NBC 4 New York Investigates Credit Card Processing Equipment Scam
In a two-part series beginning last month, NBC 4 New York has followed the plight of small business owners across the United States who have fallen victim to an alleged leasing scam by Northern Leasing Systems who has denied the charges of fraud.
Small businesses seek help in accepting credit cards from customers. Sales representatives often approach these businesses from credit card processors. Sales representatives sell the service and often give businesses options for equipment and software such as freebies, outright purchases, and long-term leases.
Since 2009, Ideal Cost has adamantly advised individual clients and the public to avoid leasing merchant equipment in virtually all scenarios. Leases were once more reasonable due to the high upfront cost of purchasing equipment, but that cost has come down considerably in the past decade. A machine that retails for $300 could lease for $50 per month for 36 months. Why pay $1800 over the life of the lease when the machine can be purchased for 1/6th the price? Furthermore, like many other leases, at the end of the leasing term, the merchant equipment requires being returned or purchased for an additional fee.
Dealing with the Leasing Company
Most merchants don’t realize that the credit card processing representatives sell the equipment leases, but have no contact with the leasing company. They blindly sell the lease for a hefty commission and leave the merchant to deal with the consequences.
The sales representative referenced in the video states that he was unaware of the consequences of leasing until after he sold several of them over the course of 45 days. Was he unaware of the massive commissions he was receiving for signing merchants up for these significant leases, or was he refusing this money? We’re glad he is taking some responsibility now, but his actions directly led to the scamming of small businesses.
Unhappy with a merchant lease? Good luck trying to reach them on the phone. If they even pick up the phone, you’ll get thrown to different departments unless you’re calling to pay them off.
Often merchants believe that if they send the equipment back, the nightmare will end. Unfortunately, the leases are non-cancelable regardless of who is in possession of the equipment. Sending the equipment back won’t alleviate that burden.
Ongoing Legal Battle
It appears that the New York Attorney General is now involved due to the sheer number of cases involving Northern Leasing Systems and consequentially the straining of court resources. Their office states that they receive complaints every day about this particular company, and we will be interested in how this all resolves. Hopefully, this case will show the country to avoid leasing merchant equipment entirely.
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has helped hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for IdealCost.com’s monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation. IdealCost.com can help secure the best terms and fees based on your specific needs.