FTC charges New York financing companies allegedly engage in unfair collection practices

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The Federal Trade Commission (FTC) filed a complaint against two small-business financing companies based in New York for allegedly engaging in unfair business collection practices.

The Commission also charged several of both companies’ owners and officers.

In the lawsuit, the FTC identified the defendants as RCG Advances LLC and Ram Capital Funding LLC. The companies’ owners and officers named in the lawsuit include Robert Giardina, Jonathan Braun, and Tzvi Reich.

FTC’s allegations against the defendants

The FTC alleged that RCG Advances and Ram Capital Funding together with their owners used deception and threats to seize the personal and business assets of small businesses, non-profits, religious organizations, and medical offices.

According to the Commission, the defendants have been engaging in illegal business practices since at least 2015. The defendants provide immediate funding in a specific amount to small businesses and other organizations (consumers) in exchange for an agreement to repay a higher amount from future revenues.

They deceived consumers by misrepresenting the terms of their financing products. On their website, they claim that their financing products require “no personal guaranty of collateral from business owners” and “no upfront costs

In fact, the defendants’ financing agreements include “personal guaranty” that consumers must agree to and they withhold different fees upfront before disbursing the funding to consumers. They also require consumers to sign a confession of judgment as part of their financing agreements.  The confession allowed the defendants to go immediately to court and obtain an uncontested judgment in case of an apparent default.

Additionally, the FTC alleged that the defendants “made threatening collection calls to consumers, frequently using obscene or profane language” to compel them to continue making payments.

According to the Commission, the defendants violated the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Their unlawful unfair and deceptive business practices caused and will continue to cause suffering to consumers. They also obtained and will continue to reap unjust profits and harm the public interest.