Merchant Services Direct LLC

Also known as: Sphyra Inc..

The FTC alleged that Merchant Services Direct LLC, doing business as Sphyra Inc., misrepresented card-processing rates, fees, contracts, and equipment leases to small businesses. The defendants settled FTC and Washington state charges for $175,000.

2Official actions

$175KRedress ordered

Resolved. Refunded, settled, ceased operating, or the claim did not hold up. Kept for the record.

Identity

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Registrations: Merchant Services Direct, LLC, et al. (FTC case 132-3013, 2014)
Jurisdictions: United States (federal) · Washington (state)

Card-processing sales practices produced federal and state settlements

Merchant Services Direct LLC, also doing business as Sphyra Inc., sold small businesses the ability to accept credit and debit card payments. The Federal Trade Commission alleged that its sales agents made false and unsubstantiated claims and failed to disclose material facts about processing services and equipment. The Washington State Attorney General’s Office filed a separate state action against the same defendants.

According to the FTC complaint, sales agents led merchants to believe they were connected to the merchant’s existing processor, Visa or MasterCard, or bank. Agents allegedly quoted a low per-transaction cost without disclosing other fees. The FTC also alleged that merchants were induced to sign binding documents described as applications, leased terminals for two to four years after being told existing equipment was outdated, and were falsely told they could cancel at any time.

The FTC later announced settlements involving Merchant Services Direct, Boost Commerce Inc., Kyle Lawson Dove, and Shane Patrick Hurley. The releases state that Generation Y Investments LLC was dismissed from the FTC matter as part of the settlement. Under separate settlements with the FTC and Washington State Attorney General, the defendants behind Merchant Services Direct agreed to pay $175,000. They also had to give merchants a separate disclosure of fees, charges, and rates before contract signing and provide copies of signed documents.

What is not established

The releases describe alleged conduct and stipulated orders. They do not report an admission by Merchant Services Direct or an exact total of merchant losses.

Sources

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