FILE - Several credit cards are shown in Buffalo Grove, Ill., Thursday, Feb. 8, 2024. Pacific Northwest company Riverside Payments and its affiliate Cascade Equipment Leasing have agreed to a proposed $600,000 settlement with the Federal Trade Commission to settle allegations of deceitful business practices that costs hundreds of small businesses as much as $32 million.
Nam Y. Huh / AP
Vancouver-based credit card processor Riverside Payments is misleading customers, charging them expensive hidden fees and equipment leases, and making it nearly impossible to cancel contracts, despite the company claiming otherwise.
That’s according to a proposed $600,000 settlement reached between Riverside Payments, the state of Washington and the Federal Trade Commission.
The settlement proposal extends to Cascade Equipment Leasing, operated by the same executives at Riverside Payments: Brandon Skinner and Jason Reese.
An estimated 300 businesses in Washington and countless others in Oregon and across the country that do business with Riverside could be eligible for part of the judgment if approved.
The proposed settlement would bar Riverside Payments and Cascade Equipment Leasing from misleading customers — many of whom are small businesses — about how much they can save on card processing fees.
“Riverside and Cascade failed to serve their small business customers in an honest, transparent way in violation of Washington law,” Washington’s Attorney General Nick Brown said in a statement. “I’m gratified that we can now deliver relief to impacted Washington businesses and get accountability for these deceptive practices.”
Riverside strongly disagrees with the allegations, a company spokesperson said in an emailed statement to OPB.
“Our decision to settle will allow us to resolve this matter and focus on helping our clients with their card-processing needs,” the statement said.
Settlement amount limited by Riverside’s reported assets
All kinds of retail businesses rely on payment processing services to collect digital and card payments from customers. Food trucks, restaurants, brick-and-mortar retailers and other shops with in-person transactions need credit card terminals to accept payments.
Payment processors like Riverside work as a middleman between retailers and banks. They charge a processing fee, typically about 2% of the sales they help process, and facilitate equipment rentals if needed.
The FTC and Brown’s office claim that Riverside Payments and Cascade Equipment Leasing told businesses they could save nearly 60% compared to their old processing company if they signed up. Instead, businesses paid more compared to their previous processor and were misled into signing expensive equipment leases that were difficult to get out of.
“Riverside also failed to disclose various added fees and buried key information including a $695 early termination fee, and the cost of leasing payment processing machines from Cascade,” the statement from the Washington state Attorney General’s office said.
State and federal investigators found that Riverside Payments likely owes $32 million to its clients. But due to the finances of the processing firm, the proposed settlement is for the far lesser amount of $600,000. If Riverside Payments leaders are found to have misrepresented the company’s finances, the settlement says the entire $32 million will become due.
The settlement is meant to fundamentally change the way Riverside and its affiliated companies do business, according to FTC attorney Ben Davidson, who worked on the case.
“When they recruit new customers to sign up, they can no longer make false claims about the services they offer, their rates or their savings,” Davidson told OPB. “They also have to tell their customers about our lawsuit and give their customers a chance to exit their processing arrangement if the customers aren’t happy with their business relationship with Riverside.”
If Chief U.S. Magistrate Judge Theresa Fricke in the western Washington district signs off on the order, Riverside Payments will be required to notify all its current customers about the settlement. Those clients will have about two months to cancel their payment processing contracts with Riverside.
Business complaints extend beyond what settlement includes
The settlement doesn’t cover the equipment leased by businesses.
Riverside misrepresents how equipment like credit/debit card terminals are leased, according to hundreds of customer complaints filed with the Better Business Bureau. A business will lease a terminal for a small monthly fee, but that fee ends up adding up to thousands of dollars over the life of a lease, which is often four years. Basic terminals typically only cost a few hundred dollars to buy them outright.
When clients ask to cancel their equipment lease — sometimes, according to BBB complaints, for equipment they didn’t order and don’t need — Riverside says the lease is through a third-party company and can’t be canceled.
In many cases, the third party is Cascade Equipment Leasing, which has the same owners as Riverside Payments.
Both companies are registered at the same address with the state of Washington. In addition to being listed as an executive at Riverside and Cascade Equipment Leasing, Skinner is connected to two other companies: Cascade Management Group and Cascade Tech Systems.
Around 250 complaints have been filed with the BBB against Riverside Payments over the last three years from companies all over the country doing business with Riverside.
“The sales representative explicitly promised me lower rates and overall financial savings,” a complaint from a Texas restaurant to the BBB said. “However, they completely concealed the binding long-term commitments, including a rigid 48-month equipment lease/subscription of $291 per month and steep cancellation fees. At no point was I informed orally or given clear notice that I was locking myself into a multi-year financial obligation totaling nearly $14,000 for equipment.”
The Texas company’s complaint echoes hundreds of others from business owners. The common theme is aggressive sales tactics that rush business owners into signing a contract on an iPad showing terms that are different from what was first presented on paper. Then, when the business tries to cancel, they can’t get through to anyone. The few who could reach the company were told they would have to pay a large termination fee to cancel the processing contract.
Even if the company did pay the termination fee, they were still on the hook for the equipment lease.
The proposed settlement could be approved any day. The judge could also deny the settlement or request more information.
