The twisted tale of Gravity Payments CEO Dan Price continues to grow more and more convoluted as time goes by. There was a time when the public – particularly the heavily progressive, SJW segment of it – were carrying Price on their shoulders like the second coming of Jesus. (And with that wild mane of hair and made for Hollywood looks it’s probably not all that surprising.) When Price “sacrificed” his own vast wealth to give all of his employees a pay bump to $70K per year he may as well have been handing out fishes and loaves to the masses. But since that time one question after another has arisen over both his moves and his motives. The latest wrinkle, though, has nothing to do with generosity or socialist tendencies, but rather allegations that he may have been gaming the system to drive up profits. (SF Gate)

Gravity Payments, the Seattle-based credit card processing company that garnered international acclaim after CEO Dan Price raised minimum salaries to $70,000, has been improperly classifying payments it processes in a way that could put many of the small businesses it serves at risk of thousands of dollars in fines, according to a new report.

That accusation comes from documentary filmmaker Doug Forbes, who published the results of what he calls a four-month-long investigation into the company on his website, Hundred Eighty Degrees. Forbes alleges that Gravity Payments used incorrect coding for bars and restaurants when it processed card transactions. In the credit card processing industry, every merchant is categorized according to a Merchant Category Code (MCC), which helps determine the interchange fee, or the amount that merchants must pay to card-issuing banks per credit card transaction.

Before continuing, let’s keep in mind that this isn’t a law enforcement investigation… at least not yet. This is all coming from a private investigation done by a filmmaker, but the charges should be rather easy to prove or disprove. This gets a little bit wonky in terms of the business requirements for accepting credit card payments, but it seems easy enough to summarize. Companies like Price’s take charge of processing credit card payments for businesses. The business has to pay an “interchange fee” to the bank issuing the card for each transaction, and companies like Gravity take care of that as well. The fee is variable, though, based on the type of business you operate, how much the average charge is and how many transactions you process. In the case of eateries there are a couple of different rates. One is for bars and another is for restaurants. Restaurants tend to have higher average bills (and more transactions) so their fee is higher.

What Price is being accused of doing is charging a lot of the restaurants at the lower fee normally assigned to bars (since the restaurant generally has a liquor license as well) allowing them to charge a lower price to their customers. This gives them a leg up in a very competitive market and saves the business owners money. That would be a pretty sweet deal except for the inconvenient fact that it’s also illegal. If this proves true and the long arm of the law gets involved, Gravity may be on the hook for the difference between the fee rates for millions of transactions. Even worse, their customers could be held liable as well.

This is just one more log on the fire in terms of just how much of a saint Price has been. We already saw how the generous pay raises he handed out may have been done to force out his brother (who was also his business partner) and heard his ex-wife weigh in on charges of domestic abuse. The bloom may be off the rose for Price, and as with so many other stories, something that sounds too good to be true often is.

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