[AndyYSCISOdept]

The issue with sending people to jail for this is that what're you going to charge them with?? And furthermore, what DA is going to take a case like that?

[CreditGuy]

The issue with sending people to jail for this is that what're you going to charge them with?? And furthermore, what DA is going to take a case like that?

Wire fraud. It won't be a DA, it will be an ambitious AUSA given it will be interstate commerce. They will do it to make an example of the industry.

There are so many shady things going on in this space, not just the disclosed junk fees. We see altered contracts all the time. The ISO has the borrower sign one version of the loan docs and then submits a second version with a higher rate to the funder with a forged signature from the first. Or, they lift the ACH info from the funder's contracts and use it to debit the merchants account for a undisclosed junk fee. I've also seen ISOs sign contracts on the borrower's behalf, let the loan fund, and then ACH the proceeds. Once the debits start rolling in the merchants call us and say they never signed a thing.

Those are just the one's that really only impact the merchant. I've also seen plenty of ISOs pull all manner of shenanigans on lender's they work with, like stacking multiple advances at closing from different funders, or stacking their own second funded partially with the commission paid by the funder.

I've seen almost every gimmick you can imagine, and there are probably some I can't imagine that I'm yet to see.

[Chambo]

Wire fraud. It won't be a DA, it will be an ambitious AUSA given it will be interstate commerce. They will do it to make an example of the industry.

There are so many shady things going on in this space, not just the disclosed junk fees. We see altered contracts all the time. The ISO has the borrower sign one version of the loan docs and then submits a second version with a higher rate to the funder with a forged signature from the first. Or, they lift the ACH info from the funder's contracts and use it to debit the merchants account for a undisclosed junk fee. I've also seen ISOs sign contracts on the borrower's behalf, let the loan fund, and then ACH the proceeds. Once the debits start rolling in the merchants call us and say they never signed a thing.

Those are just the one's that really only impact the merchant. I've also seen plenty of ISOs pull all manner of shenanigans on lender's they work with, like stacking multiple advances at closing from different funders, or stacking their own second funded partially with the commission paid by the funder.

I've seen almost every gimmick you can imagine, and there are probably some I can't imagine that I'm yet to see.

And if The Feds get involved, there will be major changes....and a couple of knocks of folks' door at 5:30 am by the men in the red coats

[ridextreme]

how are they going to be charged with wire fraud after the merchant signs off on the fees?

fees are in every industry, not just MCA. Did anyone ever lease or finance a car and pay a "bank fee", "Title fee" or "Transfer fee"? Did you ever return something and get charged a "Restocking fee"? Did you ever order someone and get charged a "Shipping and handling" fee? yes, someone "handled" your package so you get charged a fee. What about a closing fee on a MTG? The airline industry made $38 billion from charging extra fees last year.

As long as the merchant signs off on it and is aware of it, no one is going to jail lol. Forging contracts is a different story.

[CreditGuy]

As long as the merchant signs off on it and is aware of it, no one is going to jail lol. Forging contracts is a different story.

Except that one of the biggest pushes by the industry (e.g. LC's Small Business Borrowers' Bill of Rights) and the presumable raison d'etre for regulators, would be transparency with regards to pricing/cost of capital. If CAN issues a contract with an RF of 1.25 and a 55% APR (example/made up numbers) and then the broker throws on another 5% origination fee, then the cost of capital disclosed to the borrower is no longer accurate, thus is considered a deceptive lending practice. Are brokers and ISOs recalculating RF/APRs to account for their fees and then telling borrowers before they sign, "I know this contract says 55% APR, but including the additional fee you're paying me it is actually 62.35% APR."? My guess is definitely not, because then you would have to reclose the merchant on the higher true cost of capital, not to mention the headache of calculating APR correctly and the liability that comes with it.

The above example is overly simplified, but I hope it is demonstrative re: why lenders don't want brokers adding fees. It creates a possible liability for them with state AGs for deceptive lending practices. You think the AG is going to go after the ISO that borked up the rate? No. They are going to go after the lender. Sure, there are semantic arguments to be made that the fee charged by the broker doesn't calculate into APR because it isn't technically an origination fee, but you don't get to make pedantic arguments like that with the AG or CFPB or Treasury.

The types of things mentioned in the OP are what will bring prosecutorial interest and regulation, and then subsequently fines, civil money penalties, convictions, and jail. This stuff isn't a joke and those playing fast and loose and relying on semantics to not seem like deceptive and greedy little ****s need to be drummed out of the industry.

[Chambo]

how are they going to be charged with wire fraud after the merchant signs off on the fees?

fees are in every industry, not just MCA. Did anyone ever lease or finance a car and pay a "bank fee", "Title fee" or "Transfer fee"? Did you ever return something and get charged a "Restocking fee"? Did you ever order someone and get charged a "Shipping and handling" fee? yes, someone "handled" your package so you get charged a fee. What about a closing fee on a MTG? The airline industry made $38 billion from charging extra fees last year.

As long as the merchant signs off on it and is aware of it, no one is going to jail lol. Forging contracts is a different story.

You are wrong. If the contract is deemed illegal, or if it isn't followed TO THE LETTER, it can be determined wire fraud.

Overcharge the merchant $250? Wire Fraud

[AndyYSCISOdept]

You are wrong. If the contract is deemed illegal, or if it isn't followed TO THE LETTER, it can be determined wire fraud.

Overcharge the merchant $250? Wire Fraud

I think you missed what he is saying. If a merchant signs a document that states, "For my services of getting you funding I am charging you X" if the merchant signs and the funding takes place wherfe is anything illegal transpiring?

[Chambo]

how are they going to be charged with wire fraud after the merchant signs off on the fees?

fees are in every industry, not just MCA. Did anyone ever lease or finance a car and pay a "bank fee", "Title fee" or "Transfer fee"? Did you ever return something and get charged a "Restocking fee"? Did you ever order someone and get charged a "Shipping and handling" fee? yes, someone "handled" your package so you get charged a fee. What about a closing fee on a MTG? The airline industry made $38 billion from charging extra fees last year.

As long as the merchant signs off on it and is aware of it, no one is going to jail lol. Forging contracts is a different story.

Tell the merchant the fee is for X, when it is really for Y? Wire Fraud

[ridextreme]

Tell the merchant the fee is for X, when it is really for Y? Wire Fraud

yes and that should go without saying but credit guy is suggesting people who charge fees should get locked up. (merchants who send fraudulent bank statements are the ones who should get locked up)

[Funder Mark]

Definitely the merchant who sends in fraud docs.