I asked my local bank, Key Bank, to send me a rep as I wished to include credit card processing to my small computer business in Pawling, NY. As I trusted the bank to be a well-established institution, I didn't question the rep when he told me it would be $49.99 a month to sign up for merchant services. I didn't know any better at the time.
I signed the agreement without really looking at it, because I never would have thought that my own bank would rip me off, and a few days later received the machine. It worked and I was satisfied.
About two days later , I received a letter from a company called Ladco Leasing, stating that I had signed into a four-year lease with them for the credit card processing machine. Being a computer repair shop and having 30 years of electronics and computer experience, I realized that the machine could not possibly be worth almost $2500.
Sure enough, I checked several companies that were selling the terminal and I found that the terminal is worth between $150-$300. Boy was I pissed.
I immediately went online and before I even finished typing "Ladco Leasing" into Google, I saw "Ladco Leasing scam" and "Ladco Leasing complaints" come up in the suggested search box. I couldn't believe that this company was doing this to literally thousands of merchants throughout the country. But they are.
Checking Ladco's website, I found some quite disturbing statements, such as, "LADCO’s programs allow your sales people to increase the profitability of their sale by selling lease payments equal to up to 5 times the actual equipment cost. This added revenue pays for installation, sales costs, bundled services, commissions or simply increases profit." Truthfully, there is no installation. You plug in the machine and it just works. As for sales costs and "bundled services," again, there are none. It's all profit, at the expense of the consumer.
I was appalled. Having some legal experience, I asked my bank rep for a copy of the lease and right on the lease I found several issues. The biggest issue is that there's a purchase option right next to the lease option, but, naturally, the bank reps aren't telling anyone that this is even an option. Also, the lease itself doesn't have a breakdown on it, such as the equipment cost, the interest rate (over 900%) and the final cost to the consumer. Furthermore, Ladco was charging me an extra $6.00 a month on top of the $49.99 because I don't have business insurance yet. I found no mention of this extra charge anywhere on the lease.
In fact, there isn't anything on the lease except the "$49.99 a month for four years," and that's about it. Checking the law, I found that a lease without any details is illegal, and not allowing a customer to purchase a piece of equipment when there is clearly a purchase option and basically forcing them into the lease is also unlawful. The interest rate, being around 900-1000% is far beyond anything in existence, except maybe for loansharking. I'm not even going to go into the insurance charge as it's not mentioned anywhere in any place.
This is a travesty, and something needs to be done about this unscrupulous company that is ripping off thousands of merchants across the country and has forced them into an "uncancellable" lease that is a sham. You are giving Ladco $50 a month for four years for nothing, because at the end of the four years there is a buyout for several hundred dollars, which is the true cost of the machine.
When I gave all this discovered info to my bank rep, he tried to calm me down, but eventually said they would do for me what they normally don't do, and that is cancel the lease. I wasn't surprised, as they don't want too much attention drawn to their little party. I found out also that the bank reps are given a very large kickback for getting the hapless merchant into this sick lease.
I have already filed a complaint with the FTC and I am contacting the Attorney General's office and I have also signed up for a mailing list of other pissed-off merchants and we are going to file a class-action lawsuit against Ladco and Elavon, who apparently owns the company.
A warning to everyone: Do not use your local bank for merchant services. I found a private merchant service that will be selling me the machine outright for around $300 and it will only be $10 a month for statement charges.
It's shameful when a large company is consistently ripping off small business owners throught the U.S. and it only goes to show that a large company like this can get away with just about anything until someone takes them to task on it.