FTC Launches Claims Process for Small Businesses Hit by First American Payment Systems’ Hidden Fees

Federal Trade Commission (FTC)

WASHINGTON, D.C. — The Federal Trade Commission (FTC) recently initiated the claims process for over a thousand small businesses adversely affected by hidden early termination fees imposed by First American Payment Systems. The move follows a 2022 legal action against the payment processing company for deceptive practices, with the undisclosed fees being a key point of contention.

Between June 2017 and April 2020, these businesses were customers of First American and subsequently canceled their services. Now, they are eligible to request payments to compensate for the unexpected early termination fees they incurred. The FTC is currently mailing notices to 1,137 such businesses, informing them of their eligibility and the steps to file a claim.

The deadline for filing a claim is May 28, 2024. Businesses can submit their claims online through the FTC’s official website. For any questions or assistance required during the claim filing process, businesses can contact the FTC via phone at 877-595-0114 or email at info@FirstAmericanPaymentSettlement.com. Importantly, the FTC has clarified that no one will be asked to pay money or provide account information in order to apply for a refund.

The FTC’s actions stem from allegations that First American failed to disclose early termination fees and made false claims about fees and cost savings to attract merchants. The commission noted that many of these merchants had limited English proficiency, making them particularly vulnerable to such deceptive practices.

Once these merchants enrolled in First American’s services, the company would withdraw funds from their accounts without explicit authorization. Additionally, First American made it challenging and costly for merchants to cancel their services.

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As a result of the settlement reached between the FTC and First American, the payment processing company and two of its sales affiliates were mandated to return $4.9 million. They were also ordered to cease their deceptive practices, stop charging existing customers early termination fees, and make it simpler for merchants to cancel their services.

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