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Revenue Based Finance Coalition (RBFC), a trade group whose members include non-banks that provide sales-based financing to businesses, filed a lawsuit last week against the CFPB in a Florida federal district court challenging the CFPB’s final small business lending rule implementing Section 1071 of Dodd-Frank.  The core argument made by RBFC is that because sales-based financing does not constitute “credit” within the meaning of the Equal Credit Opportunity Act (ECOA) and Regulation B, the CFPB did not have the authority to regulate sales-based financing as “credit” under the Rule.… Continue Reading

The Federal Trade Commission recently prevailed on summary judgment in a case against Jonathan Braun and his company RCG Advances, LLC.  The product at issue, merchant cash advances, generally provide small businesses with critical and timely financing, and there was no dispute that the defendants gave these businesses upfront lump-sums of money in exchange for the right to collect future receivables. … Continue Reading

Utah and Virginia recently became the first two states to require the registration of providers of merchant cash advances.  The new laws also include disclosure requirements.  (Although laws requiring disclosures for merchant cash advances already exist in California and New York, those laws have not yet become effective.)

Utah. … Continue Reading

The FTC’s recent announcement that it has entered into a settlement with two of the defendants (RAM Capital Funding LLC and Tzvi Reich) in a lawsuit filed by the FTC against two merchant cash advance providers and three of their officers for alleged violations of the FTC Act serves as a reminder of the FTC’s continuing focus on small business financing as well as the FTC Act’s application to business-to-business activity.… Continue Reading

The FTC has provided its annual update to the CFPB on the FTC’s FDCPA activities.  The latest update covers the FTC’s 2020 activities.  In addition to remaining an FTC focus, unlawful debt collection practices have been identified as a CFPB priority by Acting Director Dave Uejio and Director-nominee Rohit Chopra.  In the letter, the FTC indicates that it will continue to work closely with the CFPB to coordinate consumer protection activities related to debt collection.… Continue Reading

The New Jersey Attorney General recently filed a lawsuit in New Jersey state court against Yellowstone Capital LLC, its parent Fundry.US LLC, and various Yellowstone subsidiaries and affiliates alleging that the defendants violated the New Jersey Consumer Fraud Act (CFA) and the New Jersey Regulations Governing General Advertising (Advertising Regulations) in connection with marketing and providing merchant cash advances. … Continue Reading

A New York federal district court has denied the motion filed by two merchant cash advance providers and their chief executive officer and president to dismiss the FTC’s lawsuit alleging they engaged in unfair and deceptive conduct in violation of Section 5 of the FTC Act.

The court’s order stated only the following: “Motion denied substantially for reasons stated by Plaintiff.”… Continue Reading

The FTC’s recently-filed lawsuit against two merchant cash advance providers and their chief executive officer and president for alleged unfair and deceptive conduct in violation of the FTC Act serves both as an illustration of the FTC’s focus on small business financing and a reminder of the FTC Act’s application to business-to-business activity.… Continue Reading

On Wednesday, May 8, the Federal Trade Commission hosted a special forum exploring small business lending practices, regulations, and policies. The forum consisted of three panels: (1) Overview of the Small Business Financing Marketplace, (2) Case Study on Merchant Cash Advances, and (3) Consumer Protection Risks and the Path Ahead, along with the opening remarks of FTC Commissioner, Rohit Chopra, and closing remarks from FTC Bureau of Consumer Protection Director, Andrew Smith.… Continue Reading