The New York Attorney General entered into two related Consent Order and Judgments on January 16, 2025, the first with a financial company offering short-term loans to small businesses and the second with several of the company’s officers. The Consent Orders combine for an aggregate settlement amount in excess of $1 billion, and reflect the latest in a string of actions by the NY AG targeting companies that offer allegedly predatory loans to small businesses.
The NY AG sued the company and its officers for alleged unfair and deceptive lending practices that violated New York’s general consumer protection laws, criminal usury statute, and lender licensing laws. The NY AG accused the company of marketing its loans as merchant cash advances to be repaid via a share of the company’s revenue, but in reality treating them as short-term loans and deducting daily payments from customers’ bank accounts that were fixed in value and had no relation to customers’ revenue. The NY AG identified over 1,100 small businesses who were affected by these loans.
Under the terms of the Consent Orders, the company will cease operating its merchant cash advance business and cancel all of the loans it currently holds, valued at over $534 million. The company will also pay $3.4 million in monetary relief to former customers, and a judgment payment to the state of $1.065 billion, although the value of the cancelled debts will be credited against this judgment. The two individual officers also agreed to pay an additional $12.7 million to the NY AG.
Additional actions against successor entities to the company and other individuals affiliated with it are still pending.