Court Grants FTC Motion for Preliminary Injunction Against Seek Capital

The Federal Trade Commission (FTC) said Tuesday (March 4) that a court granted its motion for a preliminary injunction against Seek Capital and its founder and CEO, Roy Ferman.

The preliminary injunction, which was granted on Feb. 20, prohibits Seek Capital from making false claims related to small business loans or lines of credit and from contacting any consumers whose information the company obtained before Feb. 20, the FTC said in a Tuesday press release.

The FTC filed its complaint against Seek Capital in November, alleging that the company targets new and aspiring small business owners, falsely advertises that it can secure business loans or lines of credit, and then charges clients thousands of dollars to simply open credit cards in the business owners’ names, according to the release.

The court found on Feb. 20 that “the FTC was likely to succeed on the merits of all its claims,” per the release.

“The court entered the FTC’s proposed order in full and found that the requested relief was necessary and appropriate given that Seek Capital and Ferman were continuing to collect on invoices to consumers who ‘fell victim to their deceptive scheme,’” the release said. “The court found that the injunction was necessary to mitigate harm pending trial.”

Seek Capital did not immediately reply to PYMNTS’ request for comment.

When announcing its lawsuit on Nov. 15, the FTC alleged that Seek Capital’s “bogus business finance scheme” cost small business owners more than $37 million.

In a separate action, the FTC said Feb. 20 that it launched a public inquiry into “tech censorship,” saying that it seeks to learn how consumers have been harmed by tech firms’ policies, such as acts, practices or methods of competition that may be deceptive or unfair.

On Jan. 28, the FTC began sending nearly $2.4 million to consumers of fast-fashion retailer Fashion Nova, which the agency alleged prevented negative reviews from being posted on the company’s website.

The FTC said Jan. 21 that it began sending more than $5 million in refunds to consumers who were harmed by a deceptive credit card debt relief scheme. The funds in this distribution came from ACRO Services, which operated under multiple names and ran the scheme, and BlueSnap, which provided payment processing services and profited from the scheme, the agency said.