Stack on his deal, you'll get sued.

**DirectMedia_Scott** · 04-02-2014, 02:07 PM

I recently spoke with a direct lender. We had the all too common discussion about stacking, its moral and financial impact, ect.

The common response is that it's frowned upon and that "there's money to be made, but its not the right way to make it."

Our conversation went a bit differently, he said that if a broker tries to stack on one of his merchants, he sues them.

Is that common practice? I had never heard of such a practice and wasn't really sure if was common among direct funders?

Thanks,

Scott

**Chambo** · 04-02-2014, 02:09 PM

and so it starts...

**Danko Darrenzano** · 04-02-2014, 02:13 PM

Not a Prayer. Just because one sues -- doesn't necessarily mean that they win. And this guy won't. Not only that -- he'll be real lucky if he doesn't get sued under the Sherman Anti-Trust Act.

**Ryan Shiroky** · 04-02-2014, 03:12 PM

And for a funder to sue a broker, is kind of funny.... He SHOULD be suing the 2nd pos funder... but really, i dont think they can... unless they have a contract with that funder to not go behind them... if ANYTHING, they would sue the merchant, but it is A LOT easier to just add a default fee to the total payback amount and continue taking pulls and/or modify the payment schedule... I would say, whoever you were talking to, is full of sh*t and trying to scare you into not funding deals behind him...

**DirectMedia_Scott** · 04-02-2014, 03:34 PM

Originally Posted by Ryan Shiroky

And for a funder to sue a broker, is kind of funny.... He SHOULD be suing the 2nd pos funder... but really, i dont think they can... unless they have a contract with that funder to not go behind them... if ANYTHING, they would sue the merchant, but it is A LOT easier to just add a default fee to the total payback amount and continue taking pulls and/or modify the payment schedule... I would say, whoever you were talking to, is full of sh*t and trying to scare you into not funding deals behind him...

I would actually agree with you, except for I don't fund deals. I'm simply a media source used to drive merchants to open phone lines. That said, I agree, it could be a scare tactic.

But honestly if you're a small ISO shop and you receive a cease and desist letter from some one wearing big boy pants, what are you going to do? It's probably a pretty effective tactic.

**Ryan Shiroky** · 04-02-2014, 03:37 PM

Yakavetta:
The 90's are killing me. I shouldn't have done that. You're not supposed to tell a guy you're gonna kill him no more. I got to tiptoe through the tulips with these assholes. Taking all the fun out of the job.

-boondock saints

**Ryan Shiroky** · 04-02-2014, 03:37 PM

i dont know why... but that immediately came to mind...

**jbrown** · 04-02-2014, 03:49 PM

There are a number of funders considering litigation strategies against the stackers. There are several elements that need to be in place for it to be successful. Notice to the stacker, UCC-1 language, and contract language with the merchant. The claim will be tortious interference.

I agree with others that ISO's will not be sued, unless they are actively participating in the stacking and the funder has no relationship with them. It doesn't cost anything to name another party in a lawsuit.

**Ryan Shiroky** · 04-02-2014, 03:53 PM

so what happens... 2nd funder wires money to merchant, 1st funder sends a notice saying to stop and 2nd funder has to stop pulling ach in order to not get sued? thats never going to happen... they funded the guy so they could make their 45 cents on the dollar and get out... not to lose the principle on top of profit...

**Ryan Shiroky** · 04-02-2014, 04:03 PM

And without regulations, I don't know how well all that will hold up in court...

**Chambo** · 04-02-2014, 05:21 PM

Originally Posted by Ryan Shiroky

And without regulations, I don't know how well all that will hold up in court...

the instant the merchant bounces a payment to fund #1, it is tortuous interference.

If nobody cared about lawsuits and the unregulated world of cash advance, then why is everyone so chicken **** of California?

**funding pro** · 04-02-2014, 06:11 PM

I may be wrong here, but it sounds like the conversation is being misconstrued. It sounds like the funding company would file suit against an agent if they place the deal with that funder, and then gets the merchant a stack behind them.

**MCAVeteran** · 04-02-2014, 08:54 PM

Sue the broker for what? The brokers stacking live commission to commission. A lawyer isnt going to chase an agent. The stackers have probably formed shell companies that will need to be pierced as well tying parties if litigation does occur and the suits will become public showing issues within the industry on alternative lending. It's a slippery slope but the only other alternative would be regulation which would put everyone not just the stackers under a microscope.

**isaacdstern** · 04-03-2014, 07:25 AM

The only time anyone would possibly have a case against a broker would be when that broker took a deal to a funder and after it funded he took the same file and got it funded again as a stack with another funder. Most iso agreements have some clause against it

**funding pro** · 04-03-2014, 08:14 AM

Wrt funding a deal with one company (a partner) and then taking that deal and getting it stacked, it shouldn't result in a lawsuit. It should result in jail time. Brokers that do this embarrass me to be associated with them. There is no argument that could be made that would convince me this is in any way an acceptable practice.

**AndyYSCISOdept** · 04-03-2014, 09:16 AM

Originally Posted by Ryan Shiroky

And without regulations, I don't know how well all that will hold up in court...

I can see it now, the judge looks at both parties, reviews the case in front of them, rolls his/her eyes and says, "Really?!? Get outta my court room..."

**jbrown** · 04-03-2014, 09:56 AM

Mat gets it, some of you are missing the point. The idea is to change the behavior, not try to collect money from an agent. There is a sound legal strategy that if executed properly will work and hold up in court. The agents are easier then the stackers - if you don't have money, you don't want to get sued, and you don't want a big judgement and having to declare BK. The stackers will try to hide, I agree, but there are strategies around that. The stackers have financial backers too. If you are fighting a dozen lawsuits in 12 different states, good luck. Remember also that the bigger funders are litigation experts by now. We all fought - and a number of us won - the usury claims and class action in California. Many of us fought - and won - the AMI patent litigation. We sue merchants in every state and collect everywhere. Most of us have in house legal staff. And we are patient - we collect claims 5, 6, 7 years after they are written off. We garnish bank accounts around the country. We get our legal costs too. We've repo'd cars, equipment, etc. The only time we don't collect is when the merchant and the owner file Chap 7 BK. It's a cost of doing business.

I don't expect this discussion to change anybody's opinion or behavior today. Just a heads up that when you start to see some things happen down the road, be smart about what you do.

**Ryan Shiroky** · 04-03-2014, 10:11 AM

Originally Posted by Chambo

the instant the merchant bounces a payment to fund #1, it is tortuous interference.

If nobody cared about lawsuits and the unregulated world of cash advance, then why is everyone so chicken **** of California?

I know a few funders that will do 2nds in Cali... not everone is chicken **** scared, some dont even give a damn... the profit outweighing the risk, in their eyes, is worth putting the money out there...

besides, legit funders doing only 1st pos in cali should always have a license to lend in cali... we do...

**Ryan Shiroky** · 04-03-2014, 10:14 AM

Originally Posted by isaacdstern

The only time anyone would possibly have a case against a broker would be when that broker took a deal to a funder and after it funded he took the same file and got it funded again as a stack with another funder. Most iso agreements have some clause against it

greed isn't good...

**mcaguru** · 04-03-2014, 03:22 PM

It just seems like avoiding doing business with Rapid might be a safe bet..who wants to get sued because a broker of there's does something wrong? (intentionally or unintentionally).....

**Ryan Shiroky** · 04-03-2014, 03:26 PM

Rapid is the one on a suing spree?

**mcaguru** · 04-03-2014, 03:29 PM

I just never liked doing business with people that use the term Sue sue sue..my fellow-in the back office is saying it reminds them of the chairman of 2nd source funding (???)....every other word was sue...

**DirectMedia_Scott** · 04-03-2014, 03:30 PM

Originally Posted by Ryan Shiroky

Rapid is the one on a suing spree?

This conversation seems to have spiraled a bit out of control. I won't name names, but it's not Rapid that I had the conversation with. Not sure where mcaguru came up with that?

**mcaguru** · 04-03-2014, 03:33 PM

Originally Posted by DirectMedia_Scott

This conversation seems to have spiraled a bit out of control. I won't name names, but it's not Rapid that I had the conversation with. Not sure where mcaguru came up with that?

Jeremy Brown is doing all the talking....

**cashmaster** · 04-03-2014, 03:39 PM

All the pontificators - shut up and go make some kesseff

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