PEP Episode 064 — When The Processor Becomes the Predator: A Legal Wake-Up Call for ISOs Agents and Merchants

Exposing the Dark Side of Payments: When Processors Turn Predatory

Behind the polished pitch decks and ISO agreements lies a side of the payments industry few merchants or agents ever see—until it’s too late. In this brutally honest episode of The Payments Experts Podcast, Global Legal Law Firm partners Christopher Dryden and James Huber pull back the curtain on predatory practices, weaponized contracts, and the shocking truth about how processors, not fraudsters, are often the ones doing the most damage.

The Case That Says It All

We begin with a real-world story that’s hard to believe—but all too common.

A gas station owner in Indiana becomes the target of credit card fraud, does everything by the book—files police reports, accepts chargebacks, and pleads with the processor to block the card.

Their response? Silence.

Then came the fines. Then came the residual withholdings. Tens of thousands of dollars gone—no explanation, no recourse, no transparency. This merchant wasn’t dealing with criminals anymore—they were up against their own processor.

How Card Brand “Compliance” Became a Profit Center

Our attorneys explain how once-legitimate risk and compliance mechanisms—like chargeback thresholds and fine regimes—have quietly evolved into profit machines. And the enablers? Poorly written contracts, no legal review, and merchant portfolios treated like extractable assets, not partnerships.

As Warren Buffett once said, “You can’t make a good deal with bad people.” And in payments, even the best contract won’t save you if you’re dealing with parties who weaponize the legal system as a business strategy.

MATCH List Removal: Legal Pressure That Works

We also shine a light on the increasingly aggressive use of MATCH list placements—a tactic that can instantly cripple a merchant’s ability to process payments. But there’s hope: litigation is proving to be one of the few reliable paths to removal, and our success rates are climbing. It’s expensive, emotionally draining, and slow—but it works.

Who Needs to Hear This Episode?

• Merchants evaluating processing relationships or considering high-risk categories
• ISOs and agents building portfolios they want to protect
• Fintech operators and PayFacs navigating their legal exposure
• Anyone who thinks their processor is “the partner” in the relationship

Don’t wait until it’s your business on the chopping block. Tune in and learn how to protect yourself—before you’re the next cautionary tale.

Subscribe now to The Payments Experts Podcast and visit globallegallawfirm.com for legal strategies that protect your business from the fine print few people read—until it’s too late.

*Matters discussed are all opinions and do not constitute legal advice.  All events or likeness to real people and events is a coincidence.*

Transcript

Christopher Dryden (00:00):

Three months later now, the pre arbitration, MasterCard fines come down because this merchant, I don’t know if it’s because they do gas, was opted into a pre arbitration regime, which I’m sure they weren’t told about, which basically puts them into arbitration for any transaction dispute. And we know that these are all fraud and they’re still being nailed for all the ones after they notified him $30,000, $40,000. And to make it worse, the guy who contacted us for the merchant, they withheld his residuals to satisfy the merchant losses, which isn’t authorized under the contract. Wow. This shit happens all the time.

Jeremy Stock (00:44):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode.

James Huber (00:58):

Be mindful of what you’re writing down. I get into a lot of cases where I’m going, why the fuck did you write that down in an email? Anything you say can and will be used against you in a court of law. And even myself sometimes like, whoa, think about if a judge is going to see that, what’s he going to say? And a lot of times they don’t, but when you’re writing something and you’re writing this, that, or the other thing, I mean, it even comes down. I’ve spent this morning listening to a bunch of recorded calls. They’re all in Texas. Be careful what you throw out there. This case was, they’re promising every new sales agent, a 40 x multiple on their residuals

Christopher Dryden (01:43):

Lump sum payment,

James Huber (01:44):

Guaranteed. It is guaranteed. You’ll make this, everybody, make sure you’re sitting down. If you have a $10,000 residual, you’ll get $400,000 applause place. And they were, it was like that, and we’re just, I’m not hearing enough hype that is actually happy and we’re going to see the shit out of him

Jeremy Stock (02:05):

Over it. Wolf of Wall Street type stuff, it sounds like,

Christopher Dryden (02:08):

Well, first off, dude, you got to cut the founding partner thing when I’m with James because it bugs the shit out of him.

Jeremy Stock (02:14):

I don’t care at all.

Christopher Dryden (02:16):

Did he talk about it incessantly in our office?

Jeremy Stock (02:19):

Yeah. Well, James was your first law clerk, isn’t that correct? Is that accurate?

Christopher Dryden (02:22):

I don’t know if he was the first, and he wasn’t really my law clerk except until after a little while he looked over at who he was law clerking for and then me and he went, I think that guy’s doing something right over there.

James Huber (02:35):

No, no, no. It wasn’t Chris. It was the clients. He was working with the ISOs and I was going, holy shit. There is a lot of,

Christopher Dryden (02:41):

It had nothing to do with me,

James Huber (02:42):

Nothing to do with Chris. There was a lot of ISOs out there and not enough attorneys. And that’s still the case.

Christopher Dryden (02:50):

It’s still the case.

James Huber (02:51):

Yeah. We’re educating people. We see things up and Jeremy gave us an outline. He wants to talk about dual surcharging and dual pricing,

Christopher Dryden (02:58):

Blah, blah. Yeah, I, to go off what I was going to say before I was founding partner, you guys are filibustering. So I think that what I see as every litigation case primarily is just poorly drafted contracts more and more and more and more. Like any place where there’s ambiguity in a contract, that’s what all of our litigation is. And it’s funny because nobody really goes through their agreements. Like Leo and I talked about it on the other podcasts. They’ll send and go, oh, it looks good to me. We have to go, dude. Don’t ever sign this. Yeah. I mean, it’s kind of crazy, but that’s where I see most of the litigation and most of the good opposing counsel are the ones that are actually in the agreement looking at it to see what it says and what it doesn’t say in the four corners of it to use it against our clients or in defense of their client.

Jeremy Stock (03:54):

If you had to say it, Chris, how many of the litigations maybe that we’re currently involved in could have been avoided had the contract been reviewed previously?

Christopher Dryden (04:06):

Some of ’em, yes. Some of them, no. I mean, you can’t really, what James was talking about is a full on bait and switch right here. I’m going to do this for you. And then ultimately what the buyout agreement says is, yeah, I’m giving you 40 x, but lemme give you 15 x now, then you do another 30 deals for me. I’ll give you more. Then you do another 30 after that. I’ll give you some more. Except when you get to 30, it’s like, oh yeah, you did 30, but then five aren’t here anymore, so now I need another seven. I mean, it’s just kind of playing

Jeremy Stock (04:40):

Games. Yeah, the goalpost keeps moving.

James Huber (04:43):

Yeah. I mean, I’ll see, one of the problems is you’ll see super tight agreements that are totally enforceable, but the other sides, they’re just assholes. And so the Warren Buffet quote is, you can’t make a good deal with bad people. You’re going to get screwed.

Christopher Dryden (05:00):

They

James Huber (05:00):

Like litigation, they get off on it, and

Christopher Dryden (05:06):

Some people really enjoy it. Some people really enjoy it. They use it as sport almost.

James Huber (05:11):

Yeah, it’s something new and shiny. You get bored of clocking deals all day. All right, I’m going to go sue this person. I’ve got more money than them, and it works. It’s really effective if you want to be a professional litigant and screw people over now, it catches up with them eventually, but it might not be

Christopher Dryden (05:32):

You. Maybe not, maybe, maybe, maybe, maybe not. I don’t know. I mean, it’s interesting because people use the court systems all the time and literally sometimes it’s just a game of attrition mean, or if I’ve got a ongoing dispute with one person on many fronts, it’s literally like a war. I’m going to use this battle to influence this battle. I mean, it just interesting how they’ll ramp it up on one side to try to weaponize something over here that’s really unrelated, but then they try to pull it in. So I see that all the time. I mean to me that people want to litigate as heavy as they do or they don’t want to just let it go. Just

James Huber (06:24):

Let it

Christopher Dryden (06:24):

Go. I mean, we’ve got ongoing litigation that’s been going on for five years between two P, and it’s like even after a settlement now there’s a set aside to the settlement to further litigate because people just don’t know how to give it up. And I don’t know if that’s just societally or what it is, but I mean, fuck, some people just don’t know how to step away from the fight. So we had this happen recently. We have a department that handles residual disputes and match disputes. They kind of run hand in hand. We just got a view of a brand violation, which is like a brand reputation MasterCard violation that was being forced on one of our clients. The bank showed us this on a conference call, and it turned out that the actual violation coming down from MasterCard was the failure to properly underwrite and manage the merchant.

Christopher Dryden (07:24):

Not that the merchant had done anything necessarily wrong. It was somebody but shit rolls downhill. And so they were going to just keep pushing it down to the merchant and then they always stand by this, oh, it’s confidential information. We can’t show it to you. There’s inherent in every contractual relationship is the duty of good faith. That doesn’t happen a lot with these contracts, so you try to negotiate, but they’re private companies, they’re not government actors. So I don’t have a freedom of information request. I can file. The only thing that I can do is file a lawsuit to engage in discovery where they’ll be compelled to provide us the information, even if it’s under a protective order, so that we can actually defend our clients or figure out how to help the client move forward. It’s requiring litigation. Now, I will say this, the litigation, we just started doing this in the last six to 12 months. It’s highly effective in getting movement and where we were doing letter campaign and trying to be civil and cordial, but advocate and it was not effective. This has been effective.

James Huber (08:33):

I think it’s increased our removal percentages by what? At least 10 points

Christopher Dryden (08:40):

At least.

Christopher Dryden (08:41):

At least. And now we’re starting to see that some of these reasons for match or fines that are intended to dwindle away residual or with reserves. Yeah, dude. Now we’re starting to see how the whole game is being played, but at the end of the day, merchants get fucked. It’s just that simple. They’re the ones that are eating the bulk of what’s happening, and now it’s starting to look like all these monetary fine regimes that are at the card brand level. They’re all intended to be just profit centers. I’ll give you one that happened yesterday. Get a call from an agent. Agent is Indian represents, he’s more of a tech guy, represents a whole bunch of Indian businesses. One of the services he provides as merchant services has really strong relationships. They’re all cultural. A lot of his merchants, gas station owners, Indian, so they got a run of chargebacks in February to the tune of like eight grand when you’re paying at the pump. That’s a tough one. So somebody had a fraudulent credit card number that they were using and maybe selling to other people because when they went back to the video, they saw that it was multiple cars and so they could see everything. There was

James Huber (10:02):

Security. I wonder if they’re just targeting that one gas station too.

Christopher Dryden (10:05):

I don’t know. That’s the crazy part, right? They’ve got this fake card. The chargebacks come down and I’ll even say it’s Fiserv. That is the backend processor. Ultimately, they file a police report. They say, we’ll eat the chargebacks. It’s on us. They don’t even contest them. They just says, yeah, we’ll satisfy these, but will you do us this favor? We have the card number. It’s the same card number. Can you block this card number from being used so that we’ll prevent it? Any future fraud, we can’t help you. That was the message, we cannot help you, but they can, but they can. We cannot help you. Now, that wasn’t Fiserv saying that, but it was Fiserv’s agent saying that, and it’s a pretty close agent. So ultimately there’s more chargebacks that come right now. Interestingly enough, they’ve somehow figured out a solution to it or it stopped two months later, three months later. Now the pre arbitration, MasterCard fines come down because this merchant, I don’t know if it’s because they do gas, was opted into a pre arbitration regime, which I’m sure they weren’t told about, which basically puts them into arbitration for any transaction dispute. And we know that these are all fraud and they’re still being nailed for all the ones after they notified him $30,000, $40,000. And to make it worse, the guy who contacted us for the merchant, they withheld his residuals

Christopher Dryden (11:46):

To satisfy the merchant losses, which isn’t authorized under the contract.

James Huber (11:50):

Wow.

Christopher Dryden (11:50):

This shit happens all the time. Right? It is happening at the highest levels. At the lowest levels.

Jeremy Stock (11:57):

This should be the podcast episode right here. I mean, it’s crazy.

Christopher Dryden (12:00):

Look, dude, this stuff comes through to us all the time, and unfortunately the message that we give everyone is you have to file a lawsuit and this may cost more than it’s worth.

James Huber (12:10):

And it usually does. I mean, that’s the one thing with the match litigation is early on people are hesitant. They’re going, I don’t want to spend the money. What are your chances of success? And I got to say, Hey, look, I’m aware of the two only match cases that made it two almost arbitration. None of ’em ever gone to trial. They all settled on the steps. One of ’em was ours, one of ’em was, I don’t know if Theo Monroe did it. He was the one who told me about it, and it settled on the steps of, because they just don’t want to admit they’re wrong. But with Match, if you’re on the match list, you can get processing. You can call Jeremy and he’ll give you a list of three, four people. It’s not

Christopher Dryden (12:52):

A bar to processing. It’s, it’s

James Huber (12:57):

An advisement.

Christopher Dryden (12:57):

It’s

Jeremy Stock (12:58):

Not, but it is.

James Huber (12:59):

It’s not what it is. It’s going to limit your options and you’re going to be more expensive because you, you’ve got the Scarlet letter on you, but suing for it, we’re cranking these things out. You’re not spending that much money to sue to get off the match list. And I would love to take one of these to trial. I remember first we were saying I due process and that wasn’t really going to fly because it’s not a state actor, but I’ll make that argument all day and it just takes the right judge. And then what was the other one? It was freedom of speech, and then we were doing fair credit reporting because you’re reporting my credit and it’s not true, and I’ve been denied a credit application, which is your merchant processing. For some reason that didn’t fly either, and we were just asking. We ran that one time hard and that one fell off for some reason. I can’t remember why that didn’t apply, but it still seems like that would work. Maybe it just settled.

Jeremy Stock (14:00):

Thank you for listening to this episode of the Payments Experts podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com. Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.