Small-fleet owners have been among victims of merchant cash advances that sometimes
The agency said Yellowstone “took money from businesses’ bank accounts without permission and deceived them about the amount of financing business owners would receive and other features of its financing products.”
Yellowstone, now operated as Fundry Inc., was a pioneer in the controversial financing niche of merchant cash advances. An MCA provider gives a client, usually a small business with a poor credit rating, a cash advance in exchange for a much larger amount repaid through daily automatic payments.
Certain MCA providers have been widely criticized for misrepresenting their products, assessing exorbitant fees and ensnaring clients in a cycle of rapidly increasing debt. It’s believed that thousands of fleets, brokers and other trucking-related entities have used MCAs in recent years.
The settlement requires Yellowstone, Fundry Inc., Yitzhak (Isaac) Stern, and Jeffrey Reece to surrender $9,837,000 to the FTC for refunds to affected businesses. Information on how the agency handles refunds is available online.
The U.S. Supreme Court said Thursday that a 1973 law giving the FTC the right to stop fraudulent commercial activity doesn’t also grant the authority to seek financial judgments. However, the FTC filed its Yellowstone settlement one day before that ruling, so its redress provisions remain in effect, said FTC spokesman Jay Mayfield. FTC has issued such judgments for years, refunding billions of dollars.
In a case focused on trucking, in 2018 the FTC settled with James Lamb, an associate and businesses related to them, including DOTauthority.com. The defendants agreed to pay $900,000 for cheating owner-operators out of millions of dollars. Lamb, head of the Small Business in Transportation Coalition, denied that his activities were fraudulent, saying he settled to avoid further legal costs.
