CMS Appoints Permanent Receiver

G arrett Vogel, a certified public accountant from Dallas, has been appointed permanent receiver in the action by the Federal Trade Commission (FTC) against Certified Merchant Services (CMS). Vogel has worked in more than 20 state and federal receivership cases.

This is the first complaint filed by the FTC against an ISO.

Judge Paul Brown, U.S. District Court for the Eastern District of Texas, Sherman Division, had named Vogel as the temporary receiver in February. At that time, Vogel assembled a team of legal and financial industry experts to address the management and operational issues that had come into question. The team also looked at specific concerns raised by customers, employees and other financial institutions.

Since February, the team has created a revised business plan for CMS, prepared a preliminary report, instituted employee re-training programs, begun a program to solicit feedback from merchant customers and reported its actions regularly to the court.

According to the FTC complaint, CMS engaged in "unfair and deceptive practices related to the marketing of credit and debit card merchant accounts to small businesses nationwide."

FTC allegations also include that CMS misrepresented and altered the terms of merchant account agreements and then fraudulently debited undisclosed fees from the merchant's bank accounts.

"Credit card processing is a vital part of virtually any business. Small business owners should be able to run and grow their businesses without having to worry about whether or not they are being treated fairly. Our responsibility is to address the concerns of the court, our customers and our employees," said Vogel.

Under Vogel's guidance, CMS and its associated companies are implementing a series of initiatives to improve and enhance both merchant and employee relationships, including reviewing the company's fee structures and policies, contractual agreements and operational procedures.

The receivership team put together by Vogel includes Fred Gumbel, former Chairman, President and CEO of Vital Processing Services, who will address operational and management issues; Mary Dees, President and CEO of creditranz.com Inc., who will oversee sales development, marketing and management issues on behalf of CMS; and Paul Scoggins, former U.S. Attorney, who is creating the company's first corporate ethics and compliance office.