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A company that sold credit and debit card payment processing services to small businesses has agreed to settle Federal Trade Commission charges that it used deception and unsubstantiated claims when signing businesses up for its services and processing equipment. The defendants also agreed to settle similar charges the Washington Attorney General’s Office filed in state court.

Under separate settlements with the FTC and the Washington State Attorney General, the defendants behind Merchant Services Direct LLC (MSD) will pay $175,000 and be prohibited from continuing to use the allegedly deceptive sales tactics.

In addition, the defendants must provide to merchants (1) a separate document disclosing all fees, charges, and rates before merchants sign any contracts with the defendants, and (2) a complete copy of any documents merchants sign before submitting the merchants’ applications for payment processing services.

According to the FTC’s complaint, MSD was an “independent sales organization” that sold small businesses the ability to accept credit and debit card payments. The businesses paid fees whenever their customers paid with a credit or debit card.

The FTC charged MSD, also doing business as Sphyra Inc., and its associates with making false representations and failing to disclose key facts concerning their processing services and equipment, and with misleading merchants about the fees and costs of services and equipment.

For example, MSD agents allegedly:

  • tricked merchants into signing binding contracts by telling them the documents were just applications to obtain price quotes;
  • led merchants to believe they were associated with the merchants’ current card processor, Visa or MasterCard, or their bank and tricked them into signing new contracts by telling them they were just updating existing account paperwork;
  • duped merchants into leasing new card processing terminals for two to four years, falsely claiming their current “swipe” terminals were outdated or incompatible with its services; and
  • falsely told merchants they could cancel at any time.

In addition to MSD, the settling defendants are Boost Commerce Inc., Kyle Lawson Dove, and Shane Patrick Hurley. Charges against another defendant, Generation Y Investments LLC, were voluntarily dismissed as part of the settlement.

The FTC acknowledges the assistance of the Washington State Attorney General’s Office and the Better Business Bureaus of Eastern Washington, Northern Idaho, and Montana in this case.

The Commission vote authorizing the stipulated final orders was 4-0-1, with Commissioner Julie Brill abstaining. The orders were filed in the U.S. District Court for the Eastern District of Washington. The Washington State Attorney General’s Office filed its proposed settlement with the defendants in the Superior Court for Spokane County, Washington.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Contact Information


Frank Dorman,
Office of Public Affairs


Nadine Samter,
FTC’s Northwest Region