Over the past several months courts have continued to provide accountability to alternative lenders, merchant cash advance companies, as well as brokers. Clearly, this is a sign that people are looking out for the best interests of small business owners who are taken advantage by this industry.
This article highlights several recent occurrences which have suggested to the industry, if you take advantage of small business owners, you will be held accountable.
By Thomas Tramaglini, Chief Operations Officer
Partner, The Center for MCA Research
A recap of several recent court happenings
New York AG Sues Delta Bridge, Yellowstone Capital, and a host of other entities and individuals. Is your MCA/Alternative Loan listed in their evidence? Find it here.
On March 5th, the New York Attorney General Letitia James sued a host of different MCA entities including Delta Bridge and Yellowstone Capital in an effort to seize alleged illegal activities associated with the Merchant Cash Advance (MCA) and alternative loan industry. Consequently, the New York AG is seeking relief in the amount of $1.4 Billion in fines and restitution which if successful can go back to business owners who were hurt by their operations.
This article outlines several parts of the AG's lawsuit and datasets entered into the evidence with virtually every deal (predatory victim) who dealt with Delta Bridge and Yellowstone Capital for the last 10-13 years.
Kabbage Inc. settles massive PPP case.
Kabbage was one of the most popular alternative alternative lenders because of their longer term loans and lines of credit which they delivered to small business owners. However, when the Pandemic happened, like many alternative lenders Kabbage threw their hat in the ring and was approved to become private provider of the PPP loan. However, their mis-management and fraudulent operations ended up being in part a cause for their demise. In October 2022, Kabbage entered into Chapter 11 bankruptcy protection.
AKF, Inc (Fundkite) Sues Another Broker For Stacking on Them.
MCA Brokers are predatory in their actions and we have written extensively about what they have made delivering multiple cash advances or loans behind the MCA companies back. We call it the "art of stacking."
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. This is never usually good for the small business owner as they are most certainly going to default because they will not be able to afford paying for the receivables they have sold and are responsible to pay.
Were you stacked? In recent months, MCA companies like AKF dba Fundkite have gone after brokers for stacking. Recently, AKF dba Fundkite sued Seed Financial for their alleged predatory broker actions. In this article, we review the case and the implications associated with the actions of the MCA company and the broker.
FirstPoint Funding LLC settles with AKF, Inc (Fundkite) for $50,000 because broker stacked small business owners at their expense.
We recently wrote about a case in New York which Fundkite (AKF), a MCA company sued a MCA predator/broker (FirstPoint Funding) for violating their ISO agreement and stacking clients (see AKF Inc dba v. Firstpoint Funding LLC.). To avoid a trial and drawn out process, FirstPoint Funding and AKF "amicably" resolve the case for $50,000.
Fora Financial Sues Broker 4 Pillar Consulting for Stacking - Seeking $500K in relief.
Stacking is a common tactic used by MCA and alternative loan brokers to fund clients which is unethical and against what funders allow. 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.
In FORA FINANCIAL ADVANCE, LLC, FORA FINANCIAL BUSINESS LOANS, LLC, FORA FINANCIAL ASSET SECURITIZATION 2021, LLC, and FORA FINANCIAL WAREHOUSE LLC v. 4 Pillar Consulting LLC, Fora sues broker for $500K for allegedly stacking clients who defaulted on Fora's funding. Several examples are provided in the docket of the deals that 4 Pillar is accused of stacking.
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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