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Apex Merchant Services of Plano, Texas, routinely altered the contracts it signed with Minnesota companies without their authorization, hitting them with fees they didn't agree to and often reinstating a cancellation penalty that had been removed, the complaint said.
"It was so blatant," Swanson said in an interview. "Fortunately, some of the small businesses kept the contract."
Apex Merchant Services CEO Andy Frankel and other company executives did not return messages seeking comment Wednesday.
Swanson is charging Apex with violating the state's Prevention of Consumer Fraud Act and Uniform Deceptive Trade Practices Act, according to the complaint filed Wednesday in Hennepin County District Court. The suit seeks to stop to Apex's activities, impose civil penalties and gain restitution for an undisclosed number of businesses.
Apex has contracts to process debit and credit cards for more than 600 small companies in Minnesota. Swanson called the number of businesses affected significant.
One Apex salesman has been particularly active in the state, she said, but she wouldn't name him because the investigation continues.
Merchants have been locked in battle for years with the major card networks and banks over the hefty fees they must pay whenever customers pay with plastic. Companies like Apex aggressively pursue retailers eager to lower the processing bill. Swanson said Minnesota businesses are reporting being contacted multiple times a week by payment processors.
"You have these companies out there, kind of swarming, saying, 'I can get you a better rate,' " Swanson said.
Attached to the lawsuit are the original and altered Apex contracts with several local small businesses, including a St. Paul convenience store and an auto repair shop in Lino Lakes. They show fees changing, and various types of fees, such as cancellation or annual fees, crossed out on the original contracts and then reappearing on the altered agreements.
One of the contracts was signed by Donn Erickson, who ran a Brooklyn Center pizzeria for 29 years. His initial contract showed he agreed to pay a 10-cent transaction fee per swipe, in addition to other costs. That doubled to 20 cents on the contract Apex recorded.
In an interview, Erickson recalled the salesman stopping at his shop last year, urging him to switch to Apex because it would save him 35 percent in processing fees. Erickson figures it actually rose about 35 percent. Efforts to resolve the problem and reverse the charges went nowhere, Erickson said.
"I knew that I was right, in what was stated in the contract," Erickson said. "And I don't like to be played with and bullied around."
Erickson has since sold the business.
Renee Quimby, co-owner of the auto repair shop in Lino Lakes, said that her agreement with Apex clearly stated there would be no cancellation fee or annual fee. But she was hit with both. Twice she had to fax the company copies of her contract to dispute the fees.
"I had to fight for my rights," she said, adding that the experience left her "very mistrusting of the industry."
At least two small businesses were forced to close their bank accounts to keep Apex from making disputed withdrawals, according to the lawsuit.
Apex has ties to Certified Merchant Services, a now defunct credit card processing company that the Federal Trade Commission sued for similar violations in 2002, according to the AG's office. Certified Merchant Services, which was also located in Plano, Texas, paid the Federal Trade Commission $23.5 million to settle charges that it engaged in deceptive sales practices with small businesses.