QUESTION:
*********
Ken,
How do you feel about a restocking fee added to the contract for returned or not used equipment and/or changes.
Also, is it legal to charge a “processing fee” for large credit card equipment purchases?
Brandon J Smith
*********
ANSWER:
*******
The Standard Form Contracts do provide for accepting credit cards. The credit card information should of course be safely guarded and not misused. If you receive notice from the subscriber to stop automatic charging you should stop immediately. If that puts your subscriber in default then enforce your rights under the contract.
To assist with the answer I asked a credit card processing company that I previously featured [it's good idea to support a supplier that designs, understands and supports the alarm industry and it's particular needs].
Here is Tom's response to the processing fee issue - pretty clear –
Mr. Kirschenbaum – Surcharging customers using credit cards is illegal! Visa and MasterCard have long standing regulations preventing surcharging customers for using a credit card. Recently they have allowed discounting for cash purchases (wordsmithing somehow negates the meaning of surcharging???).
I see merchants on a daily basis surcharging for credit transactions, and while I see it more as an inconvenience, the government doesn’t see it the same way. Currently there are 10 states with laws against credit surcharging, California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Some of these states have very easy ways to report businesses that are illegally surcharging, creating a quick path to fines, bad publicity, and lawsuits.
Apart from state laws, all that an angry customer needs to do is call their card issuer and report the business. The issuer passes the message down to the business’s processor, who then tells the business to stop. If more complaints are received, fines are assessed ($10,000 – $20,000 for the first offense), and then the business is shut down and placed on the TMF list by the issuer. They are then prohibited from accepting credit cards by just about every processor in the world until they get off the list.
It’s true that many businesses get away with surcharging for a long time, but I urge any business owner to seriously consider the potential consequences from breaking the surcharging regulations. It may seem like a logical idea from a financial standpoint, but the repercussions can be quick and severe.
I would also like to take this opportunity to thank you for featuring my company in your prior email. We are signing up alarm companies and because of the scope of your email forum we are able to deliver services at a price to smaller companies which we typically make available only to our larger clients. The program we have developed for the alarm industry has made it much more convenient for them to handle their monthly recurring revenue under their subscriber contracts, an essential feature to the alarm contracts, and we have tackled the issue of PCI compliance, often overlooked or non compliant.
We have been able to save each and every alarm comany who switched to our program significant amount of money which I’m sure they all appreciate. You can direct anyone to our site for additional information or to have them request a Free Consultation and Comprehensive Analysis of their current processing relationship.
Best Regards,
Tom Aronica
800-617-9980 x701