[iawia_advanced]

Anyone notice that LCF filed clawback lawsuits vs 9 iso shops this month

[TheUnderwritingProdigy]

Anyone notice that LCF filed clawback lawsuits vs 9 iso shops this month

Good. In my opinion, the industry has it backwards. ISO's should be paid out at different milestones in the deal instead of all at once upfront. This would ensure mutual success between the funder and the broker.

[Michael I]

Anyone notice that LCF filed clawback lawsuits vs 9 iso shops this month

You have a link ?curious if any other funder will cut those 9 off

[Michael I]

Good. In my opinion, the industry has it backwards. ISO's should be paid out at different milestones in the deal instead of all at once upfront. This would ensure mutual success between the funder and the broker.

Make an offer and you will be surprised .for instance instead of 10-12 upfront ,you will get 20-25% paid monthly.Just like lotto winners you have a choice to take less upfront or more over a longer time

[TheUnderwritingProdigy]

make an offer and you will be surprised .for instance instead of 10-12 upfront ,you will get 20-25% paid monthly.just like lotto winners you have a choice to take less upfront or more over a longer time

20-25%? Lmaoooo

[ryanh]

Good. In my opinion, the industry has it backwards. ISO's should be paid out at different milestones in the deal instead of all at once upfront. This would ensure mutual success between the funder and the broker.

I agree with this entirely. Even though it goes against my personal interests the incentives are totally misaligned in this industry and most brokers could quite literally could not care less about the merchant many times and will stack em till there cooked. If you are syndicating your deals you should be getting paid out as the deal pays in my opinion. If you are syndicating you should get more leeway about getting paid commission upfront.

[Ben_p]

those are some petty ass 3k lawsuits. just take the L and move

[FIRST US]

Really? So I paid for the lead, sold the lead, closed the lead and on top of that I should be responsible for them paying it back? If another ISO ends up funding this merchant and over leverages them Im supposed to be responsible for that? Should we show up every day to the place of business to make sure things are running smooth too? Pay me upfront, sorry not sorry

[FCF Fund]

Really? So I paid for the lead, sold the lead, closed the lead and on top of that I should be responsible for them paying it back? If another ISO ends up funding this merchant and over leverages them Im supposed to be responsible for that? Should we show up every day to the place of business to make sure things are running smooth too? Pay me upfront, sorry not sorry

I feel your pain but its the same if not worse for the funder at least monetarily. They paid for the marketing, processed and funded it.

I do think the A/R should be aligned with a higher commission payout and frequency, for example get paid 10% on RTR not principle. Get paid weekly on it as funder collects. This way you get residuals and higher profit margins. Interests are also aligned as collections are in everyones interest.

Reverse Funding companies like GFE do this, I personally like it and it has no clawback.

[J.Celifarco]

anyone who was around back in 07, 08, 09, know this is how most companies paid commissions. 6/4 - 7/3 or some other combination of upfront and residuals. Back then as a sales guy I loved the residuals that basically became your salary a set amount you could count on every month and up front commission was the bonus. It always surprised me that as stacking became more prevalent in the industry that more companies didnt try to go back to this form of commission.

[Akanner]

Really? So I paid for the lead, sold the lead, closed the lead and on top of that I should be responsible for them paying it back? If another ISO ends up funding this merchant and over leverages them Im supposed to be responsible for that? Should we show up every day to the place of business to make sure things are running smooth too? Pay me upfront, sorry not sorry

What if the ISO who paid, sold, and closed the lead also stacked, charged a heavy PSF, and lied to the merchant telling him he will get a bank LOC....?

there should be a Clawback in that case. And trust me these things happen.

[Esteban2000]

Our original commissioning approach at AdvanceMe (later CAN Capital) was a decent upfront of 5-8% of the Funded amount, plus an additional 4-6% Residual on the RTR as it came in. It let the good ISO's build a book of Residuals they could draw on when they hit a cold spell, and protected the Funder as well. ISO's got paid similarly on Renewals. The move to 100% upfront commissions has been one of the de-stabilizing changes in the MCA industry

[legendarycr]

Make an offer and you will be surprised .for instance instead of 10-12 upfront ,you will get 20-25% paid monthly.Just like lotto winners you have a choice to take less upfront or more over a longer time

Don't be a ****ty ISO and these problems can be avoided

[SmartAdvanced]

Anyone notice that LCF filed clawback lawsuits vs 9 iso shops this month

They love to sue, like a plumber loves the sewer

[Shorebird]

I agree with First Us.

There are no guarantees in life.

F@%k claw backs.

[FIRST US]

What if the ISO who paid, sold, and closed the lead also stacked, charged a heavy PSF, and lied to the merchant telling him he will get a bank LOC....?

there should be a Clawback in that case. And trust me these things happen.

Thats just par for the coarse in the industry. Banks know the risk with any deal so have the right underwriters and price accordingly.

[kevin85k]

anyone who was around back in 07, 08, 09, know this is how most companies paid commissions. 6/4 - 7/3 or some other combination of upfront and residuals. Back then as a sales guy I loved the residuals that basically became your salary a set amount you could count on every month and up front commission was the bonus. It always surprised me that as stacking became more prevalent in the industry that more companies didnt try to go back to this form of commission.

Yeah and the brokers got paid on the Payback amount not the funded amount.

[pcfunder]

someone owes 31k oof.... also why would you spend 31k before 30 days go by? I used to wait 30 days if commission was 5k+.

[abfunders]

A deal I worked not long ago: A broker double-funded with Credibly followed by a stack from Forward (same day, clearly the Forward stack was done with Credibly's knowledge). $300k+$150k. I only found out about Credibly because of UCC search the day before funding with what I thought was a 1st position. We were working with Fox to get a second before we found out that the 2nd position was funded (upon bank login). The client said, "So why can't I just get both fundings?" I responded, "Because that's fraud." So we were trying for a 3rd quick stack as well for $80k, but the client was weird, ready for funding call, never was around her non-English speaking husband, so the funder put it on the side for a few days, and eventually felt something was wrong and killed it, which I was happy about. We and funder tried calling a few days later, and the phone line was disconnected.

I feel bad for the other broker who worked so hard..... they were clearly going to get their commission clawed back. $45,000+.

[Michael I]

20-25%? Lmaoooo

Run the numbers against your book, without even factoring in how many less defaults you will have and let me know how crazy i am

[ryan $]

LCF is pretty forgiving when it comes to Clawbacks.

Some companies will rip a Clawback out of your account at one missed payment. Even if they then makeup the payment, its already ripped out of your account, and you have to fight to get paid again.

LCF was always reasonable, especially if you try and get the merchant back on track, they hold off taking clawback until the deal is absolutely 100% bad, and even then give you the option to pay it out of future comissions.

They want their money, the deals went bad within 30 days. Thats just how it is.

[Chambo]

I feel your pain but its the same if not worse for the funder at least monetarily. They paid for the marketing, processed and funded it.

I do think the A/R should be aligned with a higher commission payout and frequency, for example get paid 10% on RTR not principle. Get paid weekly on it as funder collects. This way you get residuals and higher profit margins. Interests are also aligned as collections are in everyones interest.

Reverse Funding companies like GFE do this, I personally like it and it has no clawback.

Back in the day, the funds would pay out 5/5, or 6/5.....you got the 2nd part as residual.

I believe Cap Stack/Prodigy still pays that way

[J.Celifarco]

Back in the day, the funds would pay out 5/5, or 6/5.....you got the 2nd part as residual.

I believe Cap Stack/Prodigy still pays that way

Chambo, 7/3 with MCC selling 6 month 1.30 split deals all day long. The industry was much simpler back then

[OC Funder]

Back in the day, the funds would pay out 5/5, or 6/5.....you got the 2nd part as residual.

I believe Cap Stack/Prodigy still pays that way

15 years ago the marketing expenditure per funded deal shouldn't have been more than a couple hundred dollars... now there's shops spending thousands. I think the residual model is great but it will choke out newer and poorly financed ISOs (some can argue that's a good thing).

[FCF Fund]

15 years ago the marketing expenditure per funded deal shouldn't have been more than a couple hundred dollars... now there's shops spending thousands. I think the residual model is great but it will choke out newer and poorly financed ISOs (some can argue that's a good thing).

Other industries like CC processing, Insurance brokers etc live off residuals, its not uncommon. Just like any small business, If you dont have enough resources to survive first 3-6 months then you are not ready to fly solo.

Keeps the MCA industry honest. Besides, if its off RTR you are essentially a syndicate partner and you have more upside long term. Its win / win. Especially if they renew or payoff early, are you going to be mad at the money?

Thinning out the ISO crowd is good for the industry, long term.