EXPOSURE King of Prussia, PA — Behind the digital swipe of a credit card lies a labyrinth of fees, and for hundreds of thousands of small business owners, one company has turned that labyrinth into a lucrative trap. CardConnect Corp., a major payment processor headquartered in suburban Philadelphia, stands accused of a systematic scheme to tack on unapproved charges, drain merchant bank accounts, and rely on a dense, unseen contract addendum to justify the practice. The result: inflated costs for medical practices, restaurants, retailers, and service providers across America.

According to a detailed class action complaint filed in July 2024, CardConnect’s modus operandi is straightforward: lure merchants with a short, simple “Merchant Agreement” listing transparent fees, then later impose a cascade of new, unnegotiated charges. These be “Annual Compliance SVC Fee,” “Security Bundle,” “Annual Membership Fee” — none of which appear in the signed document. When merchants object, CardConnect points to a separate 50-page “Program Guide” they never received, which purports to grant the company unilateral power to change pricing at will.

The Fine‑Print Ambush: A ‘Program Guide’ No One Sees

The core allegation is that CardConnect uses a bait‑and‑switch model. A sales rep presents a one‑page Merchant Agreement with a tidy table of fees: Chargeback Fee $25, Monthly Minimum $15, PCI Non‑Compliance $19.95. The merchant signs, thinking the deal is fixed. But CardConnect later unilaterally adds charges — sometimes doubling existing fees — and justifies the hike by referencing the never‑provided Program Guide, a dense document that supposedly permits fee changes with 30 days’ notice.

“Merchants rely on the companies to provide merchant services at a fair price and in accordance with fair and appropriate terms as agreed upon by the parties,” the complaint states. “But CardConnect deceives merchants like Plaintiff into paying much more than agreed upon by sneaking unauthorized junk fees into customers’ billing statements each month.”

One plaintiff, a Nevada‑based physician assistant staffing firm (Advanced Surgical Associates), signed a CardConnect agreement in 2018. In early 2024 alone, the company was hit with a $215 “Annual Fee Security Bundle,” a $200 “Annual Membership Fee,” and a PCI non‑compliance fee inflated from $19.95 to $29.95 — none of which were disclosed or authorized. CardConnect withdrew the sums directly from the firm’s bank account before the statement even arrived.

Echoes of 2016: A Court Already Told CardConnect to Stop

This isn’t the first time CardConnect’s fee practices have landed in federal court neither! In 2016, a class action captioned Kao v. CardConnect challenged identical tactics. In a significant ruling, U.S. District Judge John Ditter held that because CardConnect and its member bank (Wells Fargo) never signed the agreements, no express contract was formed. The court limited CardConnect to the fees explicitly listed on the Merchant Agreement, and found that unilateral notices of fee increases buried in monthly statements were unenforceable.

Despite the court’s orders and a subsequent settlement that required CardConnect to give merchants a 50‑day window to cancel after a fee increase, the new complaint alleges the company continues to flout the rules. “Upon information and belief, CardConnect never amended its agreement to reflect this requirement,” the filing states, and the company “has not changed its practices.”

How the Scheme Works: A Closer Look

CardConnect’s revenue model is built on taking a small percentage of each credit card transaction. But the real windfall appears to come from ancillary fees. The complaint identifies a pattern:

• No signed contract: Merchant signs, but CardConnect and Wells Fargo do not. Under Pennsylvania law (and the agreement’s own terms), the contract may never take effect, leaving only an implied contract limited to the fees the merchant actually saw.
• The hidden Program Guide: Sales agents don’t carry it; merchants never receive it. Yet CardConnect invokes its provisions to justify new fees.
• Direct access to bank accounts: CardConnect debits fees before the merchant sees the monthly statement, making disputes difficult.
• Hefty termination penalties: Merchants who want to leave face early termination fees, locking them into a cycle of escalating costs.

Richard Obringer, the owner of Advanced Surgical Associates, requested a copy of his contract in 2018 and again in 2024 — only to be ignored. When he finally received the agreement in June 2024, it bore no CardConnect or Wells Fargo signature, and the Program Guide was missing. By then, he had already been charged hundreds in unauthorized fees.

The Human Toll: Small Businesses as ATMs

For a solo practitioner or a family‑run store, an unexpected $200 “Annual Membership Fee” or a $215 “Security Bundle” can erase a thin profit margin. Unlike large retailers, small merchants lack the leverage to negotiate or the accounting resources to audit every line item. “The cost of merchant services is one of the highest expenses that most merchants incur, following labor and production costs,” the complaint notes. CardConnect’s fees, therefore, directly impact hiring, inventory, and survival.

One particularly egregious allegation: In March 2024, CardConnect charged the plaintiff a $29.95 “Non‑Receipt of PCI Validation” fee — a 50% markup over the $19.95 fee listed in the agreement. Multiply that by tens of thousands of merchants, and the incremental profit becomes staggering.

Corporate Impunity: When Court Orders Don’t Matter

The Kao case should have been a watershed. Judge Ditter’s 2018 order was unequivocal: “CardConnect agreed to provide its services for the fees and rates set forth in [the Merchant Agreement] and is limited to those terms absent a mutual modification.” Yet the new complaint alleges CardConnect simply ignored the precedent. If true, it represents a brazen disregard for judicial oversight — a hallmark of corporations that view fines and settlements as a cost of doing business.

CardConnect’s parent company and ownership structure may insulate decision‑makers, but the pattern described in court filings suggests a deliberate strategy: Keep the fees vague, the contracts unsigned, and the fine print invisible. When challenged, settle and promise reform, then continue as before.

What’s Next? A Reckoning for Payment Processing

The Obringer lawsuit seeks declaratory relief that the Program Guide is unenforceable, restitution of all improperly collected fees, disgorgement of profits, and an injunction to stop future unauthorized charges. More broadly, it aims to expose a business model that relies on consumer confusion and corporate overreach.

For small business owners, the case underscores the importance of scrutinizing merchant statements and demanding fully executed copies of any agreement. But the deeper issue remains: When a company can systematically extract wealth from thousands of enterprises with minimal consequence, the regulatory and judicial systems have failed to protect the backbone of the economy.

CardConnect has not publicly responded to the allegations beyond standard litigation denials. However, the weight of two federal complaints and a prior adverse ruling suggests that this time, the company may face more than just a settlement check — it may face a fundamental restructuring of its fee architecture.

This article is based on the class action complaint in Richard E. Obringer PAC v. CardConnect Corp., No. 2:24-cv-03034 (E.D. Pa.), and publicly available court documents. EvilCorporations.com is an independent watchdog publication.