ETHICS SIDEBAR

NAMAA takes lead on best practices

For the past eight years, the North American Merchant Advance Association has existed with the purpose of streamlining the industry on a number of fronts, one of which has been the development of ethical standards and best practices guidelines. Industry leaders have credited the association with raising the profile of the merchant cash advance.

David Goldin, CEO of New York-based AmeriMerchant, is one of the founders and current president of the association. He says the group is reaching out and looking at different ways to promote merchant cash advance and to make the product more mainstream.

Goldin touts the association as an example of how competitors have come together to set standards. NAMAA started out as a group of funding companies that set out to defend what, back then, was an emerging industry. At the time, several industry members were facing patent litigation, and none of those members could afford to fight the litigation on their own.

“We all came together to fight it,” Goldin said.

That effort evolved into what NAMAA is today. The association works to establish best practices and also build risk tools specific to the industry to prevent merchants from defrauding funding companies. NAMAA is updating its white paper on best practices, and also maintains a blind database of merchants who have defaulted.

Goldin believes that through these efforts, NAMAA has helped merchant cash advance earn legitimacy in the eyes of the mainstream media. He points out that five years ago, articles about alternative lending painted the practice in a negative light.

“NAMAA has done a great job educating the press, which has led to investors (coming in),” Goldin said. “The industry has really grown up.”

CEO Scott Griest, whose company American Finance Solutions is a NAMAA member, applauds the association for helping fight fraud through its suspicious activity database, which allows members to check clients’ information in a blind tagging system. Companies can enter in information that doesn’t identify the client by name, such as a street address, and find out whether that merchant has an outstanding balance.

“Those things really help members lower bad debt and foster communication, and it helps in stopping the stacking between NAMAA members,” he says.

CEO Andy Reiser of Strategic Funding Source, another NAMAA member, believes the association is headed in the right direction toward helping the industry achieve certain standards. But he points out that both the association and the industry are still young, and some of the biggest players in cash advance remain absent from the organization.

“I think the goal of NAMAA is important. And I don’t think you’ll be able to solve all the needs of a young and growing industry in the first few years of an organization,” Reiser said. “That being said, it’s a good start.”

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