Credit cards & Seasonal Businesses
by Charles MacGregor

We found it was a definite advantage to have the credit card service. About 25% of our sales at were through credit cards. However, when we started getting our receipts at the end of the run, it appeared we were being billed twice. There was a $38.00 charge and a $25.00 charge. What was more curious, the $38.00 was from a company we did not recognize. Somehow another company was deducting money from our bank account.

Around November 20 we called the sales rep who helped set up our account, and left a message on his voice mail. After 2 weeks, he finally returned our calls, but told us he would have to get back to us, because he would have to "look up our file." We did not heard from him for a couple more weeks, so we started to shop for a different service provider who might actually provide some "service."

We found Novus (Discover) could sell us the phone equipment up-front for $250.00. In stead of charging us a monthly fee, they would charge a percentage of each transaction, and there would be no charges whatsoever during months that we no sales.

When the salesrep from the first firm finally got back to us after almost a month, we found out that the phone equipment was not actually rented from his company, but financed through another company. His firm only set up the account and handled the credit card transactions. The $25.00 was the monthly account fee from the processing service, and the $38.00 was the charge for rental of the equipment.

He neglected to inform us when we started the account that another company was involved in the deal. We had been led to believe that the entire deal could be cancelled with 30 days notice, including the rental of the equipment. He did not tell us that the phone equipment was a separate non-cancellable 4-year lease. When we did the math over 4 years of payments we found that the cost of the lease totaled approximately six times the retail cost of the equipment we were using. The first thing that came to mind was a law suit lost by the Rent-a-Center company in Minnesota. They were found guilty of usury because they were charging rental fees whose totals far exceeded the retail prices of the merchandise. In addition, our salesperson neglected to inform us the equipment could be purchased, and what the retail price was in comparison to the total lease (both required by Minnesota law).

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