Working hard to collect payments from customers is challenging, but credit professionals know it's important remain exactly that: professional. However, not everyone follows the rules as was the case with three companies and their owners and managers who allegedly "cheated small businesses in New York and across the country out of millions of dollars each year by selling these small business owners 'merchant cash advances,' or fraudulent, sky-high interest loans."
According to the New York State Office of the Attorney General, the three companies were charged with "illegally loaning money to small business owners at astronomically-high interest rates, fraudulently charging undisclosed fees, debiting excess amounts from merchants' bank accounts, and obtaining judgments against merchants by filing false affidavits in New York State courts."
Additional charges against the companies include harassing and threatening violence and legal action against small business owners in order to get loans paid. After investigating for more than a year, the press release states the companies collected over $75 million on nearly 2,000 loans that were deemed fraudulent and illegal. The Federal Trade Commission filed a similar suit on the same day.
The Richmond companies' case may seem far-fetched for the average credit professional; however, actual payment fraud was a recurring issue in 2019, with 33% of financial professionals experiencing attempts and/or attacks on ACH payment methods in AFP's survey. Fraudulent attempts and/or attacks on corporate/commercial credit cards and wire transfers was experienced by 34% and 40%, respectively, while the majority saw attempts and/or attacks on checks.