Complaint Review: Coast Merchant Serivces

We are reporting our experiences with Coast Merchant Services to save other companies from-having the same experience. Here is what we went through: In March 2007 we wanted to get a merchant account for processing our customers credit cards. We got in touch with all kinds of large and small companies providing those services. Most of them gave us pages of discount rates applicable to all kinds of different cards. We got lost in numbers and the variety of credit cards people can have. One day we received a call from Coast Merchant Services, Los Angeles (www.coastmerchantservices.com). In a personal meeting, the representative offered us a flat, one and only discount rate of 2.99%. We liked the idea of only one rate very much. With one rate you know how much you have to discount on your sales and you do not have to worry about the particular credit card your customer is using.

However, we thought that the rate itself was a bit too high. Then, the president of Coast Merchant Services visited us and offered us a flat rate of 1.99%. We told him that most of our customers did not visit us in our office, but we were visiting them. They sign our contracts when we are not pre-sent and they send them back to us with personal or cashiers checks. So there is no chance of sliding a customers credit card through the terminal. When you want to charge your customers credit card, there is usually a difference in sliding a credit card through the terminal (card present) versus having all the credit card details but not the card present when entering the details into the terminal. David Ulfig, the president of Coast Merchant Services told us that we would not face any problems, we should hit Yes when the terminal prompts for card present?.

Here is the deal the president of Coast Merchant Services presented to us: 1.99% flat discount rate from EPS Electronic Payment Systems, Denver (CO), www.eps-na.com, no matter what credit card used. $90.47 incl. tax / month equipment lease for 48 month from LeaseSource Inc., Atlanta (GA), www.leasesourceinc.com. After 48 months we would own the equipment. If we wanted to terminate the merchant service beforehand, his company would transfer the equipment lease to another customer. This would be part of Coast Merchant Services service we would buy with the contract. Before signing the merchant service agreement and the equipment lease, we asked David Ulfig whether there were any surprises and hitches, because we would not like to get something sold we would not get in the end. The president of Coast Merchant Services said there were none. We put trust in him and signed the agreements. After the first 2 transactions in March 2007 we received exactly 98.01% of the credit card sales. We were relieved that everything added up finally. However, at the end of March 2007, we received a statement from EPS stating that the transactions were related to non-qualifying credit cards.

Therefore, we were charged an additional 1.75%. All kinds of credit cards with airline miles, bonuses and rewards are considered non-qualifying cards. When calling Coast Merchant Services, claiming the one and only 1.99% we did not receive any response. David Ulfig, the president, was not available. When calling EPS, we were told to look at the back of a contract page. The fine print would clearly tell that potential up-charges may occur for non-qualifying cards. The backs of the contract pages are full of 1/32 large fine print. Our reaction was to instantly stop accepting credit cards and return to the regular private and cashiers checks. As we were bound to an initial year, we terminated the services per the end of that first year. Unfortunately, Coast Merchant Services did not stick to their promise to transfer the equipment lease to somebody else. The president of Coast Merchant Service told us that we have cost him $300 and that he has no motivation to transfer our equipment lease to somebody else. He said he was lucky when we send our service termination. Well, we paid $2,600 and still have to pay $3,300. This is $5,900 in total we would have saved, if this man would have told us the truth. Beware!