[Al1]

This is dumb. In the next issue of dailyfunder that we're finalizing now, we have a comprehensive article about the regulatory landscape. There is no federal regulation coming.

Sean,

Do you discuss the FTC's enforcement powers regarding UDAAP at all in your piece? I completely agree with you that there's basically no chance of any new federal legislation coming along to regulate commercial finance. However, I do believe it's possible that in the next few years we could see an FTC enforcement action based on an UDAAP theory. I think you mentioned once that you've seen merchants confuse the split percentage with an interest rate. I think it's possible that the FTC could see that and decide to take a closer look at how some alternative finance products are marketed. If this occurred, I think some industry participants could have issues. This type of enforcement action wouldn't require any additional legislation and has been a recent focus of the FTC.

Definitely not cause to sound the alarm but probably one of the only ways we'd see governmental regulatory action, if at all.

[Sean Cash]

Sean,

Do you discuss the FTC's enforcement powers regarding UDAAP at all in your piece? I completely agree with you that there's basically no chance of any new federal legislation coming along to regulate commercial finance. However, I do believe it's possible that in the next few years we could see an FTC enforcement action based on an UDAAP theory. I think you mentioned once that you've seen merchants confuse the split percentage with an interest rate. I think it's possible that the FTC could see that and decide to take a closer look at how some alternative finance products are marketed. If this occurred, I think some industry participants could have issues. This type of enforcement action wouldn't require any additional legislation and has been a recent focus of the FTC.

Definitely not cause to sound the alarm but probably one of the only ways we'd see governmental regulatory action, if at all.

I believe UDAAP only pertains to consumers and from what I've learned from regulators and the lobbyists that interact with them, small businesses never fall into the category of consumers, not even if it's a 1 man sole proprietorship.

[HeatherF]

I think the key word in the original statement was "brokerage" I do know of a couple brokerage firms or ISO's that have come under scrutiny of the FTC for the representation of the services provided to the merchant and not being clear with their upfront and back end fees.

[Sean Cash]

I think the key word in the original statement was "brokerage" I do know of a couple brokerage firms or ISO's that have come under scrutiny of the FTC for the representation of the services provided to the merchant and not being clear with their upfront and back end fees.

misrepresentation and fraud are different things from regulating the industry. There are some practices in the industry that are considered by some to be immoral but they are not fraudulent.

If you are misrepresenting or committing fraud, your problem is not legislation, it's law enforcement.

[Al1]

I believe UDAAP only pertains to consumers and from what I've learned from regulators and the lobbyists that interact with them, small businesses never fall into the category of consumers, not even if it's a 1 man sole proprietorship.

The UDAAP regulations are some of the only federal laws that apply to commerce with consumers as well as businesses. FTC enforcement actions involving consumer transactions are much more common, but B2B transactions are subject to the UDAAP rules.

I think Heather's comment highlights exactly what the FTC would be looking for, which is disclosure. The FTC isn't concerned with rates or fee amounts. It just wants to make sure this information is being communicated clearly to the borrower/seller and is not being misrepresented, like you mention.