FTC Sues Payment Processor Riverside Over Savings Pitches and Hard-to-Exit Contracts
The Federal Trade Commission and the State of Washington have sued Riverside Payments, a Vancouver, Washington payment processor, alleging it sold small businesses on lower card processing costs and then locked them into multi-year contracts and equipment leases that were expensive and hard to leave.
The complaint, filed November 2 in the U.S. District Court for the Western District of Washington, also names Cascade Equipment Leasing, LLC, which does business as Cascade Capital Group, along with Riverside CEO Brandon Skinner and CFO Jason Reese, who each own half of both companies. A proposed settlement was filed the same day. The defendants neither admit nor deny the allegations, and the order still needs a judge's signature.
The pitch, according to the complaint
Riverside works as an independent sales organization for processors including Fiserv. The complaint says it sold through telemarketing and door-to-door visits by hundreds of sales agents, many of them independent contractors working on commission.
A flyer quoted in the complaint claimed that switching saves businesses "an average of $2,000 per year" and told prospects, "You are preapproved for 0% debit transactions and 1% average on credit transactions." The pitch leaned on a "strategic alliance" with Visa and Mastercard. The complaint says Riverside has no such alliance with either network.
According to the FTC, agents at times claimed businesses would save 40% to 60%. Regulators say the savings quotes left out annual fees, monthly software and technology fees, and American Express charges, and that merchants were later hit with activation, batch, data security non-compliance, and inactive processing fees they did not expect.
Merchants were also offered a "risk-free" "Guarantee of Savings," the complaint says, with a promise that they could switch back at no cost and receive $500 "for the time and hassle."
What the paperwork said
The processing agreement carried a three-year initial term, automatic one-year renewals and a $695 early termination fee, according to the complaint. Card terminals often came through Cascade on a non-cancelable four-year lease that renewed month to month afterward, with a $150 restocking fee.
One example in the complaint: a North Carolina business paid about $47 a month for four years, roughly $2,250 in total, to lease a machine that would have cost around $400 to buy new.
Regulators also say Riverside collected bank account information through a voided check before the business received a copy of the agreement. That allegation supports a separate count under the Gramm-Leach-Bliley Act, which bars false statements used to obtain customer information of a financial institution.
Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, summed up the agency's view when it announced the case:
"Riverside and Cascade promised small businesses significant savings, but instead of saving money locked them into costly, multi-year contracts and made it very difficult to cancel."
Trying to cancel
Riverside's written process, as described in the complaint, treated a merchant relationship as a "dead deal" only after the business refused at least three times to keep using its services. Merchants who tried to leave ended up "stuck in a loop of fruitless phone calls and deflection," the complaint says, and it cites hundreds of complaints from businesses.
The recruiting pitch
The case also goes after how Riverside recruited its sales force. Job ads promised "average yearly earnings between $75,000 and $95,000" and said top agents were making "100k+," while interview scripts told candidates that average full-time reps make "$6,000 per month," according to the complaint.
The complaint's own numbers tell a different story. No sales agent earned six figures in 2023 or 2024, it says, and in 2024 the companies paid $1,249,850.93 to 330 agents on 1099s, an average of $3,787 for the year.
What the proposed settlement does
The proposed order enters a $32,083,921 judgment against both companies and both owners. All but $600,000 is suspended. That $600,000 funds a Merchant Redress Fund, paid back to merchants by ACH based on their processing volume. If the defendants misrepresented their finances or fail to fund it, the full judgment comes due.
Within 30 days after the order is entered, Riverside must email its merchants a notice. Merchants then have 60 days to cancel without an early termination fee or other cancellation penalty.
Going forward, the order bars misrepresentations about costs, savings and cancellation, savings claims the companies cannot back up, and earnings claims without competent and reliable evidence. It also requires clear disclosure of automatic renewal terms, the merchant's express informed consent, and a way to cancel that is at least as easy as signing up. Compliance reporting runs for 10 years. The Commission voted 2-0 to file the case, and Washington joined under its Consumer Protection Act.