Were you taken advantage by a broker?
One of the most unmentioned parts of the MCA industry are the tactics that brokers use at the expense of small business owners to pad their pockets. We have written extensively about stacking and what it does to small business owners as well as MCA companies. This case is a great example of how one MCA company is going after a crooked broker.
Stacking is when brokers give more than one (some times many) cash advances to one small business owner within a day or so of the each MCA. Brokers make stacking an art and are clear with the small business owners who they stack, they do not want the MCA companies to know they are getting more than one cash advance.
A recent case in NY brings light to stacking and how Fundkite is not tolerating what a broker has done to their firm.
By Thomas Tramaglini, Chief Operations Officer
Partner, The Center for MCA Research
Case Overview
The defendant, MCA Predator (Broker) FirstPoint Funding LLC and James Raymond Power Jr. are accused of stacking their clients behind the MCA company's back. Such occurrences are pretty prevalent.
In this case, Fundkite accuses FirstPoint of stacking clients with false promises ultimately causing clients to default on their agreements thus violating their ISO agreement with the MCA company.
Specifically, "Fundkite discovered that those merchants defaulted because Defendants had advised and assisted those merchants to enter into subsequent revenue purchase agreements with other funders" (aka stacking).
In this case, there are several text messages which are added to the record which specifically highlight how FirstPoint stacked the merchant which caused a violation of their ISO agreement.
Here is an example of their text:
As this litigation continues, you can follow the case and learn more about what FirstPoint has been accused of - which is also a great glimpse of how brokers hurt small businesses each day.
Dr. Thomas Tramaglini is the Director of Operations and Negotiation for Beacon Client Solutions, a company that supports small businesses on a host of fronts, especially MCA debt. Thomas has been a small business owner for many years, as well as held leadership positions in several organizations and companies. Thomas holds a B.A. in History, as well as Masters and Doctorates in Organizational Leadership from Rutgers University, The State University of New Jersey.
Disclaimer: Beacon Client Solutions is not an accountancy, or a law firm. We are business consultants. While Beacon works with outstanding attorneys and accountants, we cannot and do not provide legal or tax advice. All of our work is connected to those who are legally certified to give such advice. Beacon does have a longstanding body of work in MCA resolution and understands what small business owners deal with, specific to MCA. Beacon Client Solutions serves clients in all 50 states, Puerto Rico, Mexico, and Canada.
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