[FoxIso]

ISOs, how many of you are charging your own fees?

I have no problem with this. We all need to make the most amount of money while retaining our merchants as clients.
We've recently just dropped our default PSFs/origination fees to 0% (the ISO still has the option of raising the fee if they so wish)

But I get the feeling that one of the reasons that there was push back on the fee was because of ISOs who charge their own fees on apps or on Funding.
Is this feeling wrong?

Also I've been seeing the name of one of my (former) ISOs on bank statements taking $5-$20 daily ACH pulls on certain merchants. He claims that this is because he syndicates; but why would he be doing his own seperate ACH transfers and not merely getting paid by the funder? Has anybody seen this before?
The guys I've been talking to think this is a fee he's been charging from the Merchant.

Does this make sense?

__________________________________________________ ______
Ben Faulding
ISO Relations
FOX Business Funding
347-632-3329

[Michael I]

its pretty simple ben . check the statements by renewal or log in a week later and you will see which of your iso charge a fee and which don't .
As for the second thing i have never seen or heard of that

[AndyYSCISOdept]

The only issue I take with Fees that ISOs charge is when they call and ask the Origination/ACH Prog. fee to be waived completely (and it's always because the merchant is "upset" about the fees) but still charge their closing cost. Tell me how the funder should feel about that?

Oh, and the second part about 5-20 dollar ach's sounds like out and out trickery on the Brokers part. Never heard or seen that before but still it doesn't surprise me.

[CreditGuy]

I can't wait until folks in this industry start going to jail for this type of crap.

[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?

[Michael I]

I can't wait until folks in this industry start going to jail for this type of crap.

are you referring to charging fees or the second thing ?

[WhoisKingsley]

ISOs, how many of you are charging your own fees?

I have no problem with this. We all need to make the most amount of money while retaining our merchants as clients.
We've recently just dropped our default PSFs/origination fees to 0% (the ISO still has the option of raising the fee if they so wish)

But I get the feeling that one of the reasons that there was push back on the fee was because of ISOs who charge their own fees on apps or on Funding.
Is this feeling wrong?

Also I've been seeing the name of one of my (former) ISOs on bank statements taking $5-$20 daily ACH pulls on certain merchants. He claims that this is because he syndicates; but why would he be doing his own seperate ACH transfers and not merely getting paid by the funder? Has anybody seen this before?
The guys I've been talking to think this is a fee he's been charging from the Merchant.

Does this make sense?

__________________________________________________ ______
Ben Faulding
ISO Relations
FOX Business Funding
347-632-3329

Hi Fox! I think the ways that you are attempting to do business with your ISOs is very reputable. You are seeing the issues and trying to make it work better for both sides of the fence. Unfortunately, lowering your own origination fees to 0% to accommodate Brokers is not your answer. Your origination fees cover your UW and legal? Correct? Giving this free space to add more $$ in for the broker will just lead you to getting in trouble. By trouble- I mean issues with ISOs and non-payments from your funded merchants who are mislead in the (broker induced rushed) closing process.

Is your feeling wrong? No. It's frustrating as hell. It leads you to do more work and having to explain and rework the way you do business. I am pretty sure your not an A-B Funder and your rates are not very low. Adding a fee on top of your rates even if there is no origination is ridiculous and greedy and shouldn't be allowed in this industry. Period. All it does is lead to the Merchant wondering why he paid a $4k fee on top of a $20k advance that he is now paying over 50% on... what's the point?

As for you bank statements of daily ACH pulls... unless this is being done manually EVERYDAY and in the Business Name? of the ISO- this is rediculous and syndication should be handled by the Funding Company that is in the lead, receives payment, and disperses payment to the syndicates... correct me if I am wrong DF, but that's how I learned how "legal" syndication is done.

[Fundyman]

I can't wait until folks in this industry start going to jail for this type of crap.

That's what ppl have been saying about the MCA "loan shark" industry for a very long time now....
From a funder's point of view it's so terrible; from the broker point of view, they're trying to eat!

There are always dishonest ppl out there, just out to do trickery, no matter how well things are set up for them. But that's not always the case.

[Fundyman]

The only issue I take with Fees that ISOs charge is when they call and ask the Origination/ACH Prog. fee to be waived completely (and it's always because the merchant is "upset" about the fees) but still charge their closing cost. Tell me how the funder should feel about that?

Oh, and the second part about 5-20 dollar ach's sounds like out and out trickery on the Brokers part. Never heard or seen that before but still it doesn't surprise me.

I think what happens here is that the broker, after being told he is going to get only 5-6 points on a $25K advance start thinking about how that's going pay the bills (even if he were to close 4-6 more of those for that month!), then, starts thinking of creative ways to make an additional 2 pts on the deal.

The problem is also the lack of education on the broker's part, and the lack of transparency from the funder's end when it comes to how much money really gets made in a deal. For example, if a broker doesn't understand that the 1.44 that a funder charges isn't going straight into the funder's pockets, but that there are investors/crowdfunders/backup banks who have to be paid out of a platform, that broker is thinking the funder is just pocketing 44% of that funded amount within a short 2.5-4 month period, while he gets a measly 5-6 points, whereas other funding companies have already put the up-to-17-points bug in his ear sometime in the past, making him feel some type of way when the deal gets turned down over there, approved over here, but only where this company pays 5-6 points...

They look at the D-paper funder as the guy who simply makes all this interest on the deal, while charging higher factor rates than the guy who would pay 12 pts+ but won't approve the deal. It just creates this great deal of confusion in his mind. And then he start to think: "How can I make an extra 2-3 pts here, and live w/ the feeling of NOT just making 6 pts on this deal?"

I've been there myself; not w/ the origination fee schemes or additional daily ACH debiting, but on feeling as though I should be able to get more than 7 points for selling a 1.60! Not understanding how the platform concept works, or syndication, or any of it really, and just thinking all those 60% of interest went straight to the funder. I have spoken to quite a few colleagues who feel the same way. And, we all read the blogs about the so-called "Day of the Broker" coming to an end. Many brokers actually believe this, and start feeling as though the industry is truly not in their favor, when all those UCCs have been used & abused, and it's hard to even get one deal or two in a month, unless you have a powerhouse of telemarketers on the phone.

So, they get desperate...

Or maybe, I'm just bugging out.

[Fundyman]

ISOs, how many of you are charging your own fees?

I have no problem with this. We all need to make the most amount of money while retaining our merchants as clients.
We've recently just dropped our default PSFs/origination fees to 0% (the ISO still has the option of raising the fee if they so wish)

But I get the feeling that one of the reasons that there was push back on the fee was because of ISOs who charge their own fees on apps or on Funding.
Is this feeling wrong?

Also I've been seeing the name of one of my (former) ISOs on bank statements taking $5-$20 daily ACH pulls on certain merchants. He claims that this is because he syndicates; but why would he be doing his own seperate ACH transfers and not merely getting paid by the funder? Has anybody seen this before?
The guys I've been talking to think this is a fee he's been charging from the Merchant.

Does this make sense?

__________________________________________________ ______
Ben Faulding
ISO Relations
FOX Business Funding
347-632-3329

Ben, the only thing I can think of with the additional $5-20/day you saw there is that the broker sent out his own mini-agreement to the merchant for an additional $5K, saying something like: "The max they approved you for is $25K, but I'll give you another $5K separately if you sign an agreement with me at (say $20/day)."

Either that, or the broker sets their own fee of $5K for a $70K deal, and agrees to be repaid that fee in daily increments instead of a lump sum, so as to alleviate the feeling of $5K just coming out of the account right after the merchant got funded, when they needed every penny of that money.

Who knows what's going on in the industry these days???

[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.

[AndyYSCISOdept]

^^Thank you Ridxtreme for pointing out the obvious. Look if brokers are forging signatures on fee sheets etc then that is one thing. But if the merchant signs it, gets funded and then complains there isn't anything to say except for, "READ THINGS BEFORE YOU SIGN!!!"

[Sachip24]

I remember I funded a merchant who had a balance with Ondeck. He told me when he first took advance out the broker charged him $2500 and said that was closing cost from lender. After week of being funded Ondeck called him and asked if he paid any other fees, when he mentioned the $2500 they called up the broker made them give him back the $2500 or they would refuse to do business with them. Merchant received check within about week for his refund.

[AndyYSCISOdept]

I have also seen this happen many times. In fact, I have had Brokers willing to cut commission to cover the Fees from the Underwriting. Unfortunately a lot of brokers think that these "fees" are to pad the pockets of the funders but in truth they are used to offset defaults which allows (at least in our case at YSC) to keep offering the deals that most others would never fund and definitely not for the amount of money we do.

[Michael I]

I have also seen this happen many times. In fact, I have had Brokers willing to cut commission to cover the Fees from the Underwriting. Unfortunately a lot of brokers think that these "fees" are to pad the pockets of the funders but in truth they are used to offset defaults which allows (at least in our case at YSC) to keep offering the deals that most others would never fund and definitely not for the amount of money we do.

andy what are the official fees at yellowstone ? correct me if i am wrong but it seems each rep decides what they want to put on it . I have seen fees as low as 2% and as high as 15% on your contracts

[Michael I]

I remember I funded a merchant who had a balance with Ondeck. He told me when he first took advance out the broker charged him $2500 and said that was closing cost from lender. After week of being funded Ondeck called him and asked if he paid any other fees, when he mentioned the $2500 they called up the broker made them give him back the $2500 or they would refuse to do business with them. Merchant received check within about week for his refund.

correct but never lender has an issue with it . Funding circle even has 2 options for commission . One with the rights to charge closing and one without

[WhoisKingsley]

I have also seen this happen many times. In fact, I have had Brokers willing to cut commission to cover the Fees from the Underwriting. Unfortunately a lot of brokers think that these "fees" are to pad the pockets of the funders but in truth they are used to offset defaults which allows (at least in our case at YSC) to keep offering the deals that most others would never fund and definitely not for the amount of money we do.

Andy... I hate to be this person but i've received contracts from you guys with origination, 3rd party from YSC, with 6 points and the rate was crazy. My old rep always tried to work with me but it was always the same story. I hardly believe that with the amount of volume you do, the cost of your money, and the rates/origination/extra fees equal out to 6 points and 25% of fees. I was always grateful for the assistance with the "YSC qualified only" files but you get to the point where there is no other choice and the merchant just goes with it. Being signed up with you- I am glad you are transparent and it makes a little more sense but still- there is a disconnect and the ladder part of the industry just doesn't get it.

[AndyYSCISOdept]

andy what are the official fees at yellowstone ? correct me if i am wrong but it seems each rep decides what they want to put on it . I have seen fees as low as 2% and as high as 15% on your contracts

I can only speak for myself and the team I work with and the underwriters on that team; our fees are as low as possible in the 2-5% range.

But as I have always said and done, if a origination fee is going to stand in the way of funding a deal then we will drop them or work something out to make sure the deal goes through.

The fact is, if we are at the point of arguing over fees while the merchant is waiting for their money then we've already made a big mistake, all of us. And that mistake is not have this discussion before we the funder and broker are under the gun to get the money out to the merchant.

[AndyYSCISOdept]

Andy... I hate to be this person but i've received contracts from you guys with origination, 3rd party from YSC, with 6 points and the rate was crazy. My old rep always tried to work with me but it was always the same story. I hardly believe that with the amount of volume you do, the cost of your money, and the rates/origination/extra fees equal out to 6 points and 25% of fees. I was always grateful for the assistance with the "YSC qualified only" files but you get to the point where there is no other choice and the merchant just goes with it. Being signed up with you- I am glad you are transparent and it makes a little more sense but still- there is a disconnect and the ladder part of the industry just doesn't get it.

Let me respond in pieces...

1. I don't think you hate being that person, you thrive/survive/flourish on drama and rocking the boat, like most of us do LOL.
2. I cant speak for "Contracts you've received from us 3rd Party"
3. Not sure where you arrived at 6% and 25% fees? Please explain
4. Like I said previously I can only speak for my team which does everything in its power to keep the fees in our 2-5% range and we do that on 95% of our files

Before anyone jumps all over me with examples of the time their merchant paid 6% etc etc please keep in mind that I am happy to discuss and assist you in any way possible but getting berated with generalities about "that one deal" wont help your cause.

[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

[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

[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?