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07-12-2017, 04:07 PM #1
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- Oct 2016
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- 4,318
These guys market directly to ISO and brokers. I'm constantly getting spammed from these guys. I can see brokers selling these programs while pitching advances. "Take this 5th position because I'll get them 'restructured' through one of my shady settlement companies."
The best way to combat this is for funders to refuse settling with these guys.
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07-12-2017, 04:28 PM #2
- Join Date
- Feb 2017
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- 3,374
It's pretty hard.
They first move all of the funds of the normal business bank account into a 2nd account so that all the ACH draws will bounce. Then they send a bunch of lawyers letters at them telling them that they need a restructure do to the fact that it's not a loan and it is an advance, and the advance is based on purchase of future receivables; since there are fewer receivables, therefore there is less money to give, so change the ACH amount, please.
It happens to be that the funders will blacklist anyone with a restructured program or altered ACH draw. Once they're out, they're really out.
I don't know how a funder could "refuse" to settle. Credit card splits is the answer to some of this (that is, after all, the "original" MCA way), but it's more work for the average advance company to do and they can't do companies that don't accept credit card, and they can't get as high of a daily draw....
So they'd rather focus all their energies on ACH and hope that these clients don't default, or not work with them to reduce their payments.... or let the merchant call in the "clean up crew."
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07-12-2017, 05:24 PM #3
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- Oct 2016
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- 4,318
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07-12-2017, 04:49 PM #4
- Join Date
- Oct 2013
- Posts
- 200
Then there is a simple solution. Have any direct funder put a clause in any ISO agreement specifically barring them from referring merchants and ensure the clause has a litany of damages that can and will be awarded should it be determined that they do. Hell, have them sign a COJ to that effect even. It may not stop all of them but it would give some a little pause before they do. This would also be a good argument for licensing because were a license required, it is likely the degenerates who sell everyone out could not obtain one. I for one don't agree with the concept of regulation but this would certainly be an upside.
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