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Deceptive merchant cash advance company owner permanently blocked from industry

On Behalf of | Nov 27, 2023 | Merchant Cash Advances

A business owner considering a merchant cash advance (MCA) must know what terms the lender is offering before they can decide whether to proceed. After all, you would not want to walk into an MCA agreement blind about what percentage of your credit card transactions you owe and other details.

But when an MCA lender purposely deceives its clients about what they are signing, those clients’ businesses could be in serious jeopardy. By signing a loan agreement they cannot afford, they risk having their assets seized — all because of a dishonest lender.

MCA lender banned from industry for deceptive practices, threats

The Federal Trade Commission recently announced that it successfully sued Jonathan Braun, the head of RCG Advances, and won an injunction in federal court forbidding Braun from issuing MCAs ever again. The FTC’s lawsuit accused Braun and his associates at RCG of lying to borrowers about the terms included in the MCAs they were signing up for. Once its customers fell behind on their payments, RCG used unfair debt collection practices, including threatening customers with physical violence. Braun and RCG were also accused of unauthorized withdrawals from their customers’ accounts and forcing them to sign confessions of judgment to make it easier for RCG to seize their assets in the event of a default.

The federal lawsuit ended in summary judgment against Braun, who is now banned from any involvement in the MCA business and debt collection. The court ordered Braun to contact credit reporting agencies and ask them to remove negative information on any reports that were the result of his actions.

A separate trial will be held to determine how much Braun owes his victims in monetary relief. The other defendants have already settled the claims the FTC filed against them, and have been ordered to pay more than $2 million.

Who will help your business?

FTC investigations can help stop deceptive MCA lenders, but only long after the fact. As a business owner, you might be responsible for protecting yourself. An attorney who practices MCA law can advise you and represent you in litigation, if necessary.