[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.