ISO Resurfaces With New Name And Goal

The name change may seem subtle, but it reflects monumental changes. That assessment of the switch from Merchant Processing Inc. to Phoenix Merchant Processing Inc. comes from Jim Keller, CEO of the Beaverton, Ore.-based ISO.
"It really describes what we have done," Keller tells ISO&Agent Weekly. "We have taken a company that was in the ashes, revitalized it, salvaged many of the merchants and are moving forward to growing again."
A year ago, the Federal Trade Commission announced it was investigating the previous owners of Merchant Processing for deceptive business practices (ISO, 4/20/07). Just this week, the FTC announced the defendants have agreed to pay more than $26 million to settle FTC charges that they deceived small businesses throughout the United States.
According to the FTC, the defendants' operation falsely promised to save merchants hundreds of thousands of dollars per year in processing fees by offering lower rates than the merchants' established processors.
The defendants also allegedly neglected to buy out merchants' equipment leases as promised, failed to disclose fees and concealed pages of fine print until after merchants signed contracts.
The defendants, all based in Oregon, are Aaron Lee Rian; Karely McCarthy, also known as Karly Speelman; Merchant Processing Inc.; Direct Merchant Processing Inc.; Vequity Financial Group Inc.; and PPI Services Inc. Merchant Processing, which Rain founded and owned, was put under court-appointed receivership in April 2007.
In October, the FTC alleged in an amended complaint that Rian and McCarthy had opened a new business, PPI Services, and were continuing to commit the same violations. Both businesses are now operated by a court-appointed receiver and will be sold to pay back merchants duped in the scheme. Direct Merchant Processing and Vequity Financial Group are defunct.
Keller says the changes in Phoenix's business practices yielded a fair attrition rate among merchants.
"In January and February we went to all of our merchants in the portfolio and told them if they wanted to terminate their contracts, they could so without penalties," Keller says. About 8% of them did, leaving Phoenix with approximately 2,500 merchants.
"Given what [the merchants] had been through, I felt pretty good about that," Keller says. Retailers that stayed saw how Phoenix, with 60 employees and 20 sales agents, altered its customer service and technical support for the better, he says.
Now, the ISO's immediate goals are to increase the number of merchant accounts, demonstrate the merchant portfolio is stable and convince onlookers that Phoenix is a solid operation, Keller says.
The goal is to make the company attractive enough to find a buyer and thus end the receivership status.
"It's no longer damaged goods," Keller says.