Leaders Merchant Services Review
Leaders Merchant Services offers a variety of other tools for merchants but leaves a lot to be desired in transparency, pricing, and overall ethical practices.
- Long-term contract with an early termination fee
- Untransparent tiered pricing
- Extensive use of deceptive advertising and sales tactics
- Offers overpriced leasing arrangements for hardware
- Numerous complaints alleging poor customer support
- Very high complaint volume relative to the company’s size
- Operating under a permanent injunction due to civil litigation settlement
Leaders Merchant Services Overview
Founded in 2000, Leaders Merchant Services was acquired by iPayment in 2017 but continues to operate under its original name. Leaders is an ISO of Fiserv (formerly First Data) — one of the dozens of companies that resell Fiserv’s credit card processing services and the very popular line of Clover terminals and point of sale (POS) systems.
While Fiserv itself isn’t a good choice for small businesses, some of its resellers offer the kind of low prices, flexible contract terms, and high-quality customer support that small business owners need to keep their costs under control. Unfortunately, there are also a lot of resellers that somehow manage to be even worse than Fiserv itself, and signing up with one of them can be an expensive and frustrating experience.
Nonetheless, Leaders Merchant Services manages to stand out as one of the worst Fiserv resellers we’ve ever reviewed. How did the company earn this dubious distinction, you ask? Well, in July 2021, Leaders agreed to settle a legal action brought against it by the Ventura County District Attorney’s Office for multiple allegations of false and misleading sales and advertising practices. The announcement of the settlement includes the following details:
District Attorney Erik Nasarenko announced today that his office settled a civil law enforcement action against Leaders Merchant Services, LLC (Leaders), of Westlake Village. The settlement resolves a civil complaint filed by the District Attorney’s Office, alleging that Leaders violated California laws prohibiting unfair competition and misleading advertising. The complaint alleges Leaders’ sales personnel failed to fully disclose the company’s fees while signing up customers to contracts for payment card and electronic payment services, and for the leasing of related equipment. Leaders’ sales presentations were made to prospective customers, including small to medium size businesses and nonprofits throughout the United States. Under the final judgment, Leaders will be bound by the terms of a permanent injunction prohibiting similar future violations of law, and must pay $1 million in civil penalties and $250,000 in cost recovery to the District Attorney’s Office. The final judgment also requires Leaders pay restitution to customers whose complaints had been received by the District Attorney’s Office before the settlement, including releasing liens, terminating collection efforts, and providing updated status reports to credit reporting agencies. The total value of restitution owed victims in this case exceeds $800,000.
Permanent. Injunction. These two words probably don’t give you a warm fuzzy about doing business with Leaders — and they shouldn’t. The company most likely only accepted the settlement terms because it knew that the DA’s office had a strong case against it and that it was unlikely to prevail if it continued to fight the charges. While being enjoined from breaking the law again might not sound like much of a punishment, the cost of accepting the settlement totals over $2 million — a significant amount of money for a company of this size.
The shady business practices that got Leaders into legal trouble are quite common in the payments industry. Nonetheless, we’re happy to see a disreputable merchant services provider finally being held accountable for its unethical actions. Between the company’s legal problems and the numerous issues that we’ll discuss below, Leaders Merchant Services only scores 1 out of 5 stars — the lowest score allowed under our rating system.
If you’re a small business owner looking for a reputable credit card processor, it should be evident that Leaders would be one of the worst choices you could make. For new or very low-volume businesses, we recommend looking at Square, which offers month-to-month billing, affordable hardware, and predictable flat-rate pricing. If your needs are more sophisticated, and your processing volume is high enough that a full-service merchant account would better serve you, our article, The Best Credit Card Processing Companies For Small Business, profiles several excellent choices.
Table of Contents
- Leaders Credit Card Processing Products & Services
- Leaders Merchant Services Fees & Rates
- Contract Length & Early Termination Fee
- Sales & Advertising Transparency
- Customer Service & Technical Support
- Leaders Merchant Services Reviews, Complaints, & Common Problems
- Leaders Merchant Services Review: Final Verdict
Leaders Credit Card Processing Products & Services
Since we don’t recommend that you sign up with Leaders Merchant Services under any circumstances, we’re going to keep this brief. As a Fiserv reseller, Leaders offers the full range of Clover products, including the popular Clover POS system. Numerous other third-party services are also available, but the company doesn’t offer any proprietary products or services of its own. Here’s an overview of what’s available with Leaders’ credit card processing services:
- Merchant Accounts: Just like its parent company (iPayment), Leaders Merchant Services is an ISO of Fiserv, although it may offer merchant accounts from other back-end processors as well.
- Clover POS Line: Fiserv owns Clover, and using this equipment means your processing contract will automatically be with Fiserv. We’ve extensively reviewed the Clover line and also covered the best Clover resellers. Remember that most Clover products require a monthly software subscription fee in addition to the price of the hardware. Also, Clover devices cannot be reprogrammed to work with another processor.
- Countertop Credit Card Terminals: Leaders offers the Fiserv FD150 and the optional RP10 PIN Pad. While these are both reasonably good devices, they’re apparently only available via a leasing arrangement. Regardless of which company you get your equipment from, we strongly encourage you to buy your terminals outright and avoid leasing under any circumstances. The one-time upfront cost will be much less than what you’ll pay over the course of a noncancellable, four-year lease.
- Mobile Payments Processing: Leaders doesn’t currently advertise the availability of a mobile processing system that works with your smartphone or tablet. If you need to take payments on the go, the Clover Flex will be your only option.
- Payment Gateway: Leaders Merchant Services is a reseller of the ubiquitous Authorize.Net payment gateway for online payment processing. This gateway also includes a virtual terminal for mail order and telephone order merchants or anyone who wants to use their existing computer as a credit card terminal.
- Shopping Cart Integration: CartManager is the company’s only featured online shopping cart provider. This company’s been around since 1998, and I noticed its website is still stuck back there.
- Check Processing: Leaders Merchant Services features the Magtek Mini-MIRC paper check reader. (Magtek itself no longer promotes this scanner, and the linked PDF is from 2003.)
- InstantAccept QuickBooks Integration: This virtual terminal/makeshift POS system lets you process payments from a computer where QuickBooks isn’t installed and then syncs everything on the back end.
Leaders Merchant Services Fees & Rates
Like most traditional merchant account providers, Leaders Merchant Services doesn’t disclose any pricing information on its website. Instead, it prefers to use a quote-based system that’s supposedly tailored to your particular business. Unfortunately, it’s an axiom in the processing industry that any company that promises you the lowest rates — without telling you what they will be — is going to end up being much more expensive than its competitors.
From what we’ve seen, Leaders mainly uses the overpriced tiered pricing method for setting rates. This method offers a low-priced qualified rate but also includes mid-qualified and unqualified rates that are much higher. Sales agents almost never mention this, but the majority of your transactions will fall under the mid-qualified or unqualified rates, resulting in much higher monthly processing costs than you were expecting. Surprise!
Like most other traditional providers, Leaders can also offer you a much more transparent — and affordable — interchange-plus pricing plan. However, you’ll have to ask for it, and most merchants don’t know enough about pricing plans to request a better option.
In addition to processing charges, you’ll encounter a host of merchant account fees with Leaders Merchant Services. While none of these are advertised on its website, they should be spelled out in your merchant services agreement. Here’s an overview of what you can expect with Leaders Merchant Services fees:
- Account Setup Fee: One-time $25 charge (can be waived if you negotiate)
- Monthly Account Fee: Variable but usually at least $10/month
- Annual Fee: Variable but typically around $99/year
- Monthly Minimum: Typically $25/month
- PCI Compliance Fee: Typically $129/year
- PCI Non-Compliance Fee: Usually $40/month for every month that your account is out of compliance
- Chargeback Fee: $35 per incident
- Gateway Fee: Usually $25/month; note that most other providers offer Authorize.Net with no setup fee or monthly gateway fee
Note that merchants have reported many other fees with Leaders. While some are industry-standard fees, the company clearly appears to charge as many fees as possible to make up for the small amount of money it earns from processing transactions for low-volume businesses.
Contract Length & Early Termination Fee
The default contract length with Leaders Merchant Services is three years. Although the dollar amounts have been removed from the most recently posted merchant program guide, references to the contract length and the existence of an early termination fee are still there. As far as we know, the standard ETF is still $350 if you cancel before the first year is up and $250 if you cancel within the second or third year. By removing the dollar amounts from the website, however, it’s only opened it up for independent sales agents to tack on more.
While you might be able to negotiate a lower early termination fee or even eliminate it altogether, there’s no reason to accept this. The trend in recent years within the processing industry has been to stop using long-term contracts. Almost all reputable providers today will offer you true month-to-month billing without you having to ask for it. We’ve also seen many complaints from merchants where Leaders refused to waive the ETF even when there was a credible allegation that the sales agent who set up the account either failed to mention it or outright lied about it being part of the contract.
Sales & Advertising Transparency
With Leaders currently operating under a permanent injunction due primarily to its long history of deceptive and downright fraudulent sales practices, there’s not much more for us to say here. The company continues to use a combination of in-house sales staff and a network of independent sales agents, but both of these groups have an equally poor reputation.
Another issue we have with the company’s marketing efforts is its continued use of a “guaranteed savings” gimmick that promises to reward you with a $200 gift card if Leaders can’t save you money compared to your current processor. These kinds of gimmicks are always rigged in the provider’s favor, virtually assuring that it will never have to pay the guarantee. A look at the fine print reveals why you’ll never get that $200:
Our “meet or beat” offer will be based on an analysis of your two most recent monthly processing statements. Whether we can “meet or beat” your current pricing will be based on a comparison of your current overall monthly costs (a combination of rates, fees, and monthly charges) with LEADERS’ proposed rates, fees, and monthly charges. Each of the merchant’s two most recent processing statements must show a minimum monthly processing volume of $2,000 in Visa, MasterCard and Discover credit card transactions (excluding PIN Debit). Our $200 Assurance is payable only if LEADERS’ analysis shows that we cannot at least match your current rate structure and processing profile. Actual costs for months in which the merchant processes with LEADERS’ may vary from month to month depending on processing volume and profile. Savings from your current rates are not guaranteed. This offer does not apply to high risk merchant types or merchants with poor credit.
In other words, Leaders doesn’t have to save you money; it merely has to project savings, which will be incredibly easy to do by assuming that all your transactions will fall into the “qualified” tier. Your actual costs will inevitably be higher than the projection, but by then, you’ll be locked into a three-year contract.
In previous review updates, we’ve found compelling evidence of Leaders soliciting false testimonials and partnering with shady review websites to bolster the company’s shaky public reputation. This activity appears to have stopped since Leaders accepted a permanent injunction to avoid further liability. However, many fake reviews and questionable rankings are still floating around on the internet, including a few that can be found in our Comments section below.
Customer Service & Technical Support
While Leaders Merchant Services advertises 24/7/365 phone-based support, many customer complaints have cited very poor quality in this area. Also, be advised that the in-house support team is probably not available around the clock (I’ve seen 6:30 AM-6:00 PM PT Monday-Saturday referenced elsewhere for that). You’ll likely get passed along to third-party support after hours. If you’re using the Clover suite, expect to be directed to Clover for any technical support.
Aside from a handful of Resource PDFs and a limited FAQ, Leaders Merchant Services’ web-based self-service support tools are virtually non-existent. Some additional resources may be offered through the iAccess merchant portal, the iPayment system used by many of its subsidiaries.
Leaders Merchant Services Reviews, Complaints, & Common Problems
Negative Leaders Merchant Services Reviews & Complaints
Despite being in business for over 20 years, Leaders Merchant Services has only been accredited by the BBB since September 2021 (two months after the settlement of the legal action against it). The company currently has a B+ rating. As of this writing, 218 complaints have been filed against Leaders in the past three years, with 30 of those complaints coming in within the past twelve months. While this actually represents a modest decrease in complaint volume since our last review update in December of 2019, it’s still an awfully high total for a company of this size. The BBB profile also includes 43 customer reviews, with an average score of just 1.56 out of 5 stars.
Information about the recent legal action against Leaders is prominently displayed at the top of the company’s BBB profile, giving consumers a clear warning that the company has a very troubled past. In fact, the Ventura County District Attorney’s Office cited the BBB complaints against Leaders in its action against the company and apparently intended to use them as evidence against Leaders if the case had gone to trial.
Here are some common complaints found in Leaders Merchant Services reviews:
- Undisclosed Early Termination Fee: This issue appears to be the most common complaint against Leaders. Sales agents routinely failed to mention this important contract term during the account setup process. In some instances, agents have been accused of falsely stating that there was no ETF when, in fact, it was included in the merchant’s contract. In the past, Leaders had steadfastly refused to refund ETFs to customers, blaming them for not reading their contracts. However, since the company is now under a permanent injunction, it’s become much more willing to offer a full refund to anyone who requests one.
- Other Hidden Fees & Terms: There were also a huge number of complaints involving “hidden” fees. Many agents will be glad to leave PCI compliance fees undisclosed and unexplained, as well as non-compliance fees, annual fees, and any other fee you might encounter. Many merchants state they were given an application to sign electronically but never saw documentation of the full gamut of fees and legal terms until later.
- Difficulty Canceling Service: This wasn’t mentioned as often as it is with some other providers, but it did come up now and then while I sifted through complaints. Still, it’s a huge disappointment to see merchants being charged an early termination fee and having trouble closing the account.
- Climbing Rates: Even if Leaders Merchant Services seems like it’s giving you very low rates in your tiered pricing plan, that’s not a guarantee that they will stay low. Some merchants complain that their rates skyrocketed in the first year of service. Unfortunately, using “teaser” rates to get merchants to commit to a long-term contract and then raising them after the first six months or so is a common problem in the merchant services industry. Your best defense against this practice is to insist on a month-to-month contract with no early termination penalty, leaving you free to switch to a different provider if your rates go up.
Positive Leaders Merchant Services Reviews & Testimonials
Leaders features seven customer testimonials on its website, although only three of them identify the business providing the testimonial. Company-provided testimonials are always a little suspicious, but those published here don’t have any of the usual hallmarks of a false review.
The same cannot be said about Leaders’ marketing efforts throughout the rest of the internet. We’ve received several fraudulent positive Leaders credit card processing reviews on our site, all from a single IP address in India. While it’s common for companies to hire outside firms to do “reputation management,” it’s also clearly unethical when positive feedback is false. We’ve also found several instances of Leaders directly partnering with so-called “review” sites that clearly appear to be paid advertising thinly disguised as independent reviews.
While the company appears to have ceased these efforts to comply with the terms of the injunction, much of this misleading content is still on the internet. In doing your own independent research on the company, be particularly suspicious of reviews published between 2017 (when iPayment acquired Leaders) and 2020.
Leaders Merchant Services Review: Final Verdict
There are plenty of merchant services providers in the industry that engage in the kind of deceptive sales practices that got Leaders Merchant Services into legal trouble. However, we’ve yet to see one that was so egregious in its efforts to increase its profits at the expense of its customers. Between the expensive tiered pricing plans, the overpriced equipment leases, the draconian long-term contracts, the unethical (and illegal) marketing efforts, the lack of proper customer support, and the concerted efforts to disguise the company’s flaws by flooding the internet with fake reviews, Leaders has engaged in every dishonest practice that the credit card processing industry is notorious for. The company lacks any redeeming features and scores a very disappointing 1 out of 5 stars overall.
While we obviously cannot recommend that you do business with any company that’s operating under a permanent injunction, there is still the possibility that Leaders will be able to improve the quality of its services in the future. Unfortunately, the only evidence we found that Leaders is trying to turn things around is that it has ceased to publish any new false positive reviews since the injunction took effect.
If you’re a current or former client of Leaders Merchant Services, we strongly encourage you to contact the Ventura County District Attorney’s Office, as you may be entitled to restitution even if you weren’t part of the original legal action. If you’re a new business looking to establish a merchant account, or if you’re just looking for a better alternative to your current processor, check out our Merchant Account Comparison Chart for a roundup of our top choices. Good luck!
We've done in-depth research on each and confidently recommend them.
We've done in-depth research on each and confidently recommend them.