On June 2, the FTC was granted a federal court order permanently barring a merchant cash advance operation and its owner from engaging in further deceptive practices and granting restitution to the customers the company harmed. The defendants offered alternative small business financing by purportedly providing funds to businesses in exchange for a percentage of future revenue. According to the FTC, however, the defendants frequently deceived small businesses and their owners, lying about terms and fees for their financing. The websites falsely claimed that cash advanced required no personal guaranties of collateral while the contracts did include such requirements. The merchant cash advance company also required businesses and owners to sign confessions of judgment, which allowed the company to obtain uncontested judgments in cases of alleged default, and which the defendants sometimes used to illegally and improperly seize consumers’ assets. Customer businesses often received thousands of dollars less funding than promised. The FTC further alleged that the defendant company and owner threatened physical violence when the businesses were unable to pay. Finally, the company is accused of providing false documents to the court during proceedings.
Continue Reading FTC Captures $2.7 Million in Restitution from Small Business Financer
