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FTC Accuses Yellowstone Capital Of Deceiving Small Business Customers

yellowstonecapital aug04 lt

FTC has accused Yellowstone Capital LLC, a leading provider of merchant cash advances, of deceiving small business customers.

According to the lawsuit, Yellowstone Capital used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed.

The FTC's complaint against Yellowstone Capital, Fundry, founder and CEO Yitzhak Stern, and president Jeffrey Reece, alleges that they unlawfully withdrew millions of dollars in excess payments from their customers' accounts, and to the extent they provided refunds, sometimes took weeks or even months to provide them.

"Small businesses are struggling right now and need responsible sources of financing," said Andrew Smith, Director of the FTC's Bureau of Consumer Protection. "Making sure that lenders and funders don't deceive business borrowers or engage in servicing abuses is a big priority for the FTC."

Merchant cash advances are a form of financing in which the defendants provide money to a small business up front in exchange for a larger amount repaid through daily automatic payments.

According to the FTC's complaint, Yellowstone has regularly withdrawn hundreds or thousands of dollars from businesses' accounts for days after customers had repaid the full amounts owed in their contracts. In some cases, Yellowstone would only refund this money when businesses complained, and even then the refunds could take weeks or months, leaving small businesses without needed cash on hand.

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