Other LanguagesSPOKANE — Washington Attorney General Bob Ferguson today filed a complaint against two businessmen and their credit card processing companies for allegedly scamming small business owners.
“Scamming small business owners in Washington will not be tolerated,” said Ferguson. “When businesses don’t play by the rules, the Attorney General’s Office will hold them accountable.”
Kyle Lawson Dove and Shane Patrick Hurley are principals of Merchant Services Direct (MSD), LLC, now operating as Syphra, Inc. The defendant’s other companies include Generation Y Investments, LLC, and Boost Commerce, Inc.
Since at least 2008, the defendants have been recruiting sales representatives and training them to deceive thousands of small business owners. MSD markets and sells credit card processing services and third-party equipment leases to small business owners through a network of branch offices and independent agents. They are based in Spokane and operate in six other western states. MSD reportedly grossed an estimated $7 million in 2012 according to the Better Business Bureau.
The Washington Attorney General’s Office (AGO) alleges the defendants called small businesses and misrepresented that they were associated with a business’ current credit card processing company and were simply ‘updating’ current service. To get the small business to agree to the update, they misrepresented that processing rates would be lower than the business' current credit card processing company and that the business would experience savings. Finally, the defendants would misrepresent that the business' current credit card processing equipment was outdated and new, expensive leases for new equipment were necessary.
Businesses learn that MSD has deceived them after receiving the first billing statement. Only then do they realize:
• MSD sales agents aren’t affiliated with their current payment processor;
• MSD’s processing rates are higher than represented;
• undisclosed fees are being debited from their bank account;
• they have signed non-cancellable leases for equipment with third-party companies; and
• they have to pay an undisclosed $300 to $400 to cancel processing services. They still remain bound by equipment leases unless they pay an additional $350 to $500 undisclosed cancellation fee.
The AGO is filing in Washington state for injunctive and other relief under the Consumer Protection Act and will be seeking full reimbursement for costs and fees and restitution for businesses.
The Federal Trade Commission (FTC) was instrumental in working with the AGO to investigate this case, providing valuable assistance that led to the filing of the case in state court. The FTC is filing a separate complaint in federal court alleging violations of federal law.
Assistant Attorney General Brooks Clemmons is the lead attorney on this case.
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