Someone Finally Takes On Credit Card Companies

Let me say I'm not an expert in finance law.  However, after reading this article I agree that the major credit card companies are overstepping themselves, and that I have a whole new appreciation for "cash only" businesses.

Stephen and Theodora “Cissy” McComb, owners of Cisero’s Ristorante and Nightclub in Park City, Utah, have filed a lawsuit against U.S. Bank claiming that the financial institution, which used to process the restaurant’s credit and debit card transactions, wrongfully seized money from the McCombs’ merchant bank account.

U.S. Bank seized about $10,000 from the McCombs’ account to pay $90,000 in fines that Visa and MasterCard imposed after alleging that Cisero’s had failed to secure its network and suffered a data breach that resulted in fraudulent charges on customer bank cards. U.S. Bank sued the McCombs to obtain the remaining balance on the fines, saying a contract the McCombs signed with the bank makes them liable for such fines.

But in their countersuit against U.S. Bank (.pdf), the McCombs allege that the bank, and the payment card industry (PCI) in general, force merchants to sign one-sided contracts that are based on information that arbitrarily changes without notice, and that they impose random fines on merchants without providing proof of a breach or of fraudulent losses and without allowing merchants a meaningful opportunity to dispute claims before money is seized.

In this case, there was possible fraud and fines were assessed without notice or a chance to investigate. These guys were found guilty in the court of MasterCard and that was all there was to it. These companies will only accept investigations from companies they allow (yeah, that's going to be fair, right?) and in this case the results came out in favor of the McCombs. They could not prove they had any involvement in the stolen identities and fraudulent payments. Yet they were still fined without explanation, and after the investigation their money was not returned.

The McCombs filed a countersuit saying they were not given any notice of the fines, nor were they given an opportunity to present any evidence or see any evidence against them. They have included the bank, saying the bank had a duty to at least give them notification of what was happening. Instead, their account was violated for a breach they don't have proof occurred. One victory on their part can change how credit card companies can fine merchants, which is important for them and the consumers who are using their services. We need to know our information is protected, and this giant round of "Not it!" isn't helping anyone.