Below is a copy of the entire AuctionPay contract. The areas of concern for nonprofits are highlighted in red. My narrative follows the contract contained in the quote box.
GREATER GIVING/AUCTIONPAY SERVICES AGREEMENT
Auctionpay has developed and owns a set of proprietary products and services to assist nonprofit organizations in managing benefit events, raising funds, and processing payments at events and online. These products and service modules are collectively referred to as the “Services” in this Agreement.
The following Agreement defines the relationship between your organization and Auctionpay Inc., a Delaware corporation, and consists of three schedules:
Schedule A: “Responsibilities” defines the responsibility of each party to the Agreement applicable for each of the selected Auctionpay proprietary Services.
Schedule B: “Pricing” specifies the fees associated with each of the Auctionpay propriety Services you select.
Schedule C: “General Terms and Conditions” defines the general terms and conditions that apply to this Agreement.
You must read, agree with and accept all of the terms and conditions contained in this Agreement. This version of the Agreement has been established on August 1, 2008.
For the purposes of this Agreement, the date you place your order for software and services is the effective date of this Agreement (“Effective Date”) and the term of this Agreement is either a 1-year term or 5-year term as you indicate in your order (“Term”).
Schedule A: Responsibilities
This Schedule defines the responsibilities of each party under this Agreement for each of the selected Services. Only the sections for the Services that you order apply. In the case of the Complete Event Suite, the sections for Auctionpay Event Software, Auctionpay Event Software Online Edition, Auctionpay Event Payments, and Auctionpay Online Payments services will apply.
A1. Auctionpay Event Software
A1.1 Auctionpay is providing you with a copy of the Auctionpay Event Software and is licensing you to use the current version of the software. You agree to use the software only as allowed in, and in accordance with the terms of, the End User License Agreement included with the software, and the terms and conditions of the End User License Agreement are hereby incorporated into this Agreement. You will receive only a limited, non-transferable, non-exclusive right to use the current version of the software.
A1.2. The first year of technical support and product upgrades is included in the price of the software. However you will be required to renew your annual software upgrades and support every year in order to receive new software releases and software support after the first year. The cost for continued support and upgrades is as provided in Schedule B hereto.
A1.3. If you request any services beyond standard technical support, e.g. database migration from other systems, data entry, or data clean-up, then you will be charged at the then-current rate for Auctionpay services as shown hereto in Schedule B or communicated to you when requesting the services.
A1.4. If you are purchasing the Online Edition add-on for the Auctionpay Event Software, Auctionpay will provide you with access to its Auctionpay Event Software hosted and maintained on Auctionpay’s servers during the Term of this Agreement.
A2. Auctionpay Event Payments
A2.1. You intend to conduct fundraising events (the “Event” or “Events”), and at these events accept credit or debit card payments (the “Event Charges”) from your patrons.
A2.2. You agree to use Auctionpay Event Payments for at least one Event during each twelve month period during the Term of this Agreement at which you accept credit cards as a form of payment. However, if you choose not to conduct an Event in any twelve month period during the Term of the Agreement, this shall not constitute a breach of the Agreement. If you do not conduct an Event in a twelve month period during the Term of the Agreement, any fees are still due as defined in Schedule B.
A2.3. Prior to utilizing Auctionpay Event Payments, you will provide us with information for a checking account (the “Settlement Account”) to which we will deposit all funds due to you, subject to the fees and timing specified in this Agreement.
A2.4. We will provide Auctionpay Event Payments, including the number of payment terminals or card swipes you request (the “Equipment”) not later than three (3) calendar days prior to the commencement of the Event. We will ensure that all Equipment is operating and will provide our standard instructions as to the proper operation of the Equipment.
A2.5. Upon receipt of the Equipment, you are responsible for any loss or damage to the Equipment until the Equipment is returned to Auctionpay. You are not responsible for any damage resulting from shipping provided you follow the instructions and use the packaging provided by Auctionpay. Except as otherwise set forth in the Agreement, you will have no rights with respect to the Equipment, and you acknowledge that all right, title and interest in such Equipment remains with Auctionpay.
A2.6. Within four (4) business days of the Event, you will submit all Event Charges by following the settlement instructions provided by Auctionpay, and you will initiate return of the Equipment to Auctionpay. Failure to return the Equipment within this time will result in late fees of $75.00 per unit per week.
A2.7. You are responsible for retaining signed credit card receipts from the Event, as well as the final credit and settlement reports generated by Auctionpay Event Payments, for no less than three (3) years from the date of the Event for the purpose of resolving any cardholder disputes that may arise.
A2.8. By the 5th business day after you submit the Event Charges, Auctionpay will transfer funds for all Event Charges approved by Auctionpay (the “Approved Event Charges”), less Auctionpay’s fees as set forth in this Agreement, to the Settlement Account you designate.
A2.9. If for any reason you are not satisfied with Auctionpay Event Payments, you have 30 days after the date of your first Event to deliver written notice to Auctionpay of your desire to cancel the remaining term of the Agreement for Auctionpay Event Payments service, without further liability to Auctionpay (except for return of Equipment and payment of the setup fee and any remaining fees payable as of the date of termination). If you cancel Auctionpay Events Payments and you purchased it as part of the Complete Event Suite, your other Service continues for the remaining Term.
A3. Auctionpay Online Payments
A3.1. By purchasing the Auctionpay Online Payments services, you intend to accept credit or debit card payments over the Internet (“Online Charges”) from your patrons for Event registrations, donations, online auctions, or other purchases or payments. We will process all approved charges received through Auctionpay Online Payments. You are solely responsible for collecting payment of any remaining charges that are declined or otherwise cannot be processed.
A3.2. Auctionpay Online Payments allows you to create secure, customized web pages (the “Pages”) for your use in processing Online Charges. The initial setup of Auctionpay Online Payments will include up to 10 Pages that you can create and reuse for multiple purposes. Your use of additional Pages beyond this limit will be billed to you at the then-current published rates for Auctionpay Online Payments. If you request that Auctionpay sets up Pages for you, You will be billed at the then-current rates for the additional services which are currently $100 to set up one standard page for you. Auctionpay Online Payments includes annual Internet transfers up to 50 Gigabytes. If more bandwidth is consumed by visitors to your Pages, you will be billed at the then-current rates for additional bandwidth. This section does not apply if you purchased just the Virtual Terminal Only.
A3.3. You will use Auctionpay Online Payments on an exclusive basis during the Term of this Agreement to handle Online Charges.
A3.4. Prior to utilizing Auctionpay Online Payments, you will provide us with information for a checking account (the “Settlement Account”) to which we will deposit all funds due to you, subject to deduction for Auctionpay’s fees and subject to the timing specified in this Agreement.
A3.5. We will transfer funds for all approved Online Charges, less Auctionpay’s fees as set forth in this Agreement, to the Settlement Account you designate. Funds will be transferred according to the following schedule:
a. Approved Online Charges submitted between and including the 1st and 15th calendar day of each month will be paid by the 5th business day following the 15th of the month, less Auctionpay’s fees.
b. Approved Online Charges submitted between and including the 16th and last calendar day of each month will be paid by the 5th business day of the following month, less Auctionpay’s fees.
c. Approved Online Charges from online auctions conducted using Auctionpay or cMarket Online Auctions software will be paid no later than five business days following the submission, less Auctionpay’s fees.
A3.6. You will use Auctionpay Online Payments only in accordance with the conditions, rules, and regulations as may be established or specified by Auctionpay from time to time and as may be set forth in any manuals, materials, documents, or instructions furnished to you by Auctionpay, including in accordance with the terms of use published on the Auctionpay Online Payments website that you log into. We reserve the right to make changes in the manner of operation for Auctionpay Online Payments. We will provide notice of fee changes via e-mail or through online notices.
A3.7. If for any reason you are not satisfied with Auctionpay Online Payments, you have 30 days from the Effective Date to cancel the remaining Term of this Agreement for Auctionpay Online Payments by delivering written notice to Auctionpay of your desire to cancel the remaining Term of the Agreement, without further liability to Auctionpay (except for payment of the setup fee any remaining fees payable as of the date of termination). If you cancel Auctionpay Online Payments and you purchased it as part of the Complete Event Suite, then the other Services continue for the remaining Term of the Agreement.
Schedule B: Pricing – Effective August 1, 2008
B1. Setup, License, Support, Hosting, and Renewal Fees:
Products Services Initial Setup, Hosting and Support Fee Annual Support, Hosting, & Upgrade Fee After 1st Year
Complete Event Suite $2,595 - 1-Year Term = $1,295 & 5-Year Term = $795
Event Payments $395 - 1-Year Term = $395 & 5-Year Term = $0
Event Software $1,195 - 1-Year Term = $295 & 5-Year Term = $295
Online Edition Add-on $595 - 1-Year Term = $595 & 5-Year Term = $595
Online Payments $695 - 1-Year Term = $695 & 5-Year Term = $295
Virtual Terminal Only $195 - 1-Year Term = $195 & 5-Year Term = $0
B1.1 Initial Setup and License Fee for Complete Event Suite, or Event Payments will be deducted from the Event Charges for your first Event under this Agreement. However, if you do not conduct an Event or process sufficient funds to enable Auctionpay to collect fees due and payable within six months of the Effective Date of this Agreement, you will be invoiced the total amount, which will be immediately due and payable.
B1.2 The Annual Support, Hosting and Upgrade Fee becomes due and payable within 30 days of each anniversary date of the Effective Date of this Agreement.
B1.3 Initial Setup and License Fee and the Annual Support/Hosting Fee for Event Software and its Add-ons will be invoiced and are immediately due and payable.
B1.4 Initial Setup and Hosting Fee for Online Payments will be deducted from your Online Charges. However, if you do not process enough payments to cover this fee within 90 days of the Effective Date of this Agreement, you will be invoiced the total amount, which will be immediately due and payable.
B1.5 If fees are due and payable, Auctionpay may deduct the fees from the Client’s Settlement Account.
B2. Service Fee for Auctionpay Event Payments:
B2.1 The Service Fee for the Auctionpay Event Payments service is based on the total of Approved Event Charges processed through Auctionpay Event Payments services for each Event. Service Fees for the Auctionpay Event Payments services are deducted from the proceeds of your Event Charges.
Total Approved Event Charges for Each Event Service Fee Number of Terminals Included
Less than $25,000 - $495 fee Up to 3 terminals
$25,000 - $99,999 1.99% Up to 4
$100,000 - $199,999 1.60% Up to 6
$200,000 - $299,999 1.30% Up to 6
$300,000 - $399,999 1.10% As needed
$400,000 and above 0.90% As needed
B2.2 Additional terminals are $75 per Event. Round-trip ground shipping is included. For Events outside the Continental US, additional shipping fees will apply.
B2.3 For events where you expect to collect more than $300,000, our Client Service Team will work with you to determine the number of terminals needed based on the specifics of your Event, not to exceed 10 terminals per event.
B3. Credit Card Processing Pass-Through Fee for Auctionpay Event Payments:
B3.1 All approved Event Charges will be subject to the following pass-through fee to cover the cost of processing the transactions, in addition to the Service Fees listed above. Pass-through fees are deducted from the proceeds of your Event Charges.
Type of Credit Card Event Payments
Visa, MasterCard or Discover 1.75%
American Express 2.25%
B3.2 The above rates for Visa, MasterCard and Discover Event Payments Charges apply to card swipe transactions. An additional processing fee of 0.75% will apply to all Visa, MasterCard and Discover Event Charges keyed manually.
B3.3 Credit Card Processing – Pass-through fees may be adjusted from time to time to reflect increases in Visa, MasterCard and/or American Express processing rates. Auctionpay will provide 30 days advance notice of any fee increases by email or posting on its web site.
B4. Credit Card Processing Fee for Auctionpay Online Payments:
B4.1 All approved Online Charges processed through the Auctionpay Online Payments services will be subject to the following processing fees. Processing fees for Auctionpay Online Payments services are deducted from the proceeds of your Online Charges.
Type of Credit Card Processing Fee
Visa, MasterCard, Discover or American Express 3.45% plus $0.35 per transaction
B4.2 Credit Card processing fees may be adjusted from time to time to reflect increases in Visa, MasterCard, Discover and/or American Express processing rates. Auctionpay will provide 30 days advance notice of any fee increases by email or posting on its web site.
B5. Service Fee for Other Auctionpay Services:
B5.1 A Service Fee will apply to other services provided by Auctionpay. Service Fees are deducted from the proceeds of your Event or Online Charges or will be invoices and are immediately due and payable.
Service Provided Service Fee
Publishing 5 additional pages in Auctionpay Online Payments $150 per year
Annual Internet transfers (bandwidth) above 50GB $100 per year for each additional 50GB of transfers during the year. Professional Services not covered under Technical Support $75 per hour
B5.2 These fees may be adjusted from time to time. Auctionpay will provide 30 days notice of any fee increases by email or posting on its web site.
Schedule C: General Terms and Conditions
C1. Notices. Except where other means of notice are expressly permitted herein, all notices you send to Auctionpay under this Agreement shall be in writing and shall be delivered by registered or certified mail, return receipt requested, or overnight delivery with verification of receipt by the addressee, at the addresses set forth on the signature page hereof. Except where other means of notice are expressly permitted herein, all notices Auctionpay may send to you under this agreement shall be in writing and shall be delivered by e-mail or other electronic means, by registered or certified mail, return receipt requested, or overnight delivery with verification of receipt by the addressee, at the address you set forth in your order. All notices shall be deemed given upon receipt.
C2. Renewal. The Term of this Agreement shall automatically be renewed for a new Term of the same duration unless one party informs the other not less than 30 days before the end of the preceding Term of its decision not to renew the Agreement
C3. Terms and pricing. Subsequent to any Term, Auctionpay may change its fees, pricing, and payment terms upon sixty (60) days prior written notice to you in which case you shall be entitled to terminate this Agreement by written notice to Auctionpay within thirty (30) days of receiving notice from Auctionpay of such changes. Auctionpay may terminate this Agreement at any time and without notice to you if you file a voluntary petition in bankruptcy, any document or pleading seeking any reorganization, liquidation, or dissolution under any law is filed against you and you admit or fail to contest the material allegations of any such pleading or document filed against you, an order for relief is filed against you under the U.S. Bankruptcy Code or similar foreign law or a receiver is appointed for a substantial part of your assets and is not dismissed within sixty (60) days, you make an assignment for the benefit of creditors or similar disposition of assets, or you cease to conduct normal and customary business practices (without a successor continuing such business practices).
C4. Confidentiality. You agree to maintain in confidence all Confidential Information provided to you by Auctionpay and agree not to use or disclose such Confidential Information, except to your own authorized employees, officers, or agents, or to persons specifically authorized by Auctionpay. “Confidential Information” includes, but is not limited to programming material, reports, or other documentation that may embody proprietary information of Auctionpay, or any other confidential, proprietary, or trade secret information disclosed by Auctionpay to you involving Auctionpay’s business, financial, technical, and other information that is not (a) disclosed in public materials or otherwise in the public domain through no fault of yours; (b) lawfully obtained by you from a third party without any obligation of confidentiality; (c) lawfully known to you prior to disclosure by Auctionpay; (d) independently developed by you; or (e) required or reasonably advised to be disclosed by law.
C5. Default. In the event either party (the “Defaulting Party”) shall fail to perform its obligations under this Agreement and such default shall continue for ten days after written notice thereof (a “Default”) from the party not in breach of this Agreement (the “Non-Defaulting Party”), the Non-Defaulting Party may declare the Defaulting Party in breach of this Agreement and pursue all remedies available at law or equity
C6. Damages. The parties agree that actual damages are as of the Effective Date, and upon a breach of this Agreement by you would be difficult to calculate hereunder, and the parties agree that the liquidated damages provided in this section are in all cases reasonable. If suit or action is instituted to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover from the other party, in addition to costs and damages and including attorneys’ fees incurred prior to the filing of lawsuit or arbitration claim, such sums as a court or arbitrator shall determine to be reasonable at the arbitration, trial and appeal.
C7. Governing law; Jurisdiction; Venue. This Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Oregon without regard to its conflict of laws provisions. If any action is brought arising out of or related to this Agreement, the parties (i) expressly and irrevocably consent to personal jurisdiction and exclusive venue of the federal courts sitting within Multnomah County, Oregon, unless no federal subject matter jurisdiction exists, in which case the Parties consent to the exclusive jurisdiction and venue in Multnomah County Circuit Court; and (ii) expressly waive all defenses of lack of personal jurisdiction and forum non conveniens with respect to the federal and state courts sitting within Multnomah County, Oregon.
C8. Early Termination Fee. If you terminate this Agreement before the end of its Term other than upon Auctionpay’s Default, Auctionpay shall be entitled to receive, as liquidated damages, the following: (a) for Auctionpay Event Payments, an amount equal to the minimum Service Fee (as specified in Schedule B) for an Event under this Agreement multiplied by the number of years remaining in the Term of the Agreement; (b) for Auctionpay Online Payments, an amount equal to the annual support and hosting fee (as specified in Schedule B), multiplied by the number of years remaining in the Term of the Agreement.
C9. Limitation of Liability; Warranties. (A) AUCTIONPAY SHALL NOT HAVE ANY LIABILITY HEREUNDER FOR (A) ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR (B) MONETARY DAMAGES OF ANY KIND IN EXCESS OF THE AMOUNTS PAID TO AUCTIONPAY PURSUANT TO THIS AGREEMENT, REGARDLESS OF THE BASIS OF THE CLAIM AND EVEN IF AUCTIONPAY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE REMEDIES SET FORTH IN THIS AGREEMENT SHALL APPLY EVEN IF SUCH REMEDIES FAIL OF THEIR ESSENTIAL PURPOSE. SOME STATES DO NOT PERMIT THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, THUS THE ABOVE LIMITATION OR EXCLUSION MAY NOT BE APPLICABLE TO YOU. (B) EXCEPT AS REQUIRED BY APPLICABLE LAW OR AS EXPRESSLY SET FORTH HEREIN, AUCTIONPAY MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY, TITLE OR FITNESS FOR A PARTICULAR PURPOSE, IN CONNECTION WITH THIS AGREEMENT. SOME STATES DO NOT PERMIT THE LIMITATION OF IMPLIED WARRANTIES, AND THUS THIS LIMITATION MAY NOT BE APPLICABLE TO YOU.
C10. Independent contractor; indemnification. You and Auctionpay agree that in providing the Auctionpay Services under this Agreement, Auctionpay is an independent contractor of yours and is not to be considered a partner with, or employee of, you. Each party (the “Indemnifying Party”) agrees to indemnify and hold harmless the other party (the “Indemnified party”) from and against all losses, liabilities and expenses (including attorneys’ fees and collection costs) resulting from any breach of any warranty, covenant or term of, or any misrepresentation, by the Indemnifying Party under this Agreement, or arising out of the Indemnifying Party’s employees’ gross negligence or willful misconduct in connection with the Auctionpay Services provided under this Agreement.
C11. Resolution of Patron Disputes and Chargebacks. If a customer of yours (“your Patron”) disputes the validity of a charge initiated by you, Auctionpay will notify you and request supporting documentation from you required to validate the charge, which may include the signed credit card receipt from the Auctionpay Event Payments services, the transaction number from the Auctionpay Online Payments services transaction, an invoice or other statement showing the items purchased and the total amount due from the Patron, or any combination of the foregoing. If you do not respond to the request for supporting documentation or do not present the required documentation to Auctionpay within seven business days, or if the disputed amount becomes a Chargeback (as defined below), Auctionpay will deduct the Chargeback amount and associated fees from your Settlement Account.
C12. Refunds, Chargebacks, and Declines. You shall be responsible for all charges, fees, costs, expenses and damages, including interest charges, attorney fees and the loss of the Event Charges or Online Charges arising out of or related to, and will indemnify Auctionpay as a result of, any Refund, Chargeback or Decline. For purposes of this Agreement the following definitions apply: “Refund”: Your Patron requests that some or all of your Patron’s Acquisition Funds be returned in exchange for return of the goods or services acquired from you; “Chargeback”: Your Patron, through its card-issuing bank, questions or disputes the validity of a charge initiated by you; “Decline”: Your Patron’s card-issuing bank declines to otherwise process your Patron’s acquisition of the goods and services from you (e.g., your Patron has exceeded the credit limits on the card). In case of a Refund or Chargeback, Auctionpay will deduct the amount and associated fees from your Settlement Account.
C13. Find a Cure Clause. Notwithstanding anything to the contrary herein, if (a) your fundraising supports medical research, and (b) the organization which benefits from your fundraising is successful in finding a cure for a medical condition or disease during the Term of the Agreement, and, therefore, (c) you choose to no longer conduct fundraising activities, and (d) you provide written notice of such event to Auctionpay, you shall have the option to terminate the remaining term of this Agreement without further liability to Auctionpay (except for the payment of any amounts payable to Auctionpay on the date you provide notice to Auctionpay of termination).
C14. Fulfillment Responsibility. You shall be solely responsible for fulfillment of any products or services purchased through transactions processed through Auctionpay’s products and services, and you shall be solely responsible for establishing the portion, if any, of any donations or payments that may be treated by the provider of any products and services used or proposed to be used as auction items as a charitable donation for purposes of U.S. income tax law.
C15. Privacy and Security. Privacy and security are of utmost importance to Auctionpay. Auctionpay will not use your information or product/service donor information in any way whatsoever, except as otherwise permitted under this Agreement, as necessary to carry out is obligations hereunder, and except as required by law or court order, and shall take reasonable steps to protect information, including deleting credit card information from credit card processing terminals and encrypting credit card information for Internet transactions. Notwithstanding the foregoing, Auctionpay reserves the right to use data obtained from the performance of its obligations hereunder, in an aggregated format, for research, quality assurance, and statistical purposes. All information individually identifying you or your patrons will be removed for the analysis and shall be reasonably reviewed by Auctionpay prior to disclosure to third parties or publication to preserve anonymity before publishing.
C16. Web Services Availability. Like all web services, Auctionpay’s web sites delivering the products and services may be temporarily unavailable from time to time due to required maintenance, telecommunications interruptions, or other disruptions. Although Auctionpay will make every reasonable effort to minimize such downtime, Auctionpay does not guarantee 100% availability of its products and services. In addition, Auctionpay does not represent and warrant the availability of any other website used to verify transactions.
C17. Representations and Warranties of the You. You represent and warrant to Auctionpay as follows:
(a) You are authorized to enter into this Agreement, which shall be binding on your organization in accordance with its terms, and the execution and performance of this Agreement by you will not infringe the rights of others or violate any other agreement under which you are obligated;
(b) Your information and activities (including the transmission and receipt of payments) through Auctionpay’s products and services shall not:
(i) be false, inaccurate or misleading;
(ii) be fraudulent or involve the sale of counterfeit or stolen items;
(iii) consist of providing cash advances from credit cards to patrons or others through the Auctionpay software and/or services
(iv) be related in any way to gambling and/or gaming activities, including but not limited to payment or the acceptance of payments for wagers, gambling debts or gambling winnings, regardless of the location or type of gambling activity (including online and offline casinos, sports wagering and office pools), with the exception of payments for gaming transactions that are expressly authorized by law in the jurisdiction of both the sender and the recipient of the payment;
(v) infringe on any third party’s copyright, patent, trademark, trade secret or other property rights or rights of publicity or privacy;
(vi) violate any law, statute, ordinance, contract or regulation (including, but not limited to, those governing financial services, consumer protection, unfair competition, antidiscrimination, or false advertising);
(vii) be defamatory, trade libelous, unlawfully threatening or unlawfully harassing;
(viii) be obscene or contain child pornography;
(ix) knowingly contain any viruses, Trojan horses, worms, time bombs, cancelbots, easter eggs or other computer programming routines that may damage, detrimentally interfere with, surreptitiously intercept or expropriate any system, data or other personal information;
(x) create liability for Auctionpay or cause Auctionpay to lose (in whole or in part) the services of Auctionpay’s internet service providers or other suppliers;
(xi) involves the preparation and/or distribution of "junk mail", "spam", "chain letters", "pyramid schemes" or the like;
(xii) would encourage conduct that could constitute a criminal offense, give rise to civil liability or otherwise violate any applicable local, state, national or international laws or regulations;
(xiii) involves the unauthorized entry to any machine accessible via the Services or
(xiv) be for another organization other than your organization that is party to this Agreement. If you use, or attempt to use the Services for purposes other than authorized by Auctionpay, including but not limited to tampering, hacking, modifying or otherwise corrupting the security or functionality of the Services, this Agreement will be terminated and you will be subject to damages and other penalties, including criminal prosecution where available.
C18. Miscellaneous. This Agreement, including the attached schedules, constitutes the entire agreement between the parties with respect to the Services to be provided by Auctionpay to you. This Agreement supersedes all prior communications, representations or agreements, whether written or oral, between the parties. This Agreement may not be amended except in a writing signed by both parties. Performance hereunder may be waived only in writing by each party and the waiver of one provision by any party shall not constitute a waiver by that party of any other provisions hereof or of strict compliance in the future of the performance so waived. The parties’ rights and obligations, which by their nature would continue beyond the termination of this Agreement, including, but not limited to, obligations with respect to indemnification and confidential information, shall survive such termination. If any provision of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. You may not assign or transfer this Agreement to any third party without Auctionpay’s prior written consent, except in connection with the merger or sale of all or substantially all of the assets or stock of your organization, provided the assignee agrees in writing to be bound by this Agreement. This Agreement shall inure to the benefit of and be binding on the respective successors and assigns, if any, of the parties hereto. All terms survive termination of the agreement.
A copy of AuctionPay’s Client contract (above) was recently forwarded to me by a nonprofit. AuctionPay’s main focus, for those of you who do not know, is the business of providing point of payment processing (credit card terminals) to nonprofits and charities. AuctionPay also purchased an auction software company a few years ago, formerly known as Archetype (Archetype originally was available to their customers at a cost of $800 and the company’s technical support was totally free. It would appear that AuctionPay’s fees have gone up and they now charge a separate fee for their support, unlike Archetype. ), and now they also sell this fundraising auction software to AuctionPay clients as well.
Long story short, I was asked to review this contract and AuctionPay’s sign up process by several of my clients, as I have recently been made aware of these client’s receiving what they have termed “threat messages/letters” from AuctionPay when these clients decided to move their business elsewhere. AuctionPay apparently had sent out notifications of breach of contract to these particular clients when those AuctionPay clients violated the terms of AuctionPay’s agreement(s) and contract(s).
AuctionPay’s sign up process occurs online. In AuctionPay’s defense, there is a web page that offers the client the ability to choose either a one year or five year contract option. This decision performed by the charity client is made by checking a box, indicating that the agreed term will either be one year or five years. In defense of the charity or nonprofit, this form of web page and sign up form is separate from the web page containing AuctionPay’s contract. That makes this process more than a little nebulous and confusing since it is obviously separate from the contract page itself. By default AuctionPay has selected the five year box option, and the client must select the one year option to change AuctionPay’s default setting.
For the record, I am by no means advocating (promoting) nor am I denigrating (libel or slander) a charity or nonprofit’s choice to use or not to use AuctionPay. I am merely bringing forward the facts, as contained in AuctionPay’s contract and only offering my opinion (free speech). How the reader chooses to approach or use this information contained in this narrative is strictly their choice alone. If this information is helpful or useful to a nonprofit or charity in negotiating a contract with AuctionPay, then this will be an independent action and choice that is entered into strictly between AuctionPay and that particular charity. I am not an attorney. However I would recommend and I have no doubt that AuctionPay would echo this statement that you should consult with your attorney in seeking any legal clarification pertaining to this contract before signing it.
CONTRACT ANALYSIS: A copy of the AuctionPay Contract may be found in quote box above!
This contract contains the normal boiler plate legalese, as do most contracts. Everything reads fine, but there are most definitely some points in this contract that unduly reward AuctionPay, even if they do not provide any services to their nonprofit clients. According to my clients, this is where their concerns begin, and why they have received the legal notices that they have from AuctionPay. Please read on.
Section A2.2 clearly states that a nonprofit AuctionPay client would be responsible for payments (As much as $5,670 on a one year contract down to a lesser amount of $1,980 on a five year contract) specified in the AuctionPay contract Schedule B.1 even if they do not use AuctionPay’s services!
Section A2.8 clearly states that a nonprofit AuctionPay client will receive their event proceeds by the 5th day after the fundraising event’s conclusion. This money sits in an AuctionPay escrow account earning interest for AuctionPay during that period before it is deposit into the nonprofit’s account. To this day, I am still unclear why this AuctionPay business practice remains in effect! The rumor I have heard from other auction software companies is that Visa is looking into and investigating this particular AuctionPay business practice.
Section A2.9 clearly states that a nonprofit AuctionPay client will be responsible for the payment of AuctionPay set-up fees (As much as $5,670 on a one year contract down to a lesser amount of $1,980 on a five year contract) even if they terminate their contract within 30 days of the client’s previous event.
Sections A3.4 & A3.5 subsection(s) a. & b. have always presented a concern to my clients. This goes back to the client concerns raised in Section A2.8 - This money sits in an AuctionPay escrow account earning interest during that period before its deposit into the nonprofit’s account.
Section A3.7 clearly states that a nonprofit AuctionPay client will be responsible for payments (As much as $695 on a one year contract down to a lesser amount of $295 on a five year contract) to AuctionPay even if you cancel AuctionPay’s Online Payments contract within the specified 30 days. The language in this clause is also quite nebulous.
Section(s) B.1, B.1.2 & B.1.3 is self explanatory!
Section B.1.4 clearly states that a nonprofit AuctionPay client will be responsible for payments (As much as $695 on a one year contract down to a lesser amount of $295 on a five year contract) to AuctionPay even if the client does not raise enough money to cover this expense. Here is a valid point of concern. Does AuctionPay have an ethical obligation to assess the nonprofits abilities and means in advance of their event? Perhaps AuctionPay should consider amending this clause?
Section B.1.5 is self explanatory! As a professional fundraiser for the past fifteen years (well before the advent of AuctionPay) I would not grant anyone direct access to my bank accounts, providing them the ability to withdraw money as they wish.
Section(s) B.2, B.2.1 & B.2.2 is self explanatory!
Section(s) B.3, B.3.1, B.3.2 & B.3.3 is self explanatory!
Section(s) B.4 & B.4.1 is self explanatory!
The hypothetical AuctionPay service models I created below indicate a one year and five contract option and assumes gross revenue of $299,000 dollars earned at a fundraising auction event. All Visa and Amex charges are assumed to be consistent. Obviously, with a mix of both Visa and Amex charges involved, the grand total amounts would trend downwards.
One Year contract:
$5,670 in set up fees
1.3% of $299,000 =$3,887
6 terminals ($75 each) = $450
Subtotal from section B.2 = $10,007
Visa, MC, Discover (1.75%) = $5,232.50 Subtotal from section B.3 applies to both contract terms.
If Amex is used (2.25%) = $6,727.50 Subtotal from section B.3 applies to both contract terms.
Possible grand totals = $15,239.50 (if Visa et al.)
Possible grand totals = $16,734.50 (if Amex)
Five Year Contract:
$1,980 in set up fees
1.3% of $299,000 =$3,887
6 terminals ($75 each) = $450
Subtotal from section B.2 = $6,317
Visa, MC, Discover (1.75%) = $5,232.50 Subtotal from section B.3 applies to both contract terms.
If Amex is used (2.25%) = $6,727.50 Subtotal from section B.3 applies to both contract terms.
Possible grand totals = $11,549.50 (if Visa et al.)
Possible grand totals = $13,044.50 (if Amex)
Section(s) B.5 is self explanatory! Of course these amounts would be added to the grand totals indicated in the hypothetical AuctionPay service model above and increase upwardly from there.
Section B.5.1 A is a huge concern to nonprofit clients and AuctionPay partners alike!
From a fundraising auctioneer’s perspective I have grave concerns about AuctionPay’s $75 an hour Professional Services not covered under Technical Support clause. AuctionPay cannot be all things to all nonprofit clients. Recently, AuctionPay is attempting to provide fundraising auction consulting to their (OUR) nonprofit clients. AuctionPay is NOT a fundraising, charity or benefit auctioneer, nor are they an event planner or special events company. Yes, AuctionPay has built their success by relying on EXTENSIVE input and information received from individuals in all these aforementioned fields. To this day, I remember my original conversation with Gary Brashear (former AuctionPay V.P.) and Angela Jackson (former AuctionPay Marketing Mgr.) in 2003 quite well in my providing both of them with marketing information, such as utilizing web sites like AuctionZip, etc.
Now AuctionPay is competing directly with all of us! They are now circumventing us, bypassing our far more superior fundraising consulting services that we have to offer our clients, so that they can attempt to sell these services to their (OUR) nonprofit clients. The sad fact is that AuctionPay is using this same information that we have previously, graciously, shared with AuctionPay and successfully provided to our clients, before the existence of AuctionPay, to derive even more revenue for their company! AuctionPay may refer to some of you as Partners (Auctioneers, event planners, special events managers, etc.) until you become no longer a necessary component of a bigger machine. This will happen if they continue down this path! AuctionPay should seriously reconsider their position when it comes to providing fundraising consulting, and auctioneers (Partners) should be asking AuctionPay these relevant questions.
There are certain states (Massachusetts and Virginia) in which it is illegal for professional fundraisers to charge a commission or percentage as a fee for services provided. AuctionPay is truly entering into dangerous territory with their current payment structure in place if they will now be providing fundraising consulting servicesin violation of these state laws. AuctionPay (original conversations with former AuctionPay employees Gary Brashear and Angela Jackson) followed my lead (I was the first auctioneer member in the U.S. to join AFP) in joining AFP. It is interesting that AuctionPay’s fee structure (percentage based) does violate AFP’s Code of Ethics, and this is especially true if fundraising consulting will now be provided by AuctionPay.
Let us not forget that there are also states in this nation that require professional fundraisers to register and become licensed as “Fundraising Counsels” if they are collecting fees in providing fundraising consulting to their nonprofit clients. I don’t believe that AuctionPay maintains such state required licenses.
Section C.1 clearly states that a nonprofit client is responsible for providing all notice to AuctionPay in writing and delivering such notice by these methods (“registered or certified mail, return receipt requested, or overnight delivery with verification of receipt by the addressee, at the addresses set forth on the signature page hereof.”) only! However, AuctionPay may deliver all notice to their nonprofit clients by the methods stated above or SIMPLY BY EMAIL!
Section C.2 is self explanatory and also creates a potential concern if overlooked by the nonprofit. Perhaps automatic renewal is not always a good idea?
Section C.8 is self explanatory and also creates a potential concern if overlooked by the nonprofit. AuctionPay appears to receive payment from the nonprofit no matter what the circumstances indicate!
Section C.13 is self explanatory and also creates a potential concern if overlooked by the nonprofit. AuctionPay, there again, appears to receive payment from the nonprofit no matter the circumstances indicate!
Section C.17 is self explanatory! Subsection (vi) is a bit hypocritical though when you or the nonprofit clients consider Section B.5.1 A, and my commentary concerning AuctionPay’s direct competition with auctioneers, event planners and special event managers who provide their clients with fundraising consulting.
Thanks,
Tom DiNardo
posted by DiNardo & Lord Auctioneers FUNDRAISING CONSULTANTS @ 1:38 PM
