(CN) - A federal class action filed by merchants in Atlanta, Ga., claims the vendor they relied on to process their credit and debit card transactions defrauded them by gradually inflating certain fees without notice.
In a complaint filed Monday, lead plaintiffs Champs Sports Bar & Grill and Fashionadvice.com claim Mercury Payment Systems has violated Georgia state law for years by gouging small- and medium-sized merchants and reaping "tens or hundreds of millions of dollars in ill-gotten gains."
The case is the Top Download for Courthouse News on Wednesday.
The plaintiffs claim Mercury carried out the scheme while hiding behind access fees charge by Visa and Mastercard, and interchange fees.
"The access fees - also sometimes referred to as 'dues and assessments' in the payment card industry - are established and published by the MasterCard and VISA card associations at $0.0195, or 1.95¢, per transaction processed," the complaint says. "These fees are paid by merchants and collected by payment card processors like Mercury, and distributed to the card associations."
Pointedly, the plaintiffs add, "No entity aside from the card associations themselves has the authority to increase or decrease these fees."
"The interchange fees are also established and published by the MasterCard and VISA card associations, but are distributed to card issuing banks or financial institutions," the complaint says.
These interchange rates vary by card type.
The plaintiffs claim that over the years, Mercury has inflated both access fees and interchange fees without notifying Plaintiffs and the other purported class members that it had done so.
"The amount of inflation added to access fees by Mercury ranges from $0.01 per transaction to as much as $0.04 per transaction. The amount of inflation added to interchange rates varies by card type but amounts to hundreds or thousands of dollars in overcharges, depending on card type," the complaint says. "Cumulatively, this unauthorized inflation has deprived each Plaintiff of thousands of dollars."
In addition to allegedly inflating access fees and interchange fees, the plaintiffs claim Mercury imposes unwarranted "junk" fees that no plaintiff agreed to pay.
Using deceptive language, "Mercury describes these fees as having been required by third parties, when, in fact, Mercury alone is responsible for their existence and Mercury alone retains the revenues generated by them," the complaint states.
"These fees include monthly maintenance fees, regulatory compliance fees, and ' PCI' fees, the latter of which are purportedly required to ensure merchants' compliance with privacy and fraud prevention standards," the complaint continues.
These fees amount to at least $40 per month per merchant, resulting in massive windfall gains for Mercury, the plaintiffs say.
The class seeks disgorgement of all the unwarranted fees they paid, punitive damages, declaratory relief, injunctive relief, attorneys' fees and court costs on claims of common law fraud and unjust enrichment.
They are represented by Kenneth Canfield, of Doffermyre, Shields, Canfield & Knowles LLC in Atlanta; Adam Levitt, of Grant & Eisenhofer P.A. in Chicago; Kyle McGee, of Grant & Eisenhofer P.A. in Wilmington, Del; and Mark Abramowitz, of the DeCello Law Firm in Mentor, Ohio.
Representatives of Mercury Payment Systems could not immediately be reached for comment.
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