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Small businesses targeted with unauthorized withdrawals

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The last thing struggling small business owners need right now is to have money unlawfully taken from their pockets. According to a complaint filed today by the FTC, that’s exactly what a company that offered financing to small business did to its customers. 

The FTC alleges that Yellowstone Capital, LLC, Fundry, LLC, and their officers kept withdrawing payments from small businesses’ bank accounts even after they had already fully repaid what they owed. The defendants in this case offered financing products called “merchant cash advances” (“MCAs”) to small businesses. MCAs give business owners quick access to money and are often marketed to business owners who don’t qualify for bank loans or other traditional forms of financing.

The defendants’ MCAs are supposed to work like this: the MCA provider agrees to give a certain amount of money to a business in exchange for a higher amount in return. The business will pay that higher amount over a period of months through daily automatic withdrawals from the business’s bank account. But the FTC says that Yellowstone kept taking these daily payments even after businesses had fully repaid.

The FTC alleges that the company also deceived customers about other important details of its cash advance products. For example, Yellowstone falsely promised that its MCAs required “no collateral” and “no personal guarantee,” when they actually did. The FTC also says that the company gave business owners much less money than promised, by withholding large fees from that promised amount.

This case reminds us that, even during the pandemic, there are companies ready to deceive and unlawfully take money from struggling small businesses. If you’re a business owner looking for financing, check out this advice to help you stay clear of this conduct.

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Comments

I just wish that everyone would make the world free meaning a dollar and under!!!!???

The same happened to me with advance america with a personal loan . I got the loan by march with a plan to pay in 6 months with a 55% interest ,9 when the pandemic came by April I couldn't pay and I called in advance to ask to defer my payments and they said that was not possible so by April 27 when I received the stimulus check they debited the whole amount of the 6 months saying that they did it because I didn't pay and if I needed more money I could go there again, it was a terrible time .

i like what the ftc is doing to help the public

I wanted to say, "unbelievable," but sadly, it isn't.

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