Thursday, 23 June 2011 16:19

Business Financial Security Preventive Maintenance

Written by Walter Danalevich

Earlier this year (Autobody News, February, 2011) I wrote a shop savings article (Credit Card Processing Fees—Dings, Dents, and Crashes at Your Bottom Line) for ABN readers warning about credit card host processing fees which could significantly ding their bottom lines. My February article pointed out that these fees can be very substantial for body shops.

If you missed the article, you can read it along with my other columns in my column section www.autobodynews.com/columnists/danalevich-walter.html.

Now I would like to re-emphasize the importance of taking extreme caution with authorizing Credit Card hosting agreements and specifically their cancellation fees. A body shop owner contacted me to share his story involving a nightmarish experience pertaining to a cancellation fee he got sucked into compliments of his prior Merchant Credit Card processing Host.

This body shop owner read my ABN article and phoned me to express his frustration during the past five months as a result of his shop cancelling a merchant credit card host service. His shop had recently signed a service agreement, based on the credit card host’s friendly telemarketing sales pitch: “we will give you the lowest credit card processing fee rates on Earth.” Here’s what happened.

The shop’s bookkeeper was continuously aggravated by the credit card host’s customer service department. When she called with questions they were consistently tossed back and forth between service reps. None could provide adequate explanations of the reason for transaction fee deductions from their business checking account. 

Soon afterward, the owner and bookkeeper accepted an offer from another Credit Card host, who also offered “the lowest processing fee rates on earth.” The new credit card host sweetened the deal by agreeing to pay the cancellation fee up to $400. Sounds good, right?

The shop owner proceeded to send an e-mail to his existing credit card host giving written notice for cancellation of service. A couple of months later the bookkeeper performing account reconciliation noticed an unfamiliar automatic withdrawal on their business checking account and informed the shop manager. He assumed the fee was taken by the prior credit card host which he had cancelled months ago. The shop owner inquired with the Credit Card Host and was told they have not received a cancellation notice and were continuing to actively withdraw monthly minimum usage fees as per the user agreement.

The shop owner had fortunately kept a hard copy of the cancellation e-mail and read it to the credit card customer service rep. The credit card rep made it sound as if fault was with the body shop and not the credit card host, and wanted the shop to send a “signed letter” of cancellation of services. Shop manager complied and sent the same e-mail letter previously sent and attached his signature.

About a month later the shop manager received a phone call from the fast talking credit card host representative indicating that a new cancellation fee of nearly $1,000 was due. The shop owner told him he was crazy (using some colorful language) and that he wasn’t responsible for their inadequate customer service. The credit card host rep acknowledged that customer service changes had taken place. The manager requested a breakdown of the proposed cancellation fee charges and was told he would receive them that very same day. No cancellation fee invoice was received that day.

A couple of days later the shop received a copy of the initial service agreement, signed by the manager, which stated in tiny size 6 print that there was a $900 minimal cancellation fee if service was terminated before three years had elapsed. There was also a cancellation fee of $250 disclosed in the terms and conditions manual. This was the fee the shop was planning on forwarding to the new credit card host for reimbursement.

Also received was a cancellation form invoice for $1,235 which had absolutely no explanation attached.

By now the shop owner was not feeling any love for the self-proclaimed “lowest credit card processing fee on Earth” company. He was worried that the credit card host had possession of his business checking account bank routing number and knowing the credit card host could easily insert a large “dent” into his business checking account balance at any time.

The body shop owner had a meeting with his bank manager to discuss the best solution and some peace of mind. The bank manager said a stop payment could be placed that would prevent any future unauthorized withdrawals. However he cautioned that there are common ways the credit card host can easily get around this security tool. The bank manager recommended that the body shop owner permanently close his bank account and open a new account. The shop owner followed his bank manager’s advice and now sleeps without the worry of having automatic withdrawals made to his account without his authorization.

This story is a cautionary tale for avoiding crashes to your bottom line and a reminder for us all to be careful who we allow access to our banking and other financial information. Oh yeah, watch out for the #6 or smaller size print before you sign anything.

Ed—Anyone considering a new credit card processing provider should start with a review website comparing fees like that at credit-card-processing-review.toptenreviews.com and proceed with due diligence from there. Your mileage may vary.

Read 2551 times Last modified on Wednesday, 14 December 2016 00:25