The FTC and Washington State announced a proposed $600,000 settlement Monday with processor Riverside Payments over alleged hidden fees and near-impossible cancellations.
If you take cards through anything other than Shopify Payments, such as a merchant account for phone orders on $2,000 tickets, someone has probably pitched you “savings” on processing. This case shows how far a quote sheet can sit from the bill, and what a contract can lock you into for three years. On Ecommerce Paradise, processing is the line item high-ticket owners watch most, because a fraction of a point on a $2,500 order is real money.
Below: what the FTC and Washington allege, the contract terms that matter, what it does to a store’s margins, and six checks to run on your own processing agreements this week. If you are newer to the model, my guide on what high-ticket dropshipping is explains why payment costs weigh so heavily on large orders.
Reading the processor contract is half the fix. Where your payouts land is the other half. A business checking account you control, separate from personal money and from any one processor, means a cancellation or a freeze never strands your cash. Open a Mercury account for your store →
Riverside Payments: $600K Settlement, $32M Judgment Suspended
According to the FTC’s November 2 release, Riverside Payments Inc., its affiliate Cascade Equipment Leasing LLC, and owners Brandon Skinner and Jason Reese will pay $600,000 to resolve FTC and Washington allegations. The case was filed in the U.S. District Court for the Western District of Washington, and the Commission voted 2-0 to authorize it.
The complaint says Riverside’s sales quote sheets compared a merchant’s current processing costs with the supposed cost after switching, at times claiming savings of 40% to 60%. The FTC and Washington allege businesses that switched usually paid more than before. The quote sheets allegedly left out activation fees, batch fees, fees for alleged data security non-compliance, and inactive-processing fees.
The contract is where the money got locked in. Per the FTC, the 26-page electronic agreement allegedly did not clearly disclose that processing renewed automatically after an initial three-year term, that early termination cost $695, or that Cascade’s equipment leases auto-renewed for one year longer than the processing contract itself.
Cancellation is the other core allegation. Riverside allegedly promised “risk-free” cancellation and a “no-risk” guarantee, and said it would move unhappy clients back to their prior processor and pay them $500. The complaint says requests went unanswered and callbacks often never came. The complaint describes customers stuck in a “complicated loop of deflection and fruitless phone calls.”
The FTC also alleges unsubstantiated earnings claims aimed at recruiting sales agents. Ads claimed $75,000 to $95,000 a year, while agents allegedly averaged $3,787. And it alleges Riverside obtained consumers’ financial information through false statements, a violation of the Gramm-Leach-Bliley Act.
The money terms need careful reading. The proposed order includes a $32,083,921 judgment against the defendants that is suspended once they pay $600,000, because of their stated inability to pay. The full judgment comes due if the court finds they misrepresented their finances. Riverside will also waive the early termination fee and any rescission penalty for 60 days, with customers notified, according to the FTC.
The order bars misrepresenting costs, savings or cancellation conditions, and requires clear disclosure of material terms before billing information is collected, express informed consent for auto-renewing billing, and a simple way to cancel. FTC Bureau of Consumer Protection Director Christopher Mufarrige said, “The FTC will hold accountable companies that deceive small businesses, whose hard work powers our economy.”
Relief differs by source. The Washington Attorney General’s release says more than 300 Washington small businesses are eligible for relief, including compensation based on their processing volume over the past six months. Attorney General Nick Brown said, “I’m gratified that we can now deliver relief to impacted Washington businesses.” The FTC release describes no national refund program, and the $600,000 is not labeled a refund fund.
These are allegations. Court Cast reports the defendants have not admitted them, and the order becomes binding only after a judge approves and signs it.
How Processor Contracts Trap Merchants: The Standard Terms
Nothing here is exotic. It is a stricter version of terms that appear across merchant services. Merchant Maverick, in a guide last updated September 16, 2025, says flat early termination fees usually run $295 to $495, though some contracts calculate the fee from the processor’s projected earnings for the rest of the term, which can be far larger. Initial terms often run 36 months and then renew for a year or month to month.
Notice rules are where merchants get caught. The same guide says most contracts require 30 or 90 days’ notice sent to the address the contract names, and a note to your account rep does not count. Leased equipment can carry its own fee, and some leases cannot be cancelled at all, which can leave you owing the full remaining balance.
Against that baseline, the $695 fee alleged here sits above the $295 to $495 flat range Merchant Maverick describes. That comparison is mine, and a single data point, not proof of anything.
State regulators have warned about the same patterns for years. A Minnesota Attorney General brochure (undated) says sellers may steer merchants into multi-year third-party equipment leases with steep cancellation fees, and that “cancelling the contract too early or too late can result in an automatic 1-year contract renewal.” It also lists personal guaranties and verbal promises missing from the written contract as red flags.
The timing matters too. Four days earlier, on October 29, the FTC and eight states sued Toast over alleged hidden fees and cancellation practices, as I covered in my breakdown of the FTC’s Toast suit. Toast says it will fight the case and argues the consumer-protection statute does not cover negotiated business-to-business contracts. Riverside, by contrast, settled.
The counterpoint is worth stating plainly. Merchant Maverick notes some contracts charge termination fees only during the initial term, the Minnesota brochure says many sellers do not charge one, and the Riverside release names no major gateway or bank. Nothing here says the processor behind your Shopify checkout does any of this. It does say regulators are now reading processor contracts line by line, twice in one week.
What the Riverside Case Means for a High-Ticket Store’s Margins
My read: this is a contract problem, not a rate problem, and high-ticket stores are more exposed than most. When your average order is $1,800, a quoted 2.9% versus an actual 3.3% is $7.20 per order. Add phone sales, where you key cards into a terminal or virtual terminal, and a processor sales rep’s quote sheet starts to look attractive. That is the kind of setup this case describes.
Here is hypothetical math, not a reported figure. Say your store processes $100,000 a month and your current effective rate is 2.9%, or $2,900. A rep shows you a quote promising a 40% saving, or $1,740. If hidden batch, activation and compliance fees push the real rate to 3.2%, you pay $3,200, which is $300 more per month than you were paying, $3,600 over a year, and $10,800 across a three-year term. Add a $695 exit fee and an equipment lease that outlasts the contract, and getting out costs more than staying put.
Your exposure depends on your setup. If every dollar runs through Shopify Payments, you are not a Riverside-type customer, though my Shopify fees breakdown shows what that path charges. The risk sits in the add-ons: a separate merchant account for phone orders, a countertop terminal, a “high-risk” processor you took on after a freeze, or a reseller who bundled gateway, terminal and lease.
Scenarios, with thresholds I would use. If your all-in effective rate matches what you were quoted within 0.1 percentage point, leave it alone. If it runs 0.2 to 0.4 points above the quote, ask for a written fee schedule and a renegotiation. If it runs more than 0.4 above, or you cannot get a straight answer on how to cancel, start planning your exit now. These are my thresholds, not industry standards, so adjust them to your margins.
Second, the fee is rarely the main cost. The lock-in is. A three-year term on a store that might change niches, platforms or entities inside eighteen months turns a small rate gap into a trap. I made the same argument about concentration in my piece on payment processors as a single point of failure: the contract and the dependency are the real risk, and the rate is only the visible part.
Third, disputes feed the same problem. A processor that already underwrites you tightly will price in your chargeback history, so tracking your chargeback ratio is part of keeping rate quotes honest. If disputes drive your costs, a fraud tool such as ClearSale is worth pricing.
The regulatory angle also cuts in your favor. With the FTC pursuing Toast, Riverside and, earlier, a PayPal ad probe I wrote about in the FTC’s look at PayPal’s fee and protection ads, disclosure standards for business payment contracts are tightening. That does not help you if you signed last year. It does help you push back on a rep this week, because “clear disclosure of material terms” is now the stated enforcement standard.
Finally, this is operator load. Auditing contracts, tracking notice dates and keeping a backup path alive is work that does not grow revenue. It is the kind of back-office drag that my turnkey done-for-you build exists to take off your plate, so your time goes to suppliers and sales.
Already running a store and tired of finding costs like this after you have signed? My team can scale the store you have while you stay out of the contract weeds. See the scaling service →
Six Processor Contract Checks to Run This Week
Here are six checks, in the order I would do them:
- Collect every payments contract in one folder. That means processing agreements, gateway terms, terminal and equipment leases, and any “free” hardware offer. Highlight the initial term, the renewal clause, the termination fee, and the notice address for each. My guide to dropshipping taxes and legal requirements has a paperwork checklist worth pairing with this one.
- Calculate your real effective rate. Divide total fees by total volume for your last three statements, counting every line. Books kept in QuickBooks make this a five-minute report. For a benchmark, see my comparison of card processing fees.
- Put the cancellation window on your calendar. Set a reminder for 120 days before each term ends so you can send notice 90 days out, by the delivery method the contract names, to the address the contract names. Keep proof of delivery.
- Treat equipment leases as separate contracts. If a lease runs longer than the processing agreement, price buying the hardware outright. For phone orders, check first whether your existing gateway already offers a virtual terminal. The Stripe fee calculator shows what that route keeps from each sale.
- Keep payouts in an account you control and build a second path. Route settlements into a business account such as Mercury and keep it separate from personal money. Consider a second path for multi-currency money, such as Airwallex.
- Before signing anything new, get the all-in fee schedule in writing. Ask for the full contract and take a few days with it, refuse a personal guaranty, and get any verbal promise written into the agreement. If you want a second opinion on your payments setup alongside your store, Explore Turnkey Builds.
If you are a Riverside customer, read your notices closely. The FTC release says the 60-day fee waiver exists but does not say when it starts, and the order still needs court approval.
Frequently Asked Questions
Is the Riverside settlement final?
No. The FTC describes it as a proposed order, and it becomes binding only after a federal judge approves and signs it.
Did Riverside admit wrongdoing?
Per Court Cast, the defendants have not admitted the allegations. The complaint’s claims remain allegations.
I am not in Washington. Do I get any money?
The FTC release describes no national refund program. The Washington Attorney General says more than 300 Washington small businesses are eligible for compensation based on their processing volume over the past six months.
Does this affect Shopify Payments or Stripe users?
Neither release names either one. Compare what you pay with my Stripe vs PayPal comparison and check your own contract for the terms listed above.
What is a normal early termination fee?
Merchant Maverick says flat fees usually run $295 to $495, with some contracts using a formula based on the processor’s projected earnings, which can be much higher. Minnesota’s Attorney General notes many sellers charge none.
How do I keep card costs down on a high-ticket store?
Track your effective rate and chargeback ratio monthly, and read my guide to reducing operating costs as your store grows. If you are still choosing a niche, start with my free high-ticket niches list.
Want a second set of eyes on your payments stack and your store’s margins? In 1-on-1 coaching we go through your setup line by line and fix what is costing you money. Get the coaching details →
Pull your contracts, calculate your real rate, and calendar your notice dates before a rep calls you with a “better deal.” Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.
Related Articles
If this was useful, these go deeper:
- Merchant Account for Ecommerce 2026: Do You Need One, and What Does It Cost?
- FTC Sues Toast Over $0 Hardware and Hidden Fees
- Chargeback Prevention for High-Ticket Stores: Stopping Disputes Before They Cost You
- Shopify Chargeback Protection: What Shopify Payments Covers and Your Options
- Mercury Pricing 2026: What $0 Banking Actually Costs a Store
Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.
