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FTC Alleges New York Small-Business Lenders Deceived Nonprofits

 |  June 11, 2020

The Federal Trade Commission (FTC) sued two New York small-business lenders Wednesday, June 10, for allegedly using deceptive terms in loans to companies, nonprofits, religious groups, and medical offices, and threatening violence and personal-asset seizures to collect funds.

The FTC filed a complaint against RCG Advance, (formerly known as Richmond Capital Group LLC, doing business as Viceroy Capital Funding) and Ram Capital Funding, along with some of the company’s alleged principals.

RCG Advance could not be reached for comment, while messages left with Ram Capital Funding seeking comment were not immediately returned.

In its lawsuit, the FTC alleged that since at least 2015, the defendants deceived clients by misrepresenting the terms of loans provided.

For example, the agency said in a statement that the defendants’ web sites falsely claimed that their loans required “no personal guarantee of collateral from business owners.” In other words, customers obtaining financing on behalf of their companies would not have their personal possessions treated as loan collateral.

But the FTC alleges that contracts did in fact include such provisions. Investigators also claimed that the defendants required businesses and their owners to sign “confessions of judgment” as part of their contracts. The FTC stated these would allow the defendants to immediately go to court and obtain uncontested judgments in case of an alleged default.

The FTC also alleged that defendants made unauthorized withdrawals from consumers’ bank accounts. Additionally, the agency claimed that the firms used unfair collection practices — including threatening to break a customer’s jaw and “come down there and beat the s**t out of you.” — to compel them to pay.

A 14-page complaint filed in the US District Court for the Southern District of New York further alleged that the defendants made threatening calls to consumers. That reputedly included threatening to ruin one customer’s reputation by falsely accusing him of being a child molester.

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