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Breach of contract suit against debit card distributor

In this economic climate, Georgia businesses are doing everything to stay afloat. When it comes to businesses in the finance industry, business is competitive. So much so that finance companies, or companies that cater to the finance sector, are keeping a very close eye on each other. As such, this is leading to a lot of business litigation, and two debit card companies are in a legal battle over alleged breach of contract.

The two companies in question are debit card companies. One company is a Florida based reloadable prepaid card company. The other company is a Georgia based company that distributes these prepaid cards. The Georgia based distributor distributes cards to companies like the Florida company, in addition to selling their own cards.

The Florida based company sells these cards to as many as 16,000 American retailers, such as Winn Dixie and Cumberland Farms. They are suing the Georgia business for alleged price fixing and breach of contract. The Florida based company is alleging that the Georgia based company is unhappy with the debit card's lower pricing model, and that the Georgia based company reportedly tried to get the other company to join their debit card network. The problem with this is that the Georgia company has a higher reload fee than the Florida based card and the Florida debit card provider did not want to participate in a higher pricing model that would ultimately affect their consumers.

The legal battle centers on the Florida company's Visa GPR card. The problem as summarized by the Florida legal team is that the Georgia based distributor was refusing to distribute the new cards because they felt the lower pricing model "might cannibalize overall higher priced cards." The Florida debit card provider is also alleging that the distributor named in their suit magnified their breach of contract by ensuring that the distributor would only honor their contract if the Florida company joined their price fixing network.

The suit has been filed in U.S. District Court Northern District of Georgia and the Florida based CEO has issued a statement to retailers stating that the suit would not affect their business operations and that they were doing everything they can to protect their business and their ability to serve retailers and customers that are looking to save a few dollars in this economic time.

Source: The Convenience Store News, "NFinanSe Brings Legal Action Against InComm," Nov. 18, 2011

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