Banks are being accused of another consumer slight. Court papers say banks use unexplained charges.

[midnight]

Stephen and Cissy McComb say they managed their Italian eatery in Park City, Utah, for more than two decades without running afoul of security rules of Visa Inc. (V) and MasterCard Inc. (MA) -- until they were accused of mishandling data and opening the door to $1.26 million in fraud.
The McCombs, who opened Cisero’s in 1985, are now in a legal fight with the bank that processed their credit charges and, indirectly, with what they say are card networks that change rules without notice, impose unfair one-sided contracts and allow the taking of money from merchants’ accounts with no proof of fault.
The couple sued, saying they didn’t break MasterCard and Visa rules, that there was no security lapse and that no acts of fraud were specifically claimed. The fraud was conjured from unexplained and unsupported data, they said in court papers filed in state court in Park City. Their suit may be the first court challenge to penalties under the card networks’ security procedures, said one of their lawyers, W. Stephen Cannon.
It’s rare for banks and their processors to file a lawsuit against a merchant, lawyers said.

http://www.bloomberg.com/news/2012-01-09/park-city-eatery-balks-at-credit-card-fines-in-rare-court-fight.html


I wonder if any D.U. business owners are aware of this credit card risk?

[midnight]

1. "The two credit card companies each ultimately claimed preposterous levels of fraud:"

"Visa decided the "actual fraud" was $1.26 million and calculated Cisero's total liability for noncompliance at $1.33 million, according to court papers. The restaurant's "total pre-cap liability" was put at $511,513, the couple said in court papers, and ultimately Visa said Cisero's owed $55,000...

MasterCard said it could assess $100,000 against the restaurant but was imposing only $15,000, they said. The card company later added $13,850 in loss claims by issuing banks based on fraudulent cards supposedly made with data stolen from Cisero's system...
As Cisero's lawyers pointed out, the way the numbers kept shifting, as though Visa and MasterCard were simply making them up as they went along, suggested strongly that the whole business was less about merchant fraud and a lot more about just randomly taking money from small business owners who can't fight back:

"These various shifting numbers based on unexplained calculations" show that the "process is little more than a scheme to extract steep financial penalties from small merchants," Cisero's said in court papers."

"The most galling part of the story is that the "fines" claimed by Visa and Mastercard were part of a fine-print arrangement that is virtually impossible for merchants to learn about, much less defend against. If you want to have a restaurant, you must allow credit card charges - but if you allow credit card charges, you have to sign, sight unseen, an agreement that says you can be fined tens of thousands of dollars every time a credit card firm thinks your security procedures are bad:"



http://readersupportednews.org/opinion2/279-82/9360-focus-credit-cards-dont-just-steal-from-cardholders

[Scuba]

2. K&R