FTC Files Complaint Against Lender

By Staff Writer August 10, 2020

The Federal Trade Commission filed a complaint against Yellowstone Capital, Fundry, founder and CEO Yitzhak Stern, and president Jeffrey Reece, alleging 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.

The provider of merchant cash advances 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, according to a Federal Trade Commission lawsuit.

Fundry President Jeff Reece, Kiva Manager of Development Jessica Feingold, and Fundry CEO Isaac
Fundry President Jeff Reece, on the left and Fundry CEO Yitzhak Stern on the right. 

“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According to the FTC’s complaint, Yellowstone has regularly withdrawn hundreds or thousands of dollars from businesses’ accounts for days after customers had repaid the full amounts owed in their contracts.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. The complaint also cites examples of businesses being left with bank overdraft fees as a result of the unauthorized withdrawals.

In addition, the complaint alleges that for years Yellowstone deceived potential customers about the amount of money they would receive, with the amount shown on the contract not reflecting additional fees that would be deducted.

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Last modified on Tuesday, 11 August 2020 12:30