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On November 17, the FTC announced a final court order permanently banning a small-business financing company and its chief executive from offering business financing, debt relief, and credit repair services and imposing a $48,280,328 monetary judgment to resolve allegations of unfair or deceptive acts or practices under the Federal Trade Commission Act, and violations of the Telemarketing Sales Rule and the Consumer Review Fairness Act. The order follows a summary-judgment ruling entered on September 16. The FTC filed a complaint against the company in November 2024.
According to the FTC, the company targeted new and aspiring small business owners seeking capital to launch or expand their ventures, and its advertising and telemarketing practices created the expectation of genuine business loans or business lines of credit. Instead, the FTC alleges that the company used high-pressure sales tactics, buried critical terms in form contracts, charged large fees without consent, and harmed customers' credit profiles by submitting numerous unauthorized credit card applications.
Specifically, the FTC alleges that the company:
- Misrepresented the nature and source of its funding services. The FTC alleges the company led entrepreneurs to believe they would receive business loans or business lines of credit, even though it instead applied for multiple consumer credit cards.
- Misrepresented its lender relationships and product terms. According to the agency, the company claimed access to special programs and favorable rates, including promotional 0 percent APR periods and "line of credit capability" that customers did not actually receive.
- Misrepresented its fees and the impact on consumers' credit. The FTC asserts that the company promised no upfront charges and no credit-score consequences while collecting early-termination fees and submitting numerous hard inquiries that significantly reduced credit scores.
- Used unlawful review-related practices. The agency alleges the company inserted prohibited non-disparagement clauses into form contracts and relied on fabricated or coerced positive reviews to obscure negative customer experiences.
The final order permanently bars the defendants from offering credit, loans, business-financing products, debt-relief services, or credit-repair services.
Putting It Into Practice: The FTC continues to actively enforce UDAP and other federal consumer-protection requirements across a wide range of financial products and services (previously discussed here). Market participants should ensure their marketing, fee practices, and credit disclosures are accurate, transparent, and subject to regular compliance oversight.
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