The U.S. Federal Trade Commission and the state of New York last week filed similar lawsuits against three related companies that are charged with ripping off small businesses by issuing merchant cash advances.
MCA borrowers agree to repay their advances with a share of daily receivables. Stories abound of small businesses being exploited by exorbitant interest rates, default penalties and terms that are unclear or deceptive.
Analysis compiled by Overdrive sister company RigDig, a trucking industry data firm, indicates thousands of fleets and other trucking-related companies have used MCAs in recent years. Overdrive’s ongoing Cash Flow Crisis series will examine MCA abuses in detail next week, including the charges spelled out June 10 by the FTC and New York.
FTC’s summary of its lawsuit charges the defendants with “allegedly using deception and threats to seize personal and business assets from small businesses, non-profits, religious organizations, and medical offices.” The FTC and New York filings seek restitution for customers and the cancellation of loans.
The defendants are RCG Advances (formerly known as Richmond Capital Group), Viceroy Capital Funding and Ram Capital Funding. Also named are four individual officers associated with the companies: Jonathan Braun, Robert Giardina, Steve Reich and Michelle Gregg.
Overdrive is looking to speak with operators who’ve dealt with these parties – or other questionable MCA providers. Contact firstname.lastname@example.org or comment below.