FTC Files Amended Complaint Seeking Civil Penalties Against Small Business Financing Providers

In a newly filed amended complaint, the Federal Trade Commission alleges that merchant cash advance provider RCG Advances and other defendants made multiple unauthorized withdrawals from small businesses’ banks, sometimes taking thousands of dollars more than the agreed repayment amount.

The amended complaint also alleges that RCG, formerly known as Richmond Capital Group, LLC and also doing business as Viceroy Capital Funding and Ram Capital Funding, violated the Gramm-Leach-Bliley Act’s prohibition on using false or deceptive information to obtain a consumer’s bank account information.

In its agreements with consumers, RCG tells businesses that they can receive an upfront amount of cash in exchange for allowing RCG to make daily withdrawals from the businesses’ bank accounts up to a “Total Purchased Amount.” The amended complaint alleges that the defendants frequently continued to make the withdrawals well after the promised amount had been withdrawn, in one instance taking more than $75,000 without permission.

The amended complaint also alleges wanton and egregious behavior by defendants, including laughing at consumer requests for refunds from RCG’s unauthorized withdrawals from customer bank accounts; abusing the legal system to seize the business and personal assets of their customers; and threatening to break their customers’ jaws or falsely accusing them of child molestation during collection calls.

The FTC asks the court to assess civil penalties against the defendants, along with injunctive relief and requiring the defendants to turn over ill-gotten gains.

The case was originally filed in June 2020.

The Commission vote to refer the civil penalty complaint to the Department of Justice for filing was 4-0. The Department of Justice referred the complaint back to the Commission, which filed the amended complaint in the U.S. District Court for the Southern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

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