Following on the heels of the Heartland Payments Systems, Inc. (“Heartland”) v. Mercury Payment Systems, LLC (“Mercury”) pending litigation, enterprising plaintiffs lawyers in Georgia and Florida have filed suit seeking class action certification against Mercury and co-defendant Global Payments Direct, Inc. (“Global”). The suit primarily alleges that Mercury’s promises of low fees and transparent pricing were illusory, along with a number of provisions of its Merchant Services Agreement being void as against public policy – including a provision purporting to require a merchant to cover Mercury’s legal fees, even in a dispute in which the merchant is the prevailing party.

The claims set forth in the complaint, which was filed earlier this month in Fulton County Superior Court (Atlanta, Georgia), are factually similar to the claims made by Heartland against Mercury, a subsidiary of Vantiv, Inc., but are based on different legal theories. In the Heartland v. Mercuryaction, Heartland has alleged that Mercury’s illusory promises of low fees and transparent pricing amounted to false advertising and unfair competition. In the Fulton County action, the Plaintiffs allege that similar practices and promises give rise to claims for breach of contract, breach of the covenant of good faith and fair dealing implied in every contract and unjust enrichment. The Plaintiffs also seek a declaration that certain provisions in the agreements between the prospective class members and Defendants are unconscionable and unenforceable.

The Plaintiffs may, however, face an uphill battle on class certification since their claims are in many ways dependent on the individual pricing and categories of fees negotiated with each merchant in the class, pursuant to the Merchant Services Agreements between Mercury and each separate prospective merchant class member. Such variations, if demonstrated by Defendants, may defeat the commonality necessary for class certification, and require contract-by-contract review of each MSA, which may undermine the Plaintiffs’ claim that a class action is a superior vehicle for resolving this dispute.

Nevertheless, for payment processors and merchant acquirers, this suit is evidence of an increasing level of scrutiny on the industry from the plaintiffs bar. As a result, processors and merchant acquirers should revisit their form agreements and billing practices to ensure they are free of provisions that a court might consider against public policy, and that all fees payable by a merchant are clearly identified in the application, the main agreement, or a schedule to the agreement. Processors and merchant acquirers should also ensure that their agreements provide them the right to periodically increase payment processing fees, and charge new fees as the marketplace changes (e.g., additional data security fees). Such provisions, if coupled with a limited termination right by the merchant, would likely ensure that the agreement is both enforceable and also not deemed a contract of adhesion.