Eatery Fights Credit Card Fines in Court

Utah restaurant owners sued the bank that processed their charges after the card companies accused them of fraud.

January 13, 2012

PARK CITY, Utah - For more than 20 years, Stephen and Cissy McComb ran Cisero??s without any problems with MasterCard and Visa. Then the credit card companies alleged the pair mishandled data that triggered fraud, Bloomberg reports.

The McCombs sued, countering that they had not broken any rules and did not have a security breach. They said that the fraud was unspecified and unsupported. They also claimed that card firms changed rules without giving notice, took money from retailers?? accounts even though no fault was proved, and inflicted contracts that were unfair and one-sided.

"This case has the potential to send the message that merchants can stick up for themselves in these relationships and demonstrate that they??re correct and the bank has it wrong," Doug Kantor, counsel for the Merchants Payments Coalition, told Bloomberg. Kantor has no involvement in the McComb case. "Merchants essentially live in fear that they will be crushed by the card companies and banks if there??s ever a dispute, and therefore don??t dispute most of these things."

While the McCombs aren??t the only ones who have criticized payment card industry regulations, they might be first to file a lawsuit to dispute the fines. "There??s a suspicion among many merchants that PCI is a near scam wrapped in good intentions," said Mallory Duncan, general counsel for the National Retail Federation. "The dissatisfaction with PCI and the financial consequences of it in the retail industry are rampant."

"The case is unusual because the banks and their processors rarely get to the point where they actually file a suit against the merchant," said Scott DeFife, who heads the National Restaurant Association??s government affairs division. "Because they did, it allowed Cisero??s to answer back, 'Prove it and show us your math.??"

Park City Judge Keith Kelly has yet to rule on the case, which is Elavon Inc. v. Cisero??s Inc.

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