[Chambo]

I like the analogy with a customer applying for multiple credit cards. RapidAdvance will have their hands full. DLA Piper is a heavyweight law firm.

Pearl will freak out when they see their bill from DLA Piper

[MCNetwork]

I'd be curious to know if Pearl's stacks are all completed before the first advance ends or if they sometimes exceed the original term length. If it's the former, then it can show intent that Pearl structures their deals to minimize their risk exposure at the expense of the original funder's.

[CreditGuy]

I'd be curious to know if Pearl's stacks are all completed before the first advance ends or if they sometimes exceed the original term length. If it's the former, then it can show intent that Pearl structures their deals to minimize their risk exposure at the expense of the original funder's.

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[MCNetwork]

Another thing to consider is whether Pearl's underwriters follow existing industry guidelines of keeping a merchant's total cash advance payments under 15-20% of gross revenue or do they throw caution to the wind and just max out the merchant. If it's the latter, then RapidAdvance will have a pretty good case...

[CreditGuy]

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[J.Celifarco]

Rapid has been the most aggressive of all the first position funders when it comes to going after stackers. I have heard of them suing people going back a couple years. This lawsuit seems to be the culmination of all of those suits and Pearl getting tired of being served every time they fund a deal.
Couple of things to note

If the lawfirm earl hired is as big and expensive as you all claim then it is safe to say that Rapid has cost them probably a small fortune up till now with all the times they have sued them for stacking. The only way to justify spending money on a law firm like this is if not doing it would cost them more money

If Rapid has sued Pearl or other companies enough times that they are being counter sued then whoever is representing them has been probably gearing up for a fight like this for awhile. Rapid is not stupid they know if they win this case precedent is set and it will clear the way for them to sue anyone and everyone and win whenever they are stacked on.

Lastly if this case is a big and as important as it sounds I would not be surprised if the other bigger banks get involved to help rapid somehow. Rapids win or loss would be a win or loss for all the big 1st position banks in the space.

[aredmond]

Rapid has been the most aggressive of all the first position funders when it comes to going after stackers. I have heard of them suing people going back a couple years. This lawsuit seems to be the culmination of all of those suits and Pearl getting tired of being served every time they fund a deal.
Couple of things to note

If the lawfirm earl hired is as big and expensive as you all claim then it is safe to say that Rapid has cost them probably a small fortune up till now with all the times they have sued them for stacking. The only way to justify spending money on a law firm like this is if not doing it would cost them more money

If Rapid has sued Pearl or other companies enough times that they are being counter sued then whoever is representing them has been probably gearing up for a fight like this for awhile. Rapid is not stupid they know if they win this case precedent is set and it will clear the way for them to sue anyone and everyone and win whenever they are stacked on.

Lastly if this case is a big and as important as it sounds I would not be surprised if the other bigger banks get involved to help rapid somehow. Rapids win or loss would be a win or loss for all the big 1st position banks in the space.

Then I am rooting for Rapid....stacking has gotten out of control.

[Chambo]

Rapid has been the most aggressive of all the first position funders when it comes to going after stackers. I have heard of them suing people going back a couple years. This lawsuit seems to be the culmination of all of those suits and Pearl getting tired of being served every time they fund a deal.
Couple of things to note

If the lawfirm earl hired is as big and expensive as you all claim then it is safe to say that Rapid has cost them probably a small fortune up till now with all the times they have sued them for stacking. The only way to justify spending money on a law firm like this is if not doing it would cost them more money

If Rapid has sued Pearl or other companies enough times that they are being counter sued then whoever is representing them has been probably gearing up for a fight like this for awhile. Rapid is not stupid they know if they win this case precedent is set and it will clear the way for them to sue anyone and everyone and win whenever they are stacked on.

Lastly if this case is a big and as important as it sounds I would not be surprised if the other bigger banks get involved to help rapid somehow. Rapids win or loss would be a win or loss for all the big 1st position banks in the space.

Rapid is playing with Dan Gilbert money.....he's got more cash than all of us put together.

They probably have 3-4 atty's on 24/7 retainer anyway

[HeatherF]

I like the analogy with a customer applying for multiple credit cards. RapidAdvance will have their hands full. DLA Piper is a heavyweight law firm.

You can counter that with the selling of a car... The agreement is laid out as a purchase and sell .. not an income to risk ratio.

[J.Celifarco]

Then I am rooting for Rapid....stacking has gotten out of control.

I wonder what side of this the majority of the people on this forum would come down on Rapid or Pearl's

[MCNetwork]

I'm on the fence. I've seen responsible 2nd (or even 3rd) position deals that made sense and didn't put a dent on the merchant's cash flow. And I've seen irresponsible stacks where a client kept going into overdraft but the stackers didn't give a damn. Their main underwriting criteria was based on how much overdraft protection a client had. I want to help put these types of stackers out of business. I think there's room in this industry for responsible stackers who are looking to do the right thing for the merchant and follow industry accepted guidelines. I don't think 1st position funders should have a monopoly on a client. If a client is seeking additional funds, then they have every right to receive it. But it should be granted in a responsible manner that doesn't jeopardize the merchant's ability to repay the 1st funder. We can find some common ground here where the industry as a whole will benefit. I think RapidAdvance's position is a bit too extreme. But then again, so is Pearl's.

[J.Celifarco]

I'm on the fence. I've seen responsible 2nd (or even 3rd) position deals that made sense and didn't put a dent on the merchant's cash flow. And I've seen irresponsible stacks where a client kept going into overdraft but the stackers didn't give a damn. Their main underwriting criteria was based on how much overdraft protection a client had. I want to help put these types of stackers out of business. I think there's room in this industry for responsible stackers who are looking to do the right thing for the merchant and follow industry accepted guidelines. I don't think 1st position funders should have a monopoly on a client. If a client is seeking additional funds, then they have every right to receive it. But it should be granted in a responsible manner that doesn't jeopardize the merchant's ability to repay the 1st funder. We can find some common ground here where the industry as a whole will benefit. I think RapidAdvance's position is a bit too extreme. But then again, so is Pearl's.

I agree with you to an extent I just dont see how there is room for some stacking.. Unfortunately I think it will be an all or nothing thing. The companies that do responsible seconds are going to get screwed by all the companies that do ridiculous seconds, thirds etc.. Personally, I have lost so many refi's because by the time I went to get them additional funding they were stacked on by other companies that if I had to choose I am hoping Rapid wins. It protects my refi business as well as would thin out the competition because if there is no stacking you will see a lot of ISO's disappear into the night because they dont know how to do 1st position deals

[CreditGuy]

In case anyone wasn't sure, I'm on Rapid's side here.

[MCNetwork]

John, one would argue that the refi business was lost once we only partially fulfilled their funding needs or declined them for additional funding. The stackers didn't take away the refi. They were able to fill a need that you couldn't. As first position funders, we need to be able to create a captive environment where our merchants have no need to seek funding elsewhere because we can provide a complete funding solution. If there are holes in our game, you can't fault other parties from exploiting them.

[AndyYSCISOdept]

John, one would argue that the refi business was lost once we only partially fulfilled their funding needs or declined them for additional funding. The stackers didn't take away the refi. They were able to fill a need that you couldn't. As first position funders, we need to be able to create a captive market where our merchants have no need to seek funding elsewhere because we can provide a complete funding solution. If there are holes in our game, you can't fault other parties from exploiting them.

That was the best defense for stacking Ive ever heard! Kudos!

[J.Celifarco]

John, one would argue that the refi business was lost once we only partially fulfilled their funding needs or declined them for additional funding. The stackers didn't take away the refi. They were able to fill a need that you couldn't. As first position funders, we need to be able to create a captive market where our merchants have no need to seek funding elsewhere because we can provide a complete funding solution. If there are holes in our game, you can't fault other parties from exploiting them.

Yes if the second position was given by one of the responsible stackers.. Generally thats not the case. Usually someone who come in blows the holdback % out of the water 20%-25%+ and put the merchant in a position they cant handle.. Most banks will still refi the first position if the second given was given resposible and the bank account is not suffering for it. My my experience this is usually not the case

[mcaguru]

Does anyone know what the average cost of capital to a merchant when taking a deal from Rapid ?

[GoodCustomerService]

I remember the days where a withhold had to do with credit card sales only and you didn't have to worry about getting stacked. Until someone lockboxed one of my merchants on a split deal.

[J.Celifarco]

I remember the days where a withhold had to do with credit card sales only and you didn't have to worry about getting stacked. Until someone lockboxed one of my merchants on a split deal.

back then we had to worry about merchant splitting.. I remember I had a merchant that got caught splitting, They had 4 different processors

[mcaguru]

I can write a book on the subject of merchants out smarting there obligations for example having signs on the registers that terminals not working

[GoodCustomerService]

I remember Marco Tatum sending a deal through Yellow that went bad on us $40k. Slow paid then nothing. He was a gas station just outside Boston. I took a train down there, went over to the guys shop with an ISO buddy in Boston, and we went inside his little processing hut between the pumps, and he had 12 machines. 8 were plugged in. So I took all of them and left just ours. I asked the guy if he had other advances and he said no. He paid for another week and then disappeared. I got a call from another funder 2 weeks later asking me to return back their terminal to them. Might still be in my buddies trunk.

[AndyYSCISOdept]

I can write a book on the subject of merchants out smarting there obligations for example having signs on the registers that terminals not working

I used to love my merchants from Seattle because Id send my father to their business' to do "after funding site inspections" (covertly of course) and I kid you not one lady told my father their CC machine wasn't working then brought out a square plugin for her iphone to avoid the split...My father got this on video by telling her how cool it was yada yada and needless to say the merchant and I had words.

[GoodCustomerService]

Marcus, how about "CREDIT CARD MACHINE DOESN'T WORK. CASH ONLY" signs in the site inspection photos when the guy already had an advance. One of my favorites.

[brokerCompany]

Wonder if any iso or brokers will be get a subpoena during the lawsuit.

[GoodCustomerService]

I hope not. What a waste of time that would be.