[Cfairbank]

Brokers (that leverage Double Dipping as a tool to sell specific products) and all other interested parties,

I know this may not be of interest to many of you, but i'd like to share our new Double Dipping Calculator with folks on this forum. Double Dipping is admittedly very confusing, so we've attempted to use math to help explain it (and hopefully to help merchants understand it, or at the very least, the magnitude of it). You can input just about any loan or cash advance into the calculator to see what the actual dollar impact is at various pay-down percentages in a renewal. Please note that while we included the term of the loan/advance as an input, it does not change the dollar cost of Double Dipping (term only impacts frequency of renewal and annualized rates, which we decided not to include). Feel free to reach out to me or anyone on my team if you have any questions or feedback.

https://www.breakoutfinance.com/doub...ing-explained/

Please note this isn't meant to be a promotion (and hence why it isn't in the promotions section). It's simply a tool you can use if you are comparing a product with Double Dipping to a product without.

Carl

[Karen37a]

I love the calculator !!

[StackMonster]

I love the calculator !!

Sure, except that it incorrectly and deceptively lumps cash advances into the same category as loans. The website also calls the entire MCA industry "highly unethical".

[LoanFunder]

Sure, except that it incorrectly and deceptively lumps cash advances into the same category as loans. The website also calls the entire MCA industry "highly unethical".

Best name ever for that reponse...

[RickyR3712]

wow thanks Carl going to use that all the time to convince someone to stack instead of renewing. #endgreedylenders

[ADiamond]

going to use that all the time to convince someone to stack instead of renewing.

lol

[Cfairbank]

Thanks Karen! Stackmonster: note that we do view Double Dipping when not disclosed as "unethical", but in no sense did we make that statement on the whole industry. There are an increasing number of cash advance companies and lenders that do not double dip (or at least offer products that don't double dip). And DD does occur similarly in both cash advances and loans, and it is clearly stated that the example was a loan; but the application is similar because there is no "time" component to the total cost calculation.

[StackMonster]

Thanks Karen! Stackmonster: note that we do view Double Dipping when not disclosed as "unethical", but in no sense did we make that statement on the whole industry. There are an increasing number of cash advance companies and lenders that do not double dip (or at least offer products that don't double dip). And DD does occur similarly in both cash advances and loans, and it is clearly stated that the example was a loan; but the application is similar because there is no "time" component to the total cost calculation.

Carl, not to split hairs, but your website does not make the distinction that it's unethical only if not disclosed.

The first sentence on the calculator page reads, "Double Dipping (also known as “Interest on Interest”, “Fees on Fees”, or “Interest Acceleration”) is a highly unethical but widespread industry practice that can cost you tens of thousands of dollars over the lifetime of a partnership with the wrong lender or cash advance provider. Double Dipping is most prevalent in short-to-medium term loans and cash advances." (emphasis added)

It also isn't clearly stated that the example is a loan. In fact, you use language interchangeably throughout the page that paints loans and cash advances with the same brush:

"Double Dipping occurs when you refinance or renew your funding with your current funding provider and the proceeds from the new loan or advance (including any unpaid and un-accrued interest or fees) is used to pay off the balance from the previous contract..." (emphasis added)

"However, Double Dipping exists in nearly every cash advance" (here you went to the trouble of making the entire statement boldfaced AND underlined, so it would really pop out.

“It is too cumbersome for us to track the original loan or advance without Double Dipping.” (emphasis added)

"If you are renewing an existing loan or advance, start with the following questions:" (emphasis added)

"Confirm that the unpaid interest (“unpaid fees”, “factor income”, or “margin income”) from the original loan or advance is extinguished..." (emphasis added)

I mean, you switch back and forth between loans, advances, lenders, funders, etc so many times that even a sophisticated reader would get confused. And yet you hold yourself out to be one of the good guys, trying to educate the public on these products and extinguish deceptive practices. In reality, however, you're simply being opportunistic, trying to paint everyone else as predatory to make Breakout seem like a rose in a weed garden.

Hey, it's your site, write what you want. But don't LIE about what it says in trying to defend it.

[Karen37a]

omg lol

[McoupeBobby]

Good stuff Carl,
1 step further twards cleaning up this industry.

[Cfairbank]

As I said in the original post, given the how prevalent it is in the market (moreso on cash advances than loans now), I know most people either don't care or will put a spin on our intent in releasing this calculator. This is simply a tool that people can choose to use or ignore, that's it. That's why I prefaced it as I did; if you don't like the calculator or the discussion, you don't need to use it or read it. It should help if you are trying to sell a non-double dipping product vs a double dipping product, but I've stopped posting on this board trying to change anyone's opinion. This is not self-promotion -- this is also relevant to products from companies like OnDeck, TBB, Quarterspot, BFS, and many more -- and our calculator can help sell the product of our competitors, not just ours.

You can see our Code of Ethics on our home page above the fold on our website where our stance on Double Dipping is detailed ("Harmful Double Dipping") which does differentiate. However, in my own personal view, I do not believe it is a good practice in general, but I also understand the stance that, with no early repayment discount, a lender/funder can price a loan/advance more aggressively up front and, for contracts that don't renew, it should be cheaper to go to a lower up front cost option that has a fully fixed contract. But, those instances are the exception, not the rule due to the frequency of renewals. There was no reason to add even more confusion to an already difficult to understand practice when, more often than not, it is not in the best interest of the merchant.

Would you be pissed if you had to pay twice for the same thing and didn't know it? I would assume so, and that's the way Double Dipping works and why we don't do it. You are welcome to interpret our intent however you'd like, but by not Double Dipping, we are passing on a significant amount of revenue but we view this is the direction the industry is going and is a "good" practice to employ. And we get attacked like this for not doing something that is costing us (and everyone else that chooses not to double dip) money. And that's fine, we have a business model we believe in. We also are NOT the only company that doesn't double dip. There are several, and more and more continue to eliminate Double Dipping from their model.

Re: your other points, this is our preface for the calculator in the description which is the ONLY place we dont include both loan and advance vernacular -- perhaps be should make it in bold: "We elected to use a loan to display the financial impact of Double Dipping because it is easier to understand given that the contract has a fixed term and utilizes common vernacular (e.g. Interest)."

Outside of the calculator, we tried as best we could to make it universal -- my team spent a long time trying to make that as universal (outside of the calculator as possible. Double dipping can exist in any fixed repayment contract, loan or cash advance.

[jotucker1983]

This is a pretty cool calculator .

[Cfairbank]

This was actually very constructive feedback, thank you all. My team will adjust the text so it's less "opinion"-based, and allow folks to draw their own conclusions on the practice. Have a good weekend, everyone.

Edit to note: the page has now been updated to allow borrowers to make their own determination on the practice versus reading our opinions on it -- all of our opinions or statements about DD being "unethical", etc. have been removed, and it should purely be educational/fact-based. If anyone has any other suggestions, would love to hear them. Thank you all for the feedback.

[LJH365]

cool!