IPayment Technologies, Bank Card USA ripoff! Fraudulent, breech of contract, unfair business practices! Calabasas California

I am a former customer of IPayment Technologies, a Credit Card Clearance Bank for Visa and MasterCard. This company is used by dozens of Banks offering credit card services to small businesses. We became their customer in 2000 when we signed a contract with BankCard USA.

In May of 2004, we had a record sales month, in which we sold over $18,000. Towards the end of the month, money from IPayment stopped coming into our Wells Fargo Bank account for Visa and Mastercard charges made by our customers for product we had already shipped to them. I contacted IPayment, who told me that we had gone over our limit of $5,000 per month.

This is something we had done more than 6 times in the last 12 months without a word from them. Because we had gone over, their risk department concluded that they would have to hold $14,000 for up to 6 months. Their reply as to why was: that your customers have up to 6 months to contest the charges. We had been a customer of theirs for almost 4 years without any problems that could justify this type of treatment of our account.

We desperately needed the funds they were holding in order to continue our business operations. This $14,000.00 was a huge hit on our operating capital. They told me that if I could prove that we delivered all of the products, they would consider releasing a portion of the money within 30 days. In less than 24 hours I sent proof of all deliveries via fax.

Within another 24 hours, they told me that they would not release any funds for at least 3 months or raise our limit up from $5,000 to accommodate our growing business and that they were in fact closing our account effective within 30 days. I received a letter in the mail couple of days latter confirming that the account was cancelled. Although the letter gave us 30 days to in which to settle all pending business with our customers related to charges through their bank, they shut-off access to our account in less than 10 days (breech of contract on their part).

During a conversation with one of their representatives by the name of D Cox, I was told that if I wanted to get our money any sooner, I should open a new merchant account with another bank, give my customers a credit under my IPayment account and then charge them under my new account. I did just that with about $4,200.00 by giving 2 customers credit each for about $2,100.00. As soon as I did this, IPayment came after our Wells Fargo account for the money.

If they were holding the $14,000.00 for just such a case, why did they come after me for the chargeback? If they had succeeded in the chargeback, they would in fact be holding $18,000.00 of our money. The only reason they did not succeed, is because we did not have sufficient funds when they put the chargeback through. Wells Fargo Bank told me that the only way to keep them out of our account was to close it, so I did.

Within 7 days of my initial problem with IPayment, I had a new account with another bank which gave us a $25,000 monthly limit with lower rates than IPayment was charging. If we were such a high risk that IPayment felt they had to close our account after 4 years, why did CardService International, which is a larger bank, give us 5 times the limit without a fuss and with lower fees?

Repeated attempts to recover our money have been fruitless. We are still out some $10,000 to this day (10 months later) with no prevision as the when they might settle this balance.

I have requested on at least a dozen occasions a justification and or clarification of our rights and obligations but, they have never given us an explanation or accounting of any sort. Since before the termination of our contract by them, we have not received any sort of accounting or monthly statement as was the practice prior to this issue.

We don't know how much they think they owe us or what fees they are charging us as our money remains in their possession. What kind of bank tells you you've broken their rules, but provides no accounting of any sort? Not even to say, according to your contract, paragraph such and such, we are now canceling your account and will hold this much money for this much time.

I am now seeking legal council for a class action suit against BankCard USA, IPayment, its representatives and executives.

It is clear to me that BankCard USA, IPayment Technologies, its representatives, employees and executives have continuously misrepresented and acted in bad faith in regards to their financial practices in the collection and disbursement of funds belonging to their clients.

Further, their contract, which is used by at least a dozen banks is effectively defective because it causes consumers injury in its use and or enforcement. IPayment should not be allowed to deceive and extort from hard-working small businesses like ours.

Sergio
Arcadia, California
U.S.A.