Riverside Payments (Vancouver, BC) and its affiliate, Cascade Equipment Leasing, have agreed to a proposed $600,000 settlement with the Federal Trade Commission and the state of Washington to resolve allegations of deceptive business practices that cost small businesses millions, OPB reported.
The settlement targets claims that the companies misled clients about potential savings on card processing fees, charged hidden costs, and buried terms that made it nearly impossible to cancel contracts. The $32 million owed to clients is far greater than the proposed settlement, which is limited by the processor’s reported assets.
Settlement Requires Customer Notifications
The proposed settlement, which awaits approval from Chief U.S. Magistrate Judge Theresa Fricke in the western Washington district, would bar the companies from making false claims about their services or rates. If approved, Riverside Payments will be required to notify all its current customers about the settlement, giving them a roughly two-month window to cancel their payment processing contracts. The settlement hinges on the company’s financial standing. The FTC and state investigators determined that Riverside likely owes $32 million to its clients. However, the proposed amount is capped at $600,000 due to the firm’s finances. A crucial clause states that if Riverside leaders are found to have misrepresented the company’s finances, the entire $32 million will become due.
Settlement Creates Financial Risk for Company
- A $600,000 settlement addresses only a fraction of the estimated $32 million in potential damages owed to businesses.
- Riverside and Cascade are barred from deceptive practices and must offer customers a path out of their contracts.
- The settlement terms create a financial risk for the company if its reported finances were misrepresented to regulators.
Settlement Excludes Equipment Leased Terms
The settlement does not cover equipment leased through Cascade Equipment Leasing, which is operated by the same executives as Riverside: Brandon Skinner and Jason Reese. According to hundreds of Better Business Bureau complaints, Riverside misrepresents equipment leases. Businesses are often rushed into signing contracts on an iPad with terms different from initial paper agreements, locking them into four-year leases for terminals that cost a few hundred dollars to purchase but totaling thousands of dollars in fees. Complaintants report being promised savings of nearly 60%, only to pay more than their previous processor and face steep early termination fees, such as a $695 charge to exit the processing contract. Even after paying this fee, businesses remain on the hook for the equipment lease.
Settlement Bars False Claims About Rates
| Alleged Misconduct | Settlement Term | Impact on Businesses |
|---|---|---|
| Misrepresentation of savings (up to 60%) | Bar on false claims about rates and savings | Businesses paid more than previous processors |
| Hidden fees and buried contract terms | Requirement for clear communication and cancellation option | Difficult or impossible to cancel contracts |
| Deceptive equipment leases | Not covered in this settlement | Leases totaling thousands for equipment worth a few hundred |
Expert Analysis on the Precedent Set
The immediate next step is Judge Fricke’s decision on the proposed settlement. If approved, the notification and cancellation period for current customers will begin shortly. If denied, the FTC and Washington state may pursue further legal action. It is unclear how many of the 300 identified businesses in Washington and countless others in Oregon and across the country will be able to complete the cancellation process and recover from the financial strain of these deceptive contracts. The company’s claim that it “strongly disagrees with the allegations” while simultaneously settling leaves the long-term impact of its business practices open to interpretation.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
