Class action threatens Priority ISOs

A class action lawsuit filed Nov. 23, 2021, could impact a broad network of sub-ISOs and merchant level salespeople (MLSs) associated with Priority Payment Systems LLC and Priority Technology Holdings Inc. In the complaint, a large class of merchants, represented by Atlanta-based law firm Webb, Klase & Lemond LLC, accuses Priority representatives of enrolling customers under false pretenses and subsequently inflating contracted fees.

Plaintiffs further assert that ISOs, which include Priority Payments of North Atlanta, Priority Payment Systems Gulf Coast, Priority Payments Local, Priority Payments Global, and Priority Payments of Texas, used Priority's standard merchant application to sign up new customers, many of whom were not even aware that they were entering into an agreement with Priority and Wells Fargo Bank N.A., legal representatives noted.

The class action filing, Braids R Us 305, et al. v. Priority Technology Holdings, Inc., et al., case number 2021-0151551-CV, will be heard by the Superior Court of Cobb County, Georgia. Injunctive relief sought by plaintiffs, too numerous to name, includes refunded fees and rescinded contracts, Webb, Klase & Lemond stated.

"The precise number of Class members and their addresses is presently unknown to Plaintiffs but can readily be ascertained from Defendants' books and records," legal counsel members wrote. "Class members may be notified of the pendency of this action by recognized, Court-approved notice dissemination methods, which may include U.S. Mail, electronic mail, and/or published notice."

"What's crazy is that they are going after everybody," added a source who requested anonymity. "This class action potentially affects ISOs and MLSs from all over the country."

Bait and switch accusations

Webb, Klase & Lemond requested a jury trial and included examples of merchant applications in the complaint, which calls for "disgorgement of all profits, benefits, and other compensation obtained by Defendants by virtue of their wrongful conduct."

Plaintiffs cited the following concerns in the three-count complaint:

• Fraudulent inducement: Plaintiffs allege defendants knowingly disclosed inaccurate pricing to induce merchants to enter into business. By not properly disclosing true applicable rates on the MPAA Fee Schedule, Priority ISOs and MLSs misrepresented the true pricing model that would ultimately apply.

  "Defendants' misrepresentations and omissions alleged herein were material, including in that they would be considered very important to merchants in deciding whether or not to do business with Defendants, and were known by Defendants to be false and misleading," plaintiffs' legal representatives wrote.

• Breach of contract, covenant of good faith and fair dealing: Plaintiffs allege that defendants repeatedly imposed fees that were outside of merchant contract fee schedules or higher than amounts set forth in merchant agreements.

  "Priority's anticipated attempts to defend its overbilling through reliance on the self-serving contractual provisions in the Program Guide will be without merit," the legal representatives wrote. "If the MPAAs never took effect because Priority and Wells Fargo never signed them, the Program Guide is not binding on the parties."

• Breach of the duty of good faith and fair dealing: Plaintiffs allege defendants failed to honor stipulated contract terms, thereby abusing power by violating good faith, fair dealing and the spirit of their bargains.

  "Subterfuge and evasion violate the obligation of good faith in performance even when an actor believes his conduct to be justified," plaintiffs' legal representatives wrote. "A lack of good faith may be overt or may consist of inaction, and fair dealing may require more than honesty."

Webb, Klase & Lemond has invited interested parties to contact the law firm directly at 770-444-9325 or www.webbllc.com for additional information about the class action lawsuit.

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