The Center for MCA Research at Beacon is the only high-quality research organization that conducts detailed research on the Merchant Cash Advance industry.
This article is a snapshot of the data we collected about the lawsuits filed in through the middle of 2024. Overall, The LCF Group continues to lead the MCA industry as the most litigious predatory lender with nearly 800 lawsuits filed in 2024 against small business owners. Other MCA companies like Itria Ventures, Vox Funding, Velocity Capital Group, and Fora Funding increased collections efforts and made it into the top 5. Implications are discussed.
By Thomas Tramaglini, Chief Operations Officer
Partner, The Center for MCA Research
The Center for MCA Research
The Center for MCA Research collects, interprets, and releases data and reports which describe the industry, their attorneys, and their collections agents in hope to help small business owners. Specifically, we work to ensure that our team and clients are informed with the most accurate data so decision-making is always precise and guided.
While our organization collects all types of data, one of the most important areas we conduct research is in our work to understand the trends of different predatory alternative lenders, their collections companies, their attorneys, and litigation tendencies. The Center for MCA Research is unparalleled in its efforts to highlight industry trends, bad brokers, scam settlement companies, and more to inform their work in informing how MCA companies and their attorneys can be limited in their actions to hurt America's small businesses.
So far in 2024, who are the most litigious companies in the MCA industry?
We obtain our data through a comprehensive data mining process, collecting information daily from various locations nationwide. The data is sourced from the New York State Court Database (NYSCEF). Thus far in 2024, a total of approximately 12,233 lawsuits have been filed in several counties in New York. Compared to a national sample nationally, New York constitutes over 85% of all lawsuits filed by predatory lenders. While this article only describes the top 50 predatory lenders, so far in 2024 there have been lawsuits filed by over 500 different MCA names, which may or may not be platforms owned by those in the top 50.
Again, and on a similar scale as 2023, the most litigious MCA company by a significant margin is The LCF Group, Inc. As of October 15, 2024, LCF had filed nearly 800 lawsuits against small businesses.
Top 50 Most Litigious MCA or Alternative Loan Companies of 2024.
2024 Rank | Predator | 2024 # Lawsuits | 2023 Rank |
|---|---|---|---|
1 | The LCF Group Inc | 779 | 1 |
2 | Itria Ventures | 672 | 11 |
3 | Vox Funding | 624 | 13 |
4 | Fora Financial | 477 | 7 |
5 | Velocity Capital | 434 | 94 |
6 | CFG Merchant Solutions | 433 | 5 |
7 | EBF Holdings (Everest) | 365 | 4 |
8 | Byzfunder NY LLC | 331 | 9 |
9 | Samson MCA | 275 | 21 |
10 | Prosperum Capital Partners dba Arsenal Funding | 270 | 2 |
11 | Fenix Capital Funding LLC | 246 | 10 |
12 | Pearl Delta Funding LLC | 239 | 8 |
13 | Silverline Services | 229 | 25 |
14 | Honest Funding | 200 | 35 |
15 | Litefund Solutions | 183 | 36 |
16 | Revenued LLC | 182 | 17 |
16 | RDM Capital Funding dba Fintap | 182 | 24 |
18 | Advance Service Group LLC | 174 | 22 |
19 | 171 | 12 | |
20 | G and G Funding | 164 | 31 |
21 | Kalamata Capital Group | 162 | 14 |
22 | Spartan Business | 160 | 25 |
23 | Advance Servicing Inc | 156 | 15 |
24 | Specialty Capital | 145 | 16 |
25 | Newco Capital Group | 137 | 6 |
26 | Fintegra Llc | 133 | 41 |
27 | Epic Advance | 126 | 32 |
28 | Bizfund, Llc | 124 | 19 |
29 | Global Merchant Cash Inc | 123 | 30 |
30 | Fundfi Merchant Funding | 122 | 18 |
31 | Parkside Funding | 121 | 42 |
32 | Alpine Advance 5 LLC | 111 | 55 |
33 | Liquidibee Llc | 104 | 28 |
34 | Pinnacle Business Funding | 101 | 29 |
34 | DMKA LLC dba The Smarter Merchant | 101 | 36 |
36 | Square Funding | 100 | 63 |
37 | Flexibility Capital | 93 | 57 |
38 | Highland Hill Capital LLC | 92 | 36 |
39 | Favo Funding | 85 | 22 |
39 | HFH Capital | 85 | 76 |
39 | App Funding Beta | 85 | 106 |
42 | Flash Funding Services | 84 | 33 |
43 | Swift Funding | 80 | 27 |
44 | Merk Funding | 75 | 40 |
44 | Libertas Funding | 75 | 81 |
46 | The Merchant Marketplace Corp | 74 | 68 |
47 | Jrg Funding | 71 | 70 |
48 | Cloudfund LLC | 66 | 3 |
49 | Rocket Capital NY | 65 | 58 |
50 | Atipana Credit | 63 | 47 |
Who are the attorneys who file the most litigation for alternative lenders?
2024 Rank | Predatory Lender Attorney/Law Firm | 2024 # Lawsuits |
1 | Fogel, David | 1006 |
2 | Zachter, Jeffrey | 1003 |
3 | Zakharyayev, Steven | 1001 |
4 | Bouskila, Ariel | 1001 |
5 | Aisnworth, Levi | 954 |
6 | Greenfield, Isaac | 911 |
7 | Parrella, Jeffrey | 805 |
8 | Feldman, Adam | 786 |
9 | Gang, Jason | 481 |
10 | Kollis, Evridike | 479 |
11 | Gilerman, Erica | 445 |
12 | Cohen, Theodore | 429 |
13 | Johnson, Michael | 374 |
14 | Eisner, Zachary | 348 |
15 | Leyvi, Maksim | 336 |
16 | Verstadig, Jacob | 295 |
17 | Yankovich, Boris | 292 |
18 | Rosen, Gene | 270 |
19 | Weinstein, Jacob | 267 |
20 | Klestzick, Yonatan | 253 |
21 | Robinson, Douglas | 242 |
22 | Desai, Rickin | 201 |
23 | Madeb, Jack | 194 |
24 | Klein Yehuda | 181 |
25 | Faskowitz, Avi | 126 |
26 | Herman, Matthew | 112 |
27 | Luchs, Morgan | 110 |
28 | Pollock, Alan | 91 |
29 | Frimet, Rhett | 72 |
30 | Ershowsky, Michael | 71 |
31 | Myones, Sydney | 70 |
32 | Serebro, Vadim | 55 |
33 | Missick, Jackée | 45 |
34 | Wolkind, Bryan | 41 |
35 | Dominczyk, Thomas | 27 |
Top counties for litigation by MCA companies in New York
1) Kings
2) Monroe
3) Nassau
4) Ontario
5) New York
6) Niagara
7) Rockland
8) Washington
9) Bronx
10) Queens
11) Washington
Here are some initial take aways from our extraction of the data.
1 - Kings County is continuing to lose its place as the king of the industry in court.
Previously, the majority of MCA lawsuits were typically filed in Kings County, NY (Brooklyn). We are preparing to share data regarding the frequency of lawsuits across various counties in New York. Due to the congestion of MCA litigation in Brooklyn, an increasing number of lawsuits are now being initiated in areas like Queens, Ontario, and there is a noticeable trend towards Monroe. Evidently, MCA firms are striving to expedite their cases, ultimately facilitating the process of obtaining judgements against small business owners. The future landscape of MCA litigation underscores the significance of agility, as MCA companies are focusing on relocating lawsuits to smaller counties with less red tape to expedite the judgement process.
2 - When small business owners answer their lawsuits, MCA companies are over 9 times less likely to be awarded a judgment against the defendant.
The data are clear.
When a person defends themselves against a predatory lender, they gain some leverage and the law protects the person from getting taken advantage of. In the court system, over 9 in 10 lawsuits filed that are answered by an attorney never reach judgement. However, when a lawsuit is not answered, more than 9 in 10 lawsuits are awarded a default judgement.
3 - After the New York Attorney General's lawsuit against Yellowstone earlier this year, Cloudfund and Delta Bridge, both the next wave of Yellowstone have stopped collecting in court, and likely stopped funding.
Since the NY AG filed suit against Cloudfund and Delta Bridge, it appears that most of their collections and lending has stopped.
4 - The LCF Arbitration Model is Clear
In many cases, LCF files arbitration against those who have defaulted. Our firm has helped many clients who have had arbitration filed against them instead of a lawsuit. In most cases, LCF files arbitration and while it is not a court matter, most small business owners do not treat the process like a court process and they do not show up to the arbitration hearing as required. When they do not show up to the hearing, the arbitrator awards LCF what they are asking for (usually ridiculous default fees and legal fees) and LCF then just files the award in court.
While the process takes initially a bit longer than a lawsuit, once the arbitration is awarded, the client cannot defend the awarded decision and penalties and basically once the lawsuit is filed, little can be done to change the damage that is done.
5 - MCA litigation is a good business to be in if you are in collections or an attorney.
Just like before, the same companies are at the forefront of legal actions against small business owners with little oversight or collaboration with those in need. MCA companies persist in imposing exorbitant fees (disguised as discounts) and show impatience when business owners struggle to comply with their program, resulting in legal actions being taken.
The crux of the matter is that defaulting on a lawsuit will likely lead to being sued. Some legal representatives for MCA companies initiate thousands of lawsuits annually, resulting in substantial financial gains for them. Based on our data, attorneys and collection agencies typically receive 15-20% of the collected amount, incentivizing them to escalate costs as much as possible.
From our perspective, MCA litigation and collections are just as detrimental as the MCA industry itself.
6 - The scientific basis for MCA funding approvals is terrible and even worse than handicapping.
Given the high number of lawsuits, it is important to consider how individuals are financed in light of the high default rate. In our view, the solution is clear. Relying solely on 3 months of bank statements to predict repayment of an advance is a risky proposition. Total deposits or average daily balances only offer a limited view of a business's ability to repay debts, especially with a default rate as high as reported by the SEC (exceeding 50% - see the PAR funding case).
Conversely, banks may have effective strategies to reduce defaults. It is plausible that small businesses face challenges in obtaining bank funding due to banks using metrics that cast doubt on their repayment capacity.
From our experience, few MCA companies fully understand concepts such as balance sheets, debt servicing, and other financial obligations.
In recent years, both government and private entities have focused on the MCA and alternative lending industry due to their perceived high interest rates disguised as fees, but all such efforts have not succeeded. Perhaps the government should concentrate on establishing lending standards to improve the regulation of borrowing and default rates.
Why do we report on these data?
Day in and day out, we want to help small business owners. Few MCA or alternative loan people or organizations every want to help the small business owner. It is what it is.
Who reports on the MCA industry? Nobody. But we do. By publishing data and reports on the MCA industry, we aim to expose the good, bad, and ugly associated with the MCA industry and what happens to small business owners 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.