National Credit sues Western Union Unauthorized use of technology is alleged by firm

June 25, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Facing a threat to its primary business, National Credit Management Corp. is suing Western Union Financial Services Inc., alleging that the company is using patented technology it developed.

The Hunt Valley-based financial services company filed the suit in U.S. District Court in New York seeking "injunctive relief," unspecified damages and legal fees from Western Union.

National Credit, which provides credit, collections and accounts receivable management services to businesses nationwide, alleges that Western Union is using patented technology developed by National Credit that allows its clients to take check payments over the phone from consumers who are paying bills or buying goods.

"Their process is a clone of ours," said Leeds Hackett, chairman and chief executive of National Credit. "We didn't do this [file suit] in essence to reap the rewards of a lawsuit. We did this to protect our business. They are our major competitor."

Western Union is a giant money transfer firm that handled more than 28 million money transfers in 1995. It is owned by Hackensack, N.J.-based First Data Corp., which had $1.1 billion in operating revenues in the first quarter. Neither Western Union nor First Data officials were available for comment.

The legal fight began last week after National Credit received a patent on April 2 for the software used by its subsidiary, Accelerated Payment Systems.

Accelerated Payment operates a service bureau for clients such as MBNA American Bank, Banc One Corp., USAir Group Inc. and Baltimore Gas and Electric Co., that electronically collects the money from customers' accounts after they have agreed to pay over the phone.

Accelerated Payment then generates a check using an automated system so the customer doesn't have to put one in the mail.

"It has been very successful," Hackett said. "We complete about 20,000 transactions per day utilizing our process."


Union introduced a competing service in 1993, Hackett said.

The CEO said National Credit, which has 170 employees and about $12 million in annual revenues, is feeling the effects of the competition.

"They won't give us exacting information as to their clients or their business, but clearly, we have not gotten some prospects because they have," Hackett said.

Hackett said that on April 3, the company proposed licensing the technology to Western Union, but the offer was rejected.

"Can they sink us? You bet," Hackett said. "But this is David taking on Goliath. We have an asset and we are not going to let them trample over us."

Pub Date: 6/25/96

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