Credit Card Processing Companies and Deceptive Business Practices

When choosing a credit card processing company it is very important to research the company in question before making your final decision.  Merchants rely on these processors to ensure transactions are properly handled and that they receive payment for each transaction.  It is also important for merchants to understand the whole payment processing system which involves more players than the processor alone.  Credit card companies and banks are also involved in the process which means there is a chance that deceptive business practices used by any of these parties can affect the merchant as well as consumers.

This appears to be the case with Discover, the major credit card company currently the subject of a Minnesota lawsuit.  As stated in a New York Times article, “The lawsuit alleges that Discover Bank and its affiliated processing company made aggressive and misleading telemarketing calls to sign people up for these products, tricking people to sign up for the add-on products and in some cases, charging consumers for enrollment without agreement from the consumer.  This, the state alleges, would have been easier for Discover to do than your standard issue telemarketer because Discover already had access to their credit card numbers.”

The products in question are payment protection, wallet protection, identity theft protection and credit score tracking.  According to the report, Discover charged these products to the consumers credit card without their knowledge by using deceptive business practices.  The Minnesota Attorney General stated, “The irony is that the credit card company markets these products as a way for consumers to protect themselves from fraudulent or unauthorized credit card charges and financial instability in a bad economy.”

As a merchant, you must be familiar with the practices of your credit card processing company.  When credit card companies and processing companies are believed to use deceptive business practices, the end result will affect everyone involved including the merchant.

As a consumer it is even more important to understand your rights relating to credit card use.    The first step to ensure you are not the victim of savvy marketing is to fully understand the terms and conditions to which you agreed by signing a contract with the credit card company. Consumers should also learn as much as possible about identity theft, credit card fraud and their rights pertaining to each.

At the end of the day, there are products available that can help consumers reduce their risk of becoming a victim of identity theft and any number of other scams prevalent in our society.  At the same time, there are plenty of products and services available that do nothing more than provide a false sense of security.  By taking the time to first learn about credit cards, credit card processing and your rights as an account holder, you can minimize the chances of being the victim of a con artist and deceptive business practices designed to rob you of your hard earned cash.  With this in mind, merchants and consumers alike should fully investigate any company with whom they intend to do business in the future.

Posted on Thursday, December 16th, 2010