Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Government Payment Service, Inc., D/B/A Govpaynet v. Lexisnexis Vitalchek Network

May 29, 2012


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


Government Payment Service, Inc.,d/b/a GovPayNet(GPN), has sued LexisNexis VitalChek Network, Inc. (VitalChek). Cook County moved to intervene on the defense side of the case, and the Court granted the motion.

GPN asserts a claim for false advertising under the Lanham Act as well as state law claims. VitalChek has moved to dismiss GPN's claims, and Cook County has moved to stay the suit pending resolution of related suits in state court. For the reasons stated below, the Court grants VitalChek's motion to dismiss and terminates as moot Cook County's motion.


The Court accepts the allegations in plaintiff's complaint as true for purposes of resolving the motions to dismiss. See Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).

A. GPN's business with Cook County

GPN is a credit card processor and provider of bail bond services. As a credit card processor, it manages credit card and debit card transactions between consumers and merchants by processing the consumer's credit or debit card information, working with a bank to gain approval of the transaction, and conveying the funds from the cardholder's account to the merchant. Generally, a card processor charges merchants a fee for the services that it provides. Some government entities that accept credit cards, however, insist on terms requiring card processors to charge a convenience fee directly to the consumer so that the government entity is not charged a fee.

As a credit card processor, GPN is required to comply with rules established by the credit card issuers and associations. The most demanding rules are those created by Visa, which is the most commonly used brand of credit card in the United States. Visa has strict rules governing convenience fees. In particular, GPN claims, Visa's rules generally require any convenience fee to be a fixed sum rather than an amount that depends on the dollar value of the transaction. Visa's rules also generally forbid any third-party processor from charging convenience fees. According to GPN, Visa's rules permit only a merchant that actually provides a good or service to the credit card holder to charge a convenience fee. Each of these rules, however, has some exceptions.

Since 2005, GPN has processed some credit and debit card transactions for Cook County. Specifically, GPN has processed bail bond payments for the Clerk of the Circuit Court of Cook County and has processed tax payments and other transactions for the Cook County Department of Revenue. As part of its bail bond processing, GPN also claims to provide other services related to the bail bond process. It describes these services as follows:

[C]ompletion and processing of bail related reports; validation of government agency data; discussions with the governmental entity staff; provision of technological services designed and developed to expedite bail payments; suggested process improvements; training and support by GovPayNet field staff; the handling of all chargebacks and card holder contacts regarding payment status and issues; and following up with correctional facility staff to ensure that all requirements related to prisoner release have been met. 1st Am. Compl. ¶ 20.

Cook County imposed a requirement that credit card processing not cost the County any money, so GPN charged cardholders directly for the services it performed for the County. Initially, GPN charged a convenience fee equal to a certain percentage of the transaction. In response to a rule compliance investigation by Visa, however, GPN changed its practices in 2010. It began charging fixed fees for all transactions it handled for Cook County's Department of Revenue and similar government entities. GPN continued charging percentage fees on bail bond transactions.

Visa initially took the position that GPN's percentage convenience fees violated its rules for two reasons. First, Visa believed that GPN was only a third party processor and thus could not properly charge any convenience fees at all. Second, Visa thought that GPN's percentage convenience fees were improper because Visa's rules allowed only fixed convenience fees. Eventually, however, GPN convinced Visa that it was a merchant providing bail bond services and that it could therefore appropriately charge a percentage fee for those services when processing bail bond payments for Cook County. Visa also gave GPN a merchant category code (MCC) appropriate for a company in the business of handling bail and bond payments. GPN claims that MCCs reflect the primary business of the merchant.

B. Cook County's bid process

Changes in Illinois law obligated Cook County to begin accepting credit card payments for real estate taxes by the beginning of 2012. As a result, in 2011 Cook County sought bids from credit card processors to process credit card payments made to the County Treasurer, Circuit Clerk, and Department of Revenue. GPN already handled credit card transactions for the Circuit Clerk and Department of Revenue, but the County wanted a single processor for all credit card transactions.

Cook County issued a request for quotes (RFQ) that established the bid process for credit card processors. In the first stage, interested companies could submit proposals to the County, and the County would judge if they were qualified to offer the services the County needed. In the second stage, the qualified companies could specify the fees that they would charge to process transactions. Cook County made clear that it would pay nothing for the credit card services and that the winning bidder would have to charge cardholders directly. The RFQ and its addenda contained other requirements. All bidders had to agree to accept all major credit cards, obey the card associations' rules, and handle chargebacks, which are essentially refunds to cardholders.

After the first stage of the bidding process, the County found four companies qualified, including GPN and VitalChek. The County invited each of those companies to submit a bid indicating the amount that it would charge customers to process credit card transactions. The County made clear that the winning bidder would be the company that submitted the lowest percentage convenience fee. No provisions were made for charging a fixed convenience fee.

VitalChek submitted a bid indicating that it would charge a 2.24% convenience fee. Its bid included, however, a footnote stating that Visa regulations did not permit the charging of percentage convenience fees in cases that did not involve tax payments and that in some face-to-face transactions Visa did not permit any convenience fees at all. VitalChek asked if it could submit proposed fixed convenience fees and also asked whether the County was ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.