", When merchants fall behind on their payments, some direct lenders send threatening emails and texts, owners and their lawyers say. Federal government websites often end in .gov or .mil. He stopped paying around Thanksgiving and hired a restructuring firm, Second Wind Consultants, to help him work out the loans. Of course I want to thank you further than what I wrote. We'll get into all of the specifics in the article below, but in most cases, when a business defaults on an MCA, the contract states that the MCA lender can immediately begin to: File a collection lawsuit. Learn more about your rights as a consumer and how to spot and avoid scams. The case is further summarized here. Now, amid the coronavirus crisis, the lenders have come for their money. Please call for your free consultation to speak to one of our trained professionals. Unless your case involves one of our attorneys having to go to court, our negotiation service fees are flat fee based not charged hourly. This type of predatory, extortionate approach is going to wipe out so many businesses, and they're not going to come back. Use our visualizations to explore scam and fraud trends in your state based on reports from consumers like you. Mike handled my case, hes very professional and efficient, he made sure I understand the whole process, any questions I have are answered promptly. This saves time for you and eliminates any extra stress for you as time is money and being stress free is just as important as being debt free! Merchant cash advances are like payday loans, but for businesses and often have triple-digit interest rates. To read about this case click here. Under a typical deal, a business might receive $40,000 in exchange for agreeing to hand over $50,000 in future revenue over a few months. We analyze your current financial situation including your assets and liabilities as well as your current cash flow, allowing us to narrow down our services more specific to what you can afford. The merchant cash advance companies often demand that borrowers also pay attorneys' fees, which can be 25 percent to 33 percent of the balance due under a borrower's agreement, documents. In addition to the $2.7 million financial judgment with RCG and Giardina, the just-announced orderputs them on the Banned Wagon, prohibiting them from engaging in small business financing and debt collection. What to Do When You Can't Pay a Merchant Cash Advance from Blursoft Michael explained the process in detail and even though I was quite hesitate I feel this was the best option for me. We serve clients in English & Spanish. (The suit is now on hold.). Most of the debt was in my name so I contacted Dramer Law . We are very satisfied with the work and support provided by Michael Sininsky and The Law Offices of Kenneth H. Dramer. If you do, you must create a user name, or we will not post your comment. The MCA companies will almost always move to sue the business immediately. Aside from treating you with the upmost care possible, this means you wont have to deal with multiple people and re-explain your situation to a different person each time you call. Not only did you waste money in fees to the settlement company, but your funders have now all assessed extra fees per their contract which typically include: DONT FALL THE FOR DEBT SETTLEMENT LIES. "You can't have people freezing assets and demanding payments at a time like this. The purpose of this blog and its comments section is to inform readers about Federal Trade Commission activity, and share information to help them avoid, report, and recover from fraud, scams, and bad business practices. Call the police I don't care.". Approach a Merchant Cash Advance Attorney Hire a lawyer skilled in debt settlements and bankruptcy for your MCA debt. The FTC had previously settled with defendants RAM Capital Funding, LLC and Tzvi Reich. Are you getting hounded by collection calls that you want us to take over on your behalf? I wish everyone would be like that. Whether or not the bankruptcy is filed personally or for your business will determine the result of how the discharge will affect your liability. "I don't see how companies that are collecting future receipts can be litigating against companies that don't have any receipts," Indelicato said. They advised me every step of the way through the difficult process of bankruptcy. So when small businesses become targets for misleading claims, deceptive tactics, and flat-out intimidation, the FTC takes notice. Is a Merchant Cash Advance (MCA) ruining your business cash flow? A True Merchant Cash Advance is NOT a loan. Once hired the process was thoroughly explained to me and it was about as effortless (at least on my end) as humanly possible. The agreements are enforceable contracts the borrowers have agreed to, lawyers say, but some of the aggressive collection practices, such as visiting borrowers' homes, aren't legal, they contend. Prev Post All this just to get you to sign on the dotted line. Court documents show that amid the pandemic, so-called merchant cash advance companies are pursuing legal claims against owners that freeze their bank accounts and are pressing their family members, neighbors, insurers, distributors even their customers for money the lenders say they're owed. Youll have one individual client service representative that will be your point of contact and youll build a relationship with them so theyll know exactly what you are going through. The repayment was not contingent upon funds coming into the merchant account, causing it to be a loan and therefore the rate charged, which was calculated to be roughly 180%, was in fact deemed usurious and thus the contract was voided. But the 81-year-old lawyer says that's not how it worked when his solo practice accepted $55,000 from Scottsdale, Ariz.-based . Debt settlement companies typically do not discuss any downsides of settling your Merchant Cash Advance obligations. Search the Legal Library instead. Cash Advance Firm to Pay $9.8M to Settle FTC Complaint It Overcharged Overall, though, Im very happy. Mike S. Baldwin, NY 8-3-15, I was so happy to have been represented by the law firm of Kenneth H. Dramer. From the initial consultation and throughout the entire process ,Michael patiently and fully explained everything. Opinions in comments that appear in this blog belong to the individuals who expressed them. "The FTC has to seriously look at rules that ban some of the most extortionate clauses in these loan contracts," he said, adding that the FTC is prepared to "go after some of the loan sharks and their lawyers who run lawsuit mills that are filing some of these sham collection actions.". Download the NBC News app for full coverage and alerts about the coronavirus outbreak. If you are an out of state business owner, a confession of judgment can no longer be filed against you in the state of NY. They are known to misrepresent their tremendous upfront fees or for just telling you not to worry about the fees because theyre all included in the monthly payment estimates. MERCHANT CASH ADVANCE LAWSUITS and JUDGMENTS - Lebedin Kofman LLP Merchant Cash Advances can be discharged through bankruptcy. Call today for your free consultation with an experienced member of our team who will ask the right questions to determine the best course of action. That must change, Chopra said. When the business owners call to find out what is going on, they quickly find out that no progress has been made! Do you need help with a Merchant Cash Advance lawsuit or legal issues? Getting out of that debt was like taking a huge weight off my shoulders. Cory K. 4-20-15, Nicki and I are ecstatic, she is so happy she is in tears! We wont post threats, defamatory statements, or suggestions or encouragement of illegal activity. The case against Jonathan Braun is pending. Granted, they have specific clauses in their agreements to protect themselves from you closing your merchant account purposely to avoid paying, but if its open and just not receiving funds, nothing should be paid to them if it is a true MCA. This step is critical in any of our processes as we ensure that whatever service we recommend will be within your budget and therefore youre more likely to succeed. Specifically, the complaint states that Yellowstone promised that business owners would not be required to provide collateral or be subject to a personal guaranty. Mike Thank you so much for your help. I can not thank you enough for giving me freedom from debt. FTC takes action against merchant cash advance providers Merchant cash advance companies provide funds to businesses in exchange for a percentage of their revenues, often in the form of daily withdrawals from the business's bank account until the obligation has been met. Small businesses have borrowed billions from unregulated merchant cash advance companies. Michael was always professional and courteous as well as efficient . Office of The Attorney General A COJ will allow your funder to freeze your bank accounts whereas a UCC lien will allow your funder to freeze your receivables BEFORE THE FUNDS EVER MAKE IT INTO YOUR BANK ACCOUNT! For a free consultation regarding your merchant cash advance lawsuit, contact our New York merchant cash advance lawyers at (516) 217-4488 or fill out a form. We will send notification of power of attorney to your actual MCA Purchaser, their collectors, their attorneys, and even the Marshall or Sheriff if they are now involved. Highly recommended. G.P. In 2019, it provided an estimated $19 billion in funding. Instead of lending an amount of money over a period, a Merchant Cash Advance company will purchase your companys future receivables coming into your merchant account. For example, if A+ Construction Co gets an advance of $10,000 and pays back 20% of their sales with a 1.35-factor rate, they will pay back about $13,500 by the end of the eight weeks. Get to keep our house and car, even our credit score went up. Many of your customers that receive notice of the UCC Lien filed against you may see that as a sign of weakness and may also choose to do business elsewhere so it can cause problems in more ways than one. I didnt feel rushed or like I was being blown off. You can rely on Lendmark for customized loans that are hassle-free and budget-friendly. Merchant Cash Advance Attorney Florida - Grant Phillips Law We were thankful that he had our account . Merchant Cash Advance - Grant Phillips Law PLLC A Merchant Cash Advance is not a set term as the purchaser is paid back as funds come into your merchant account. They will tell you that you only have to make one payment into an escrow account and theyll settle your balances for less making MCA debt settlement seem like a walk in the park. Being debt free is such a relief- now we can move forward and put our money toward our kids college educations and save for our future.I am happy to recommend them and am so glad I contacted them a few years ago. We can negotiate the principal balance owed to a lower payoff amount so you can literally pay back less than you owe. Thanks! JC, Queens, NY. We offer many different services for those struggling with debts including Business Debt Relief, Mortgage Relief, Tax Relief, & Student Loan Relief. The FTC alleged that RCG, Giardina, and others stitched together a blanket of misrepresentations that cloaked the true nature of the transaction. It is true that a judgment (whether entered by COJ, default, or awarded) can also be used to freeze your incoming receivables, however, most funders do not use judgments to freeze receivables (especially now that COJs in NY are banned against out of state business owners) so filing a UCC lien is a much quicker tool! FTC Alleges Merchant Cash Advance Provider Overcharged Small Businesses Our Relief Specialists are NOT Paid a Commission so there will be no sales pressure at our law firm. At that point, the business owners then fire the debt settlement company and hire us for real help. We research all over the internet and called many law firms and layers. I highly recommend them. Jamie M. Seaford, NY 5-30-2017, I just wanted you to know it has been an absolute pleasure working with you. But the industry's reach has exploded as money from traditional banks has become less available to these borrowers. Another text to the owner included a Google map showing a driving route the debt collector was taking to the borrower's home. A Merchant Cash Advance remains one of the most devastating lending instruments available to cash strapped businesses. Search the Legal Library instead. The filings are often in amounts that are twice the money owed, say lawyers who work in the arena. The Law Offices of Kenneth H. Dramer are extremely knowledgeable and dedicated. Hi Michael, Just wanted yo drop you a note in appreciation for all you have done for Bob & I in regard to the Capital One situation. NBC News reviewed some of the communications, including videos of a visit by a collection agent to a borrower's home and another to a borrower's office by an expletive-spewing man trying to collect on a loan. Merchant Cash Advance Defense: How to Protect Yourself From Lawsuits If you Merchant Cash Advance position is eating away at your business cash flow and revenues, don't hesitate to contact Texas Merchant Cash Advance Attorney Grant Phillips Law, PLLC - serving clients in Texas and . The court proceedings were annulled, and agreeable working terms were consolidated with my creditors. A leading provider of merchant cash advances used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed, according to a Federal Trade Commission lawsuit. Sincerely , Robert & Michele A. Whitestone, NY 5-25-2015, Dramerhandled my case very professional. Five years ago, the merchant cash advance industry financed around $8 billion for small businesses. In the case of some Merchant Cash Advances, the profit made by the MCA purchaser can range from 100% to 200% or even higher, which would undoubtedly be usurious by most states standards if it were deemed to be a loan. 1-21-16. A merchant cash advance is just one way to secure financing for your business. As a provider, you deserve to get paid for the cash you advance. Find legal resources and guidance to understand your business responsibilities and comply with the law. The companies generally provide a predetermined amount of money to a business in exchange for future receipts. The complaint alleges that these practices violated the FTC Act. On March 27, NBC News contacted Bernard Feldman, a lawyer for PowerUp Lending, about the Indelicato case. According to the complaint, the defendants told business owners that no personal guaranty of collateral was required and then put personal collateral requirements in their contracts. Some business owners said they are being swamped with new texts and emails offering funds. Your thoughts, ideas, and concerns are welcome, and we encourage comments. "We have no intention of pursuing this matter at the present time," Feldman wrote. This is called a merchant cash advance. Their price is very reasonable. At The Law Offices of Kenneth H Dramer PC, before we make any recommendations, our debt lawyers, certified debt relief specialists, and paralegals are trained to ask the right questions to find out about your specific situation. Put our experiencedMerchant Cash Advance Settlement Attorneysto work for you. What Happens if I Default on a Merchant Cash Advance? They completely turned around a very trying situation for me. A recent case decision on March 16, 2017 in the Supreme Court of New York in Nassau County, titled IBIS Capital Group, LLC v. Four Paws Orlando LLC, states, in summary, the fact that payment or enforcement of a Merchant Cash Advance agreement rests upon a contingency for the payment schedule (of the funds coming into the account), rather than a true loan, in which it is essential to provide for repayment absolutely and at all events, it is not actually a loan, and therefore, is valid, even though it provides for a return in excess of the legal rate of interest. Companies often choose to make the filings in New York state, because its statute is powerful and easy to use. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts. By doing so, the MCA purchaser is taking the risk that your business may potentially not have any future receivables. The Merchant Capital decision is very good news for MCA companies doing business with Florida merchants. In addition, the complaint alleges that for years Yellowstone deceived potential customers about the amount of money they would receive, with the amount shown on the contract not reflecting additional fees that would be deducted. But the bank backed out after he had signed a new lease and begun construction on the second office, and by spring of last year, Runion said, he desperately needed funding. Sometimes called cash advances, payday loans are quick, simple, convenient loans with competitive rates and terms. What Happens with a Merchant Cash Advance Breach of Contract Lawsuit Its basically free money! There arent that many reviews on the internet about them and like most people were not sure if we can trust them. receive our Limited Power of Attorney, they are obligated to contact us directly on your behalf. The merchant cash advance agreements typically allow for these remedies. A similar situation regarding further recourse to the Merchant Cash Advance purchaser came about in the case Merchant Funding Services, LLC, v. Volunteer Pharmacy Inc. which dealt with the signing of a Confession of Judgment (COJ) in the MCA contract. ! I hope other staff in your office are as efficient and compassionate as Mike is. A merchant cash advance, MCA for short, [] Read Now It became a cycle of death. I never felt at anytime like I was getting less than 110% from them. Franchisee Conversations with Chair Khan, Statement of Commissioner Rohit Chopra Regarding Yellowstone Capital, LLC, Blog: Small business targeted with unauthorized withdrawals, Blog: Protecting small businesses seeking financing during the pandemic.