Lawsuit Claims Missouri Cannabis Company Deceives Customers with ‘Cashless ATM’  

A class action lawsuit in Missouri alleges a cannabis company deceived customers with hidden fees through cashless ATM payments that misrepresent sales to banks, credit card processors and card networks, KCTV reports. The lawsuit claims customers of Kansas City Cannabis Company receive cannabis and sometimes “change” in cash, but their debit cards are charged to look like ATM withdrawals.  

The lawsuit contends that the scheme rounds up payments to present increments, includes ATM surcharges between $2 and $4 per transaction, and out-of-network bank fees that would not apply to standard debit purchases – unlike ordinary debit card purchases which do not carry consumer fees. The lawsuit claims the model mislabeled the transactions which forced customers to pay substantially more than the listed price. 

The lawsuit claims the practice violates the Missouri Merchandising Practices Act, claiming the Kansas City Cannabis Company engaged in deception, false pretenses and misrepresentation in connection with the sale of merchandise; common-law negligent misrepresentation, alleging the company supplied false information about the nature of transactions; and unjust enrichment, claiming the company retained inflated proceeds obtained through deception. 

The lawsuit seeks certification of the case as a class action, actual and punitive damages, restitution and disgorgement of unlawful proceeds, declaratory and injunctive relief, including an order prohibiting the company’s use of cashless ATMs, a corrective advertising campaign, attorney’s fees and costs, and pre- and post-judgment interest.  

Major payment networks explicitly ban cannabis sales on their systems, the lawsuit notes. 

Both Visa and Mastercard have issued compliance warnings against the practice. In 2021, Visa published a notice stating it was “aware” of the cashless ATM scheme and that they violate the company’s rules and terms of service. In 2023, Mastercard warned that “The federal government considers cannabis sales illegal, so these purchases are not allowed in our systems.”