Yellowstone Capital to pay $9.8M to settle FTC lawsuit alleging it overcharged small businesses

Yellowstone Capital settles FTC lawsuit

Yellowstone Capital reached a settlement agreement with the Federal Trade Commission (FTC) in connection with the regulator’s allegations that it engaged in deceptive and unfair practices targeting small businesses.

The FTC accused Yellowstone Capital and its owners Yitzhak (Isaac) Stern, and Jeffrey Reece of withdrawing money from small businesses’ bank accounts without permission.

The consumer protection watchdog also alleged that the defendants deceived small businesses about the amount of financing they will receive. The defendants also lied about certain features of their financing products in online ads and other types of marketing.

For example, the defendants falsely claimed in their advertisements that their loans do not require collateral or a personal guarantee. In fact, they required business owners to sign a guarantee holding them personally responsible for the entire amount if their business defaulted.  The defendants also required collateral in the form of a purported security interest or lien on everything the business owned.