My friend's small business agreed to a one-month risk-free trial service from one Credit Card Processor company. However, she did not like the service, because it did not live up to verbal promises made by sales person - monthly processing fees actually increased with them compared to the previous processor company. And now this credit card processor company auto-charged her $840 as ETF (Early Termination Fee) even though she gave them a notice within one month that she does not want to continue service with them once the trial is over.

My friend does not have written contract - either nothing was signed on a paper at the time of signing up for service or they did not leave her a copy of written contract. I actually would not be surprised that there is no written contract in the first place, because other their customers are complaining about exactly the same issue on Better Business Bureau and YP websites that they don't have "written contract". This company also is not sending us a copy of contract - they simply told us that they don't have a file with us and hanged up the phone. However, I have to admit that this would be bold and dumb move by this company to practice such fraud if they really don't have a written contract.

My goal is to help my friend to dispute this $840 ETF (Early Termination Fee), because to me this seems like a typical fraud scheme where:

  1. sales person over promises that service will be better than the current one.
  2. once victim realizes that service is worse, she (or he) tries to terminate it within this 1 month trial period.
  3. then credit card processor company charges Early Termination Fee of $840 which is ridiculous.

My concern is that I don't have a copy of written contract and I actually don't know if one exists in the first place so I have to gather evidence via other sources.

If this case would go to court where we have to prove that this company is practicing fraud, what would judge consider as "Compelling Evidence" to waive the ETF and void the written contract, if there really is one?

Since I don't have much experience with Court I am not sure what evidence judge would consider as compelling enough:

  1. If I would manage to get other mistreated customers to testify?
  2. If I would manage to record a phone call with their customer service representative where he would admit that service was actually free for a month? They don't seem very professional and I thought to try this out, but how can I prove authenticity of this call to the judge?
  3. If I would get in touch with one of their ex-employees and try to get them to confess at court?

Any other ideas what could be done here?

  • What is the name of the company?
    – user4951
    Jan 31, 2018 at 13:35

4 Answers 4


If there is no written contract, why not just respond to their invoice with a letter stating you do not intend to pay because the trial was free so you don't owe anything. If they attempt to collect, make the same case to the court. Then the burden is on them to prove otherwise. Which, if there is no written contract agreeing to pay an ETF, might be difficult for them to do.

Be careful about surreptitiously recording phone calls without the other party's knowledge or consent. In some jurisdictions this is illegal and can subject you to criminal prosecution.

  • 1
    The ETF was auto-charged (they have access to her bank account). Unfortunately, without having access to the alleged written contract I can't verify if she has authorized this company to do auto-payment in the first place. Nevertheless, she did not receive email or physical mail with invoice or bill. This money was simply taken from her bank account.
    – Jonny
    Dec 9, 2015 at 1:18
  • 3
    That's the game. When she gave them electronic access to her checking account she gave away the game by effectively shifting the burden of proof from them to her. Bad rookie mistake. My advice, consider the $840 the price of her education: Never give anyone electronic access to your checking account! If you do, then just assume they will rob you. Dec 9, 2015 at 1:44
  • 1
    I agree that she has learnt it the hard way. Also, the other mistake was that she did not make copy of all documents that she signed. Nevertheless that does not mean that there is nothing that can be done to waive the ETF.
    – Jonny
    Dec 9, 2015 at 1:56
  • @jonny: I'm just employing a non-legal, strictly accounting cost-benefit analysis here: Is $840 worth the time and cost of doing all this to try and recover it? For me, my time is more valuable to chase the $840 than it would be to use that same time to make money. Expensive lesson. If she makes the decision to move forward, then she just has to make the best case she can with the evidence she has. Which isn't much other than her word vs. theirs. Whether that's enough to overcome the burden of proof? It's hard to say it is from my perspective. Which means good money chasing bad from my POV. Dec 9, 2015 at 2:31
  • 1
    You are right about that as well that there is infliction point where trying to get these $840 back is not worth it. However, I am doing this because 1) I want to understand legal side to be prepared next time if similar issue happens again. 2) also, maybe getting back these $840 is not that hard if I can gather compelling evidence for court.
    – Jonny
    Dec 9, 2015 at 2:48

There is a simple answer to this: Get the card networks involved. Put this dispute in front of Visa, MC, AMEX, Discover. They won't sit around and let a bad apple ruin the party.

EDIT: In all cases before the court, there is a process of discovery. You proffer an interrogatory or request for documentation, and if it isn't honored, then you explain that in court after filing a motion to compel.


I would be extremely surprised if the contract did not contain a clause to the effect that it represented the entire agreement and that no representations made by either party prior to signing were contractual.

If that is so, then it would be almost impossible to prove that your friend relied on a statement that there was a free trial period. Such statements may have been made, you might even be able to prove that they were made, however, your friend then willingly and without coercion signed a contract that says she did not rely on those statements.

Before signing the contract the parties were negotiating; positions were resolved and an agreement was reached. The contract document is evidence of what the final agreement was - there may have been previous positions but if they didn't make it onto the paper they are not part of the contract.

Now, the other party may have engaged in unconscionable or deceptive and misleading conduct and that may be illegal and grounds for having the contract set aside. However, this is almost equally hard to prove: you have no independent witnesses to what was said and agreed. You would be relying on the other party admitting it or on a history of prior conduct.

Judges are simple people: they like to believe that if you sign a contract then that is the contract you wanted to sign.

  • They just confirmed that there is no written contract, just Application form and Termination Notice Template that they sent to us once we decided to terminate service. Termination Notice mentioned this $840 termination fee. However, if there really is no initial written contract then it seems that they have tried to sneak in ETF terms in the notice after we agreed to the original term. I think that ETF (if any) should have been mentioned in initial contract terms. Can termination notice introduce new terms like this?
    – Jonny
    Dec 9, 2015 at 19:34
  • @Jonny new terms can only be added by mutual agreement. If you signed the notice you may have agreed; you should have struck that out before signing.
    – Dale M
    Dec 9, 2015 at 21:07
  • 1
    What would happen if I would have tried to sneak in new terms in termination notice and charge them $1000/day for not picking up their PoS terminal (basically storage fees)? My friend sent it to them over USPS rigt away, but really did not have to because there was no contract that talks about this. I know that it might be difficult to get their signature on such paper (if needed), but let's say I would be able to get it?
    – Jonny
    Dec 9, 2015 at 21:37

IANAL, but I do work in the credit card processing industry.

If I understand the circumstance:

  1. Your friend agreed to the "free trial". Undoubtedly, the processor can prove that.
  2. Your friend never got anything in writing and verbally canceled.
  3. The processor billed her an ETF and is currently giving her the finger.

If the withdrawal of the $840 was via ACH (usual for CC settlement), then the only basis for a dispute that I'm aware of is:

  1. Account holder never authorized it (she has to prove she didn't)
  2. Transaction processed on a date earlier than authorized (assume not)
  3. Transaction is for an amount different than authorized (she has to prove that)

So to recover anything, given she doesn't have a copy of a contract, she's going to have to go to court and convince someone she's been wronged. There's two options here:

  1. Most effective is to get a lawyer to fight this. Downside is she'll typically pay more than $840 just to retain a lawyer, and frankly any honest lawyer should tell her she's going to spend far more than $840 proving she doesn't owe the money, if she can.
  2. She can fight it herself in small claims court. At this point, she's on her own dime spending time and money to figure out the system, go to court, play the system, etc. This is where the little guy can win, and sometimes win big. It's also the place where I've seen people spend 100x what they won in the end, for the "principle" or "revenge" or whatever. If she spends more than $840 of her time away from her business in small claims court, she has lost. Keep it in perspective.

So, yeah, not so encouraging. Some biz advice:

  1. Contracts aren't for when people are happy with each other.
  2. Paper has memory that words don't; always get things in writing.
  3. You might have an agreement with the salesrep. The salesrep might be your best pal. Tomorrow, there could be a new salesrep. See 2.
  4. The person who won't sign a contract because "they do business on a handshake" might be the person who won't honor their handshake when push comes to shove. See 2.
  5. Estimate the dollar value of your time. Learn about 'opportunity cost'. Learn about 'sunk cost'. These will give you an objective measure of when to just let it go.

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