Beware of the Telemarketing Leasing Scam: Protect Your Business
If you’ve ever been telemarketed about credit card processing, you’re not alone. These calls often start with a warning: “This is your merchant services calling, and your terminal is out of date. If it hasn’t already stopped working, it’s about to.” However, this is a scare tactic designed to manipulate you into making unnecessary and costly decisions.
The Telemarketing Tactics
Telemarketers will claim they are from your merchant services, yet they never mention their company name. They create a sense of urgency, telling you that your credit card terminal will soon stop working unless you take immediate action. This fear-mongering is aimed at making you stay on the call to “protect” yourself from this fabricated problem.
The ultimate goal is to get you to sign a lease for a new, overpriced credit card terminal. These leases are typically for 36 months, at a cost of $89.95 per month. Over the term, you end up paying $3,238 for a terminal that usually costs between $400 and $500. This discrepancy allows the telemarketers to pocket a substantial commission from a sale you didn’t even need.
The Hidden Costs
Processors who employ such deceitful sales techniques are unlikely to offer you the best rate charges. Even if they initially provide a fair rate, they often increase these rates every six months, notifying you in the fine print of your merchant statement. This makes it easy to overlook the changes until you realize you are paying much more than anticipated, and you are locked into a long-term lease.
The Lease Trap
Leases come with specific requirements for termination after the 36-month period. If you do not follow these procedures exactly, the lease is automatically extended for another year. Typically, you must notify the leasing company (not the processor) within 30 days of the lease’s end. Missing this window, even by a day, means you are stuck with the lease for another year. Leasing companies often make it difficult to reach a representative, further complicating the cancellation process.
A Better Alternative
At Electronic Money Company, we never sell leases for terminals. While we may lease POS systems, our leases automatically end after 36 months. Given the low cost of terminals, we prefer to sell them outright. This approach ensures transparency and fairness for our clients.
If you ever receive an offer that seems too good to be true, feel free to contact us for a second opinion at 505-362-0837. Our A+ rating with the Better Business Bureau (BBB) is a testament to our commitment to ethical practices and client satisfaction.
We treat our merchants like family, ensuring they remain with us for the life of their business. Don’t get trapped by telemarketing scams. Protect your business by staying informed and choosing partners you can trust.
Questions To Ask
Most every merchant has been the victim of a payment processor who charged hidden fees, raised rates over time, scammed them into a ridiculous price for a credit card terminal lease, or didn’t take proper care of their service requests.
So I put together a list of questions to ask when you are shopping for a new credit card processor. I am Gingergaye, president of Electronic Money Company.
- How long until funds are deposited into my merchant bank account? You should be able to get next morning deposits.
- Do you provide a free credit card terminal?
- Am I under a contract? If so, for how long and what are the early termination fees?
- Do you have liquidated damages for a termination fee or a flat fee or both? (Liquidated damages means that the processor will continue to collect all the fees and profits they were used to making before you terminated, until the end of the contract. It is a lot!!!
- What is the processing fee model that is being proposed? Flat fee, Tiered, or Cost +? ( Flat fee is self-explanatory. Tiered means there are 3 rates, one for swiped cards, one for keyed in cards and a third for corporate cards. Cost + means you will get charged wholesale rates on each transaction plus a markup.
- Do you have chargeback support? A chargeback is when a customer charges their credit card back to you. The money is immediately sucked out of your bank account and you have a week to prove that the sale was legitimate and that you should get your money back.
- What is the phone # to your support line? When is it accessible? (I suggest you try it and see how fast someone gives you service.)
- What other fees are there besides rate, transaction fee and monthly fee.
- What are the PCI compliance fees and the PCI non-compliance fees?
- Do you raise rates over time?
Consider giving Electronic Money Company a call to compare a quote or you can simply call us for advice at 505-296-2847. Talk to you soon!
Stay up to date with our latest videos and merchant services tips, make sure to subscribe to our YouTube channel by clicking the link here: https://bit.ly/3oqnz7Z