STRATEGIC PARTNERS
CCC may be the target of at least two state investigations after customers get tired of hearing that "the check's in the mail."
January 30, 2002
At least two of the thousands of retailers who have contracts with Credit Card Center are asking for state investigations of the Philadelphia-based ISO's business practices.
Bernard Salvador, owner of the Sanbornton (N.H.) General Store, and Tim Wallace, owner of the Daily Market in Lewes, Del., both say they experienced problems getting their residual checks from CCC.
Salvador and N.H. state Rep. Tom Salatiello have asked their state Attorney General's office to investigate CCC.
He was unfamiliar with the ATM business before he signed a contract with CCC, Salvador said. "I'd never had an ATM before. I guess I bit too quick."
He purchased a Tidel is1000 cash dispenser from CCC in January of 1999. Based on his contract, he said he believed the cost to be $9,000, which included all service, processing and supplies. When he received the paperwork from Newcourt Financial, a California leasing company, he discovered the actual cost was $17,000 – 60 monthly payments of $288.
CCC was always "slow on payment," Salvador said -- sometimes more than 2 months late issuing his monthly residual checks. Salvador decided to take action when CCC's check for his November of 2000 payment bounced.
Vicki Tibberino, CCC's vice president, said the company experienced an accounting problem with "a limited number of customer checks." The company's computer system is not equipped to handle the problem, she added, so all customer files must be pulled manually. CCC is in the process of doing so now. "We're calling every one of our customers to address this."
The process may take some time, Tibberino said. "We've got a customer service department of eight people dealing with 18,000 customers."
When he got the bad check on Jan. 18, Salvador called corporate headquarters and was told new checks were being issued and would be available no later than Feb. 7. When he still hadn't received a check by Feb. 12, he contacted the regional office in Littleton, N.H. A supervisor there told him that her latest paychecks from CCC had bounced and that she had been unsuccessful in reaching the main office. Salvador also said the supervisor informed him that CCC had 400 ATMs in New Hampshire and 75 in Maine.
When he attempted to call CCC's Philadelphia headquarters himself, Salvador said he got a voice message asking him to leave a message with an operator, followed by another message stating that an operator was no longer available.
He then called Newcourt Financial, the leasing company, and was told that retailers all over the country who had received financing for their CCC machines through Newcourt were experiencing similar problems. (A reporter's efforts to reach Newcourt were unsuccessful.)
After Salvador went public with his troubles in his local newspaper, the Laconia (N.H.) Citizen, he started getting calls from other unhappy CCC customers across the U.S. "They're bouncing checks all over the country," he said, adding that he believes others may be pursuing legal action against CCC in their own states.
Salvador said he received an overnight mail package from CCC containing his residual checks for November and December on Feb. 21. The package also included a letter indicating that CCC planned to perform surcharge settlement on a daily, rather than a monthly, basis. According to the letter, this would "alleviate future problems." Salvador deposited the checks but they have not yet cleared, he said.
He said he is happy with the resolution of his problem -- for now. "They sent me a check for all of the money they owed me. If it's coming like they say it is, I'll continue to work with them."
Salvador had turned off the machine, which tallied up to 600 transactions a month. He plans to turn it back on, beginning March 1.
Wallace had a similar experience with CCC. He signed a five-year contract with the company for an is1000, agreeing to pay $274 a month for a turnkey program like Salvador's that included service, processing and supplies.
"Their history was the checks were never on time," he said. "At one time last summer, the checks were so late that they owed me about $6,000."
Wallace said he spoke with several people in the Philadelphia office who promised to resolve his problems, including CEO Andy Kallok. Threats produced results, he said. "If you get through and scream, they'll cut you another check – but I think that's a stupid way of dealing with your problems."
Like Salvador, Wallace discovered that a CCC account at Mellon Bank had been frozen when he tried to cash his November check in early January. Although he eventually received a replacement check for November on Feb. 7, he went to Delaware state Rep. John Schroeder and asked him to pursue an investigation of CCC.
"It's not about the money anymore," said Wallace, who still hasn't received a check for December. "I've been lied to and treated badly over and over again."
Wallace also recently switched processors, a step he recommends for merchants experiencing similar problems. "They need to shut down those machines because otherwise that money is going right into CCC's pockets."
Former CCC sales representative Judy Mangini recently left the company after 3 ½ years for employment with another large ISO, said the two men's experiences seem fairly typical. "CCC sells to mostly small mom-and-pop operations. I think there are a lot of confused merchants out there."
Though she had been unhappy with CCC for some time, the final straw came when she received two dozen calls from unhappy customers whose November checks had bounced.
"I felt responsible because I was CCC to them," she said. "When push came to shove, they called me."
Mangini's husband, a former CCC service technician, also got a bad check from the company. He was field testing a machine with his own bank card, Mangini said, and it showed a negative balance. A teller at his bank branch told him there were insufficient funds for payment in the CCC account.
The company's biggest downfall, Mangini said, was its guarantees to merchants. Mangini said CCC contracts that she sold included monthly surcharge and advertising guarantees of up to $264 on a $269 lease.Some of her merchants' machines did as few as 20 transactions a month.
"They were paying out advertising revenue on a monthly basis, and there was no advertising. They weren't getting anything back. If you've got 15,000 merchants, but you're carrying 20 percent of them – you're going to lose money," she said.
Inflated sales commissions led to the large number of bad locations, Mangini said. "If a sales rep is looking at a $2,000 to $2,400 commission, they don't care where they put a machine."
If an underperforming machine was pulled in the first six months of a contract, Mangini added, the sales rep paid a $600 penalty. "So what? They're still making $1,800."
Based on her own experiences with CCC, Mangini doesn't think the company will be able to make amends with the increasing number of disgruntled merchants. "They've lied to me so long that no matter what they said – even if it was the truth – I wouldn't believe it."
