In the face of COVID-19, many small businesses are looking for help from the CARES Act’s Paycheck Protection Program. They may apply for PPP loans through Small Business Administration-authorized lenders and others the SBA has determined to be eligible. But there are concerns that some companies have falsely claimed an affiliation with the SBA or approved PPP lenders, or have represented untruthfully that people can get PPP or other SBA loans by applying on their sites.
Blog Posts Tagged with Credit and Finance
Many small businesses, medical offices, non-profits, and religious organizations turned to a New York company called Richmond Capital for financing, but according to a lawsuit filed by the FTC, they got less – and way more – than they bargained for. The just-filed law enforcement action against a network of related companies and individuals is the latest step in the FTC’s ongoing effort against questionable financing practices that target small businesses.
Ostriches get a bad rap. The popular perception is that the species Struthio camelus bury their heads in the sand. But, in fact, they flee from perceived danger at speeds that top 60 miles per hour. An FTC proposed settlement with a payment processor that ignored signs that certain clients were engaged in fraud suggests that more companies should follow the real-life example of the ostrich and hightail it away from any association with illegal conduct.
The FTC’s complaint against Bronx Honda alleges the company jacked up what consumers had to pay by fabricating fees, inflating charges, and sneaking in stealth add-ons. The lawsuit also alleges the defendants discriminated against African-American and Hispanic consumers by charging them higher financing markups and fees, in violation of the Equal Credit Opportunity Act and Reg B.
For a company called Harvest Moon, its business practices sure leave consumers in the dark about key aspects of its payday loans. That’s what the FTC alleges in a case filed in federal court in Nevada.
Companies that deceive consumers often don’t act alone. Pull back the curtain and you may find behind-the-scenes businesses that lend a hand. The FTC alleges that Atlanta-based First Data Merchant Services and its former vice president, Chi “Vincent” Ko, engaged in conduct that helped scammers rake in megabucks at consumers’ expense.
Many small businesses are looking for a financial life preserver to help them stay afloat until the COVID-19 wave subsides. But joint warning letters just sent by FTC staff and the Small Business Administration raise concerns that some companies – including lead generators – are making questionable claims about their affiliation with SBA-administered programs designed to offer emergency relief to struggling businesses.
Small businesses and nonprofits should never be on the receiving end of another company’s deceptive practices. An FTC action challenges the methods of companies that allegedly pitch offers for “no risk” business publications and then follow up with hefty bills for unauthorized orders. But it doesn’t stop there.
As companies struggle to stay afloat financially due to the economic reverberations of COVID-19, your employees are facing the same challenges at home. The FTC has something you can share with staff members in need – and it won’t cost you a thing.
In these unprecedented times, the Commission is working on all fronts to stop pandemic-related scams or deception – and to warn consumers and businesses about them. But our work in other areas continues, too. Today, we’re taking a minute to take stock of some of the highlights from 2019.
Some things have changed in the rent-to-own business, but a $175 million proposed settlement with Progressive Leasing reminds companies that bedrock consumer protection principles apply, especially the fundamental proposition that deceiving people about cost strikes at the heart of the FTC Act. Not in the rent-to-own industry? Not so fast. The case offers compliance pointers for your company, too.
The COVID-19 crisis has many small businesses on the ropes, so it’s unfortunate we have to warn them about another threat. According to a lawsuit just filed by the FTC, a Rhode Island company that goes by the name “SBA Loan Program” has been soliciting applications from small businesses, but has no affiliation with the U.S. Small Business Administration and the loan programs that agency is currently running.
For small businesses, there’s never been a time when “business as usual” has been so unusual. With many companies facing coronavirus-related challenges, the FTC has tips for business owners – and for those offering small business financing – about navigating today’s uncharted financial waters.
As a business owner, you’ve seen the headlines about financial relief that may be available to some companies through the Small Business Administration (SBA). But you’ve also heard about scammers who extract a grain of truth from the news and distort it in an effort to cheat small businesses. Now more than ever it’s critical for small business owners to go straight to the source for accurate information about what’s happening at the SBA. And that source, of course, is the Small Business Administration’s dedicated page, sba.gov/coronavirus.
It’s an unprecedented time. But even in the midst of monumental change, the FTC’s commitment to its consumer protection mission remains constant. Here’s a statement from Chairman Simons about the ongoing work of the Bureau of Consumer Protection:
The practice is called piggybacking, but it’s not child’s play. It’s where a person with iffy credit pays a credit repair company to be listed as an authorized user on the account of someone with good credit – even though they don’t actually have access. The idea is that the person with bad credit can inflate their own credit score and get the money-saving benefits of better credit by “piggybacking” on the credit of a stranger. That’s how a Denver-based business pitched its services to cash-strapped consumers.
As an essential engine of the American economy, small business has a big impact. But where can small business owners turn for the capital they need to grow? Traditional lenders are one option, but the “It’s a Wonderful Life” image of George Bailey at the Building & Loan may not reflect reality. New online options may broaden the availability of credit, but they also raise some consumer protection concerns.
Top picks, star ratings, in-depth reviews. Many consumers don’t buy anything without consulting third-party review sites or checking out the opinions of other customers. But how often are those ratings the product of buying and selling between the “independent” site and companies willing to pay for better play? And are those reviews really from satisfied customers or are they from employees acting on instructions to stuff the ballot box with five-star ratings?
When people report scams, deceptive practices, or identity theft, the FTC and other members of the Consumer Sentinel Network regularly use that data for law enforcement purposes. But now we’re examining the information in innovative and interactive ways – and you can, too. The FTC just produced a video featuring Paul Witt, the Bureau of Consumer Protection’s Sultan of Stats.
They say hindsight is 20/20, but what about foresight? We’re not ones to prognosticate, but a look at notable FTC cases and initiatives from the past year suggests some topics likely to be top of mind in months to come. Here is a non-exhaustive list of issues in our 2019 rearview mirror and likely visible through the 2020 windshield.