Bryan Cohen Jul. 31, 2013, 5:45pm

SPOKANE, Wash. (Legal Newsline) - Washington Attorney General Bob Ferguson filed a lawsuit Tuesday against two credit card processing companies and their owners for allegedly scamming small business owners.

Merchant Services Direct LLC, doing business as Syphra Inc., Generation Y Investments LLC, Boost Commerce Inc., and their owners, Kyle Dove and Shane Hurley, allegedly trained sales representatives to deceive thousands of small business owners. The defendants allegedly misrepresented that they were associated with a business' current credit card processing company and simply updating current service.

The defendants also allegedly misrepresented that the credit card processing rates would be lower than the current rates and that the current credit card processing equipment was outdated and new equipment was necessary.

Upon receiving a billing statement, small business owners allegedly learned that MSD debited undisclosed fees from their bank account, signed non-cancelable leases with the business for equipment and MSD charged undisclosed $300 to $400 fees to cancel processing services.

"Scamming small business owners in Washington will not be tolerated," Ferguson said. "When businesses don't play by the rules, the attorney general's office will hold them accountable."

Ferguson's lawsuit seeks injunctive and other relief under the Consumer Protection Act in addition to full reimbursement for costs and restitution.

The Federal Trade Commission worked with Ferguson's office on the case and is filing a separate complaint in federal court against the defendants alleging violations of federal law.

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