” “Sphyra Inc.,” and “Boost Commerce.” This allowed the company to scam more business owners without them being able to easily trace the fraud back to Merchant Services Direct. 

This company did all the classic scams: lied when asked about hidden fees, leased and charged for unnecessary equipment, lied about flat rates, lied about their relationship with major credit card companies, lied about cancellation policies, and more.

Next, we will show you how to pick out the good merchant accounts from scams and fraudsters like Merchant Services Direct. After that we’ll tell you about some of the worst merchant account companies, so you know some specific names to avoid during your search.

What to Look Out For

When trying to get a read on whether a merchant account provider will make a good partner, look out for the following red flags:

  • A bad score or lots of negative reviews from their Better Business Bureau listing
  • No-cancel contracts
  • Evasive answers regarding hidden fees or other basic questions
  • Hyper-aggressive sales staff
  • Leasing outdated equipment 
  • Entries on sites like RipoffReport
  • Associations with other companies with poor reputations
  • Negative reviews from current or former employees
  • Negative customer reviews
  • Frequent changes to a company’s name, logo or other branding
  • Companies claiming “wholesale pricing” or claiming to process credit cards directly (credit and debit card processing is always handled through third parties)

A typical dishonest merchant account is guilty of at least one of the following practices:

  • Hidden fees
  • Excessively high termination fees
  • Dishonest and aggressive sales pitches
  • No-cancel contracts
  • Otherwise inflexible contract terms
  • Deceptive auto-renewal policies
  • Leasing outdated equipment
  • Leasing at rates much higher than if you simply purchased the same equipment
  • “Slamming” (this is when a rep or automated system calls you, impersonating an employee of your current provider, to claim your account has been flagged or is under review. Credit card processors will never do this, so if you get a call like this, it’s probably a slamming attempt)

How to Find Out if the Company You’re Speaking With is Reputable

On the surface, it isn’t easy to tell the reputable companies from the scams. Disreputable merchant account providers will have slick, modern websites, attractive logos, and phone numbers you can call to talk to service reps. These companies might even post positive testimonials from alleged customers, which are often completely made up, with fake names attributed to them.

During negotiations, there are questions you can ask and tips you can take advantage of to figure out whether or not the company you’re speaking with is reputable. Disreputable companies will use commission-only sales staff and encourage them to use certain forms of deception and aggressive tactics.

Here are some questions to ask. Always look out for answers that feel evasive. If an answer is unclear and you as for clarification, and are then met with more evasion or even aggression, get up and walk out the door (or hang up the phone). 

Part of the problem is that the absolute worst offenders will just lie to your face rather than bother evading the question. You’ll have to have a keen internal lie detector and use your instinct as to whether or not the sales rep is being truthful.

  • Is every fee and cost included in the contract, or are there other potential costs?
  • How long is the contract term, and what is the cancellation process?
  • Has your company ever been sued? (If they become awkward in response to this question, it’s a red flag.  Before or after your meeting, use search engines to look for lawsuit records associated with the company. You’ll know if the rep is lying when they say their legal history is squeaky-clean)
  • What are the termination fees?
  • What equipment leases are included?
  • What specific equipment is included, and what are the leasing fees?
  • Are you accredited with the Better Business Bureau? (you can look this up later and see for yourself if the sales rep lies or not. If they claim to be officially accredited and they aren’t, look elsewhere)

Worst Merchant Account Providers

Below are some of the worst offenders we’re aware of:

Main Street Direct

As is the case with most scam providers, Main Street Direct is also suspected as operating under the names TriData, Inc., Consolidated Payment Services, Wholesale Banc, Datalink Bankcard Services, and several others.

They hit their customers with as many hidden fees as possible, then refuse refunds and don’t let customers cancel. Steer clear of these guys.


Main Street Direct is bad, but LFG might be even worse. Short for “Lease Finance Group,” LFG goes by many names. They have faced multiple lawsuits as well, including being sued by the State Attorney General of New York. From one of these lawsuits, they paid a settlement of millions of dollars after being caught using a phantom company to syphon money from customer’s bank accounts even after their contracts had expired.

This company then took their fraud even further, trying to sue customers when payments became overdue…for leasing fees that were illegitimate to begin with!

Ladco Global Leasing Solutions

This company claims to be a partner of Elavon, one of the world’s leading credit card processing companies. However, investigators who tried to confirm the affiliation couldn’t figure out what the connection was, if any, between the two companies. This is a major red flag.

To make the picture even clearer, hundreds of complaints from customers of Ladco Leasing can be found online. According to these reviews, Ladco is guilty of many of the most common deceptive practices of bad merchant accounts. Reports say Ladco has inflexible contract terms that mislead customers into being locked into multi-year commitments with excessively high prices. 

Merchants’ Choice Payment Solutions

This company’s Google search results are loaded with results from websites like RipoffReport, as well as merchant account review services reporting deceptive practices like early termination fees and a lack of pricing transparency. One website has an employee who claims the negative claims are being posted by rival companies.

While this claim of corporate sabotage might be credible if it were only a few negative reports, the high number of complaints and bad reviews indicates that this comment may originate with an owner of Merchant’s Choice trying to save their company’s reputation.

Electronic Payment Systems

This company has been around for over two decades, and usually longevity would be a good sign when choosing a merchant account. They even have a one-year contract option, which is a plus for any provider of these types of services. 

However, this company has many negative reviews associated with it, including an official complaint from the FTC that employees were part of a money laundering operation. In addition, their sales reps have been caught lying to independent reviewers when they asked questions. Steer clear of this one.

Final Thoughts

Getting scammed by a merchant account provider can be extremely expensive and time-consuming. Taking the time upfront to research multiple different companies deeply and thoroughly will ultimately save you a fortune in the long run.

Your merchant account provider will be central to everything your business does. It’s not worth rushing the process and choosing a dishonest company. Take your time, be vigilant, and know that the extra effort will all pay off in the end!

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