WASHINGTON, D.C. — The Federal Trade Commission (FTC) has announced it is distributing more than $2.6 million in refunds to thousands of small businesses adversely affected by the practices of First American Payment Systems, a payment processing company accused of deceptive practices and unauthorized charges. This significant refund effort follows a lawsuit and subsequent settlement aimed at addressing financial harm experienced by small business owners across the country.
The lawsuit, filed by the FTC in July 2022, alleged that First American Payment Systems, along with several affiliated firms, engaged in widespread misconduct to induce small businesses into contracts under misleading terms. Specifically, the FTC accused the company of luring merchants with false promises of low fees and cost savings while concealing extra charges, “zombie fees” withdrawn without consent, and hefty early termination penalties. Once enrolled, businesses faced considerable difficulty and expense when attempting to cancel their contracts.
Following these allegations, First American Payment Systems reached a settlement with the FTC that included a monetary resolution to compensate affected businesses and required substantial reforms to prevent future misconduct. The company agreed to clarify its fee structures, eliminate misleading marketing claims, and streamline the cancellation process for businesses.
Refunds for Harmed Businesses
The FTC has started distributing refund checks to 5,588 small businesses impacted by these practices. Businesses eligible for a refund are advised to cash their checks promptly, as they are valid for 90 days.
Additionally, the FTC is working to ensure other impacted businesses have access to restitution. Claim forms were recently mailed to 16,181 businesses that had contracts with First American between June 2017 and April 2020 but canceled their agreements after incurring early termination fees. These businesses may apply for a refund by submitting a claim before the deadline, which is set for May 7, 2025.
Assisting the Claims Process
The FTC has made resources available to help businesses understand and participate in the refund and claims process. A dedicated refund administrator, JND Legal Administration, has been designated to oversee the process. Affected businesses can reach out by calling 877-595-0114 for further assistance. Importantly, the FTC emphasizes that it does not require payment or sensitive account information in exchange for issuing refunds, cautioning recipients to remain wary of potential scams. More information about this refund and claims process is available at ftc.gov/FirstAmerican.
Ongoing Advocacy for Small Businesses
The case against First American Payment Systems highlights the challenges small businesses face in navigating predatory practices within the financial services market. The FTC’s actions reflect its ongoing effort to safeguard entrepreneurs and business owners from misleading and unfair practices. By securing financial relief for affected businesses and implementing accountability measures, the agency aims to create a more transparent and equitable operating environment.
Looking ahead, the FTC states that it continues to prioritize the protection of small businesses, ensuring they benefit from fair treatment and clear terms in their financial dealings. For those harmed by the conduct of payment processors and similar entities, efforts like this serve as a reminder that advocacy and restitution remain within reach.
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